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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________  
FORM 10-K
_______________________________________________  
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
OR
¨
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 001-38730
LINDE PLC
(Exact name of registrant as specified in its charter)
Ireland
 
98-1448883

State or other jurisdiction of incorporation or organization
 
(I.R.S. Employer Identification No.)
 
 
The Priestley Centre, 10 Priestley Road,
Surrey Research Park, Guildford, Surrey GU2 7XY United Kingdom


 
+44 1483 242200
(Address of principal executive offices)
 
Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
 
Name of each exchange on which registered:
Ordinary shares ( € 0.001 nominal value per share)
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
___________________________________  
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.           Yes   þ     No   ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.      Yes    ¨    No   þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                        Yes    þ     No    ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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   þ     No   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.                                           þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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           þ     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 Act).                Yes    ¨     No    þ
The aggregate market value of the voting and non-voting common stock held by non-affiliates as of June 30, 2018 , was approximately $45 billion (based on the closing sale price of the stock of the registrant's predecessor Praxair, Inc. on that date as reported on the New York Stock Exchange).
At February 28, 2019 , 544,910,125 ordinary shares of € 0.001 nominal value per share of the Registrant were outstanding.
Documents incorporated by reference:
Portions of the Proxy Statement of Linde plc for its 2019 Annual General Meeting of Shareholders, are incorporated in Part III of this report.
 

Table of Contents

LINDE PLC
ANNUAL REPORT ON FORM 10-K
For the fiscal year ended December 31, 2018
TABLE OF CONTENTS
 
 
 
Page
 
 
 
Part I
 
 
 
 
 
Item 1:
Item 1A:
Item 1B:
Item 2:
Item 3:
Item 4:
 
 
 
Part II
 
 
 
 
 
Item 5:
Item 6:
Item 7:
Item 7A:
Item 8:
Item 9:
Item 9A:
Item 9B:
 
 
 
Part III
 
 
 
 
 
Item 10:
Item 11:
Item 12:
Item 13:
Item 14:
 
 
 
Part IV
 
 
 
 
 
Item 15:
Item 16:
 
 

 

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FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions. They are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the ability to successfully integrate the Praxair and Linde AG businesses; regulatory or other requirements imposed as a result of the business combination of Praxair and Linde AG that could reduce anticipated benefits of the transaction; the risk that Linde plc may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates, including the impact of the U.S. Tax Cuts and Jobs Act of 2017; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from accounting principles generally accepted in the United States of America, International Financial Reporting Standards or adjusted projections, estimates or other forward-looking statements.

Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in this report, which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.


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Linde plc and Subsidiaries
PART I
ITEM 1.     BUSINESS
General
Linde plc is a public limited company formed under the laws of Ireland with its principal offices in the United Kingdom.  Linde plc was formed in 2017 in accordance with the requirements of the business combination agreement, dated June 1, 2017, as amended, between Linde plc, Praxair, Inc. ("Praxair") and Linde Aktiengesellschaft ("Linde AG"). Effective October 31, 2018, the business combination was completed and Linde plc is comprised of the businesses of Praxair and Linde AG (hereinafter the combined group will be referred to as "the company" or "Linde").
The business combination brought together two leading companies in the global industrial gases industry, leveraging the proven strengths of each.  Linde believes the merger will combine Linde AG’s long-held expertise in technology with Praxair’s efficient operating model, thus creating a global leader. The company is expected to enjoy strong positions in key geographies and end markets and will create a more diverse and balanced global portfolio.
Linde is the largest industrial gas company worldwide.  It continues to be a major technological innovator in the industrial gases industry. Its primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, and rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene). The company also designs, engineers, and builds equipment that produces industrial gases primarily for internal use and offers its customers a wide range of gas production and processing services such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants and other types of plants. The surface technologies segment supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders.
Linde serves a diverse group of industries including healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment.
In 2018, the company, Praxair and Linde AG entered into various agreements with regulatory authorities to satisfy antitrust requirements to secure approval to consummate the business combination. These agreements required the sale of the majority of Praxair's European industrial gases business (completed on December 3, 2018), the majority of Linde AG's Americas industrial gases business (completed on March 1, 2019), as well as certain divestitures of other Praxair and Linde AG businesses in Asia that are expected to be sold in 2019.   As of December 31, 2018 and until the completion of the majority of such divestitures, Linde AG and Praxair were obligated to operate their businesses globally as separate and independent companies, and not coordinate any of their commercial operations. The U.S. Federal Trade Commission's (the “FTC”) hold separate order (“HSO”) restrictions were lifted March 1, 2019, concurrent with the sale of the required merger-related divestitures in the United States. See Notes 4 and 23 to the consolidated financial statements for additional information relating to divestitures.
Praxair was determined to be the accounting acquirer in the business combination. Accordingly, the historical financial statements of Praxair for the periods prior to the business combination are considered to be the historical financial statements of the company. The results of Linde AG are included in Linde's consolidated results from the date of the completion of the business combination forward. Also, during 2018 the company reported its continuing operations in six reporting segments under which it managed its operations, assessed performance, and reported earnings: North America, South America, Asia, Europe, Surface Technologies and Linde AG. Linde AG became the sixth reportable segment effective with the merger on October 31, 2018.
Linde’s sales were $14,900 million , $11,437 million , and $10,534 million for 2018 , 2017 , and 2016 , respectively. Refer to Item 7, Management's Discussion and Analysis, for a discussion of consolidated sales and Note 20 to the consolidated financial statements for additional information related to Linde’s reportable segments.

Industrial Gases Products and Manufacturing Processes
Atmospheric gases are the highest volume products produced by Linde. Using air as its raw material, Linde produces oxygen, nitrogen and argon through several air separation processes of which cryogenic air separation is the most prevalent. Rare gases, such as krypton, neon and xenon, are also produced through cryogenic air separation. As a pioneer in the industrial gases industry, Linde is a leader in developing a wide range of proprietary and patented applications and supply systems technology. Linde also led the development and commercialization of non-cryogenic air separation technologies for the production of industrial gases. These technologies open important new markets and optimize production capacity for the company by lowering the cost of supplying industrial gases. These technologies include

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proprietary vacuum pressure swing adsorption (“VPSA”) and membrane separation to produce gaseous oxygen and nitrogen, respectively.
Process gases, including carbon dioxide, hydrogen, carbon monoxide, helium, specialty gases and acetylene are produced by methods other than air separation. Most carbon dioxide is purchased from by-product sources, including chemical plants, refineries and industrial processes or is recovered from carbon dioxide wells. Carbon dioxide is processed in Linde’s plants to produce commercial and food-grade carbon dioxide. Hydrogen and carbon monoxide can be produced by either steam methane reforming or auto-thermal reforming of natural gas or other feed streams such as naphtha. Hydrogen is also produced by purifying by-product sources obtained from the chemical and petrochemical industries. Most of the helium sold by Linde is sourced from certain helium-rich natural gas streams in the United States, with additional supplies being acquired from outside the United States. Acetylene is primarily sourced as a chemical by-product, but may also be produced from calcium carbide and water.
Industrial Gases Distribution
There are three basic distribution methods for industrial gases: (i) on-site or tonnage; (ii) merchant or bulk liquid; and (iii) packaged or cylinder gases. These distribution methods are often integrated, with products from all three supply modes coming from the same plant. The method of supply is generally determined by the lowest cost means of meeting the customer’s needs, depending upon factors such as volume requirements, purity, pattern of usage, and the form in which the product is used (as a gas or as a cryogenic liquid).
On-site. Customers that require the largest volumes of product (typically oxygen, nitrogen and hydrogen) and that have a relatively constant demand pattern are supplied by cryogenic and process gas on-site plants. Linde constructs plants on or adjacent to these customers’ sites and supplies the product directly to customers by pipeline. On-site product supply contracts generally are total requirement contracts with terms typically ranging from 10-20 years and containing minimum purchase requirements and price escalation provisions. Many of the cryogenic on-site plants also produce liquid products for the merchant market. Therefore, plants are typically not dedicated to a single customer. Advanced air separation processes allow on-site delivery to customers with smaller volume requirements. Customers using these systems usually enter into requirement contracts with terms typically ranging from 10-20 years.
Merchant. The merchant business is generally associated with distributable liquid oxygen, nitrogen, argon, carbon dioxide, hydrogen and helium. The deliveries generally are made from Linde’s plants by tanker trucks to storage containers at the customer's site which are owned and maintained by Linde and leased to the customer. Due to distribution cost, merchant oxygen and nitrogen generally have a relatively small distribution radius from the plants at which they are produced. Merchant argon, hydrogen and helium can be shipped much longer distances. The customer agreements used in the merchant business are usually three-to seven-year requirement contracts.
Packaged Gases. Customers requiring small volumes are supplied products in metal containers called cylinders, under medium to high pressure. Packaged gases include atmospheric gases, carbon dioxide, hydrogen, helium, acetylene and related products. Linde also produces and distributes in cylinders a wide range of specialty gases and mixtures. Cylinders may be delivered to the customer’s site or picked up by the customer at a packaging facility or retail store. Packaged gases are generally sold under one to three-year supply contracts and through purchase orders.
A substantial amount of the cylinder gases sold in the United States is distributed by independent distributors that buy merchant gases in liquid form and repackage the products in their facilities. Packaged gas distributors, including Linde, also distribute hardgoods and welding equipment purchased from independent manufacturers. Over time, Linde has acquired a number of independent industrial gases and welding products distributors at various locations in the United States and continues to sell merchant gases to other independent distributors. Between its own distribution business, joint ventures and sales to independent distributors, Linde is represented in 48 states, the District of Columbia and Puerto Rico.
Engineering
Linde’s Engineering Division has a global presence, with its focus on market segments such as olefin, natural gas, air separation, hydrogen and synthesis gas plants. The company utilizes its own extensive process engineering know-how in the planning, project development and construction of turnkey industrial plants and associated services. Linde plants are used in a wide variety of fields: in the petrochemical and chemical industries, in refineries and fertilizer plants, to recover air gases, to produce hydrogen and synthesis gases, to treat natural gas and to produce noble gases. The Engineering Division either supplies plant components and services directly to the customer or to the industrial gas business of Linde, which operates the plants on behalf of the customer under a long-term gases supply contract.




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Surface Technologies
Surface Technologies is a leading worldwide supplier of coating services and thermal spray consumables to customers in the aircraft, energy, printing, primary metals, petrochemical, textile, and other industries. Its coatings are used to provide wear resistance, corrosion protection, thermal insulation, and many other surface-enhancing functions which serve to extend component life, enable optimal performance, and reduce operating costs. It also manufactures a complete line of electric arc, plasma and wire spray, and high-velocity oxy-fuel ("HVOF") equipment.
Inventories – Linde carries inventories of merchant and cylinder gases, hardgoods and coatings materials to supply products to its customers on a reasonable delivery schedule. On-site plants and pipeline complexes have limited inventory. Inventory obsolescence is not material to Linde’s business.
Customers – Linde is not dependent upon a single customer or a few customers.
International – Linde is a global enterprise with approximately 60% of its 2018 sales outside of the United States. The company also has majority or wholly owned subsidiaries that operate in approximately 45 European, Middle Eastern and African countries (including Germany, France, Sweden, the Republic of South Africa, and the United Kingdom ); approximately 20 Asian and South Pacific countries (including China, Taiwan, India and Australia); and approximately 20 Americas countries (including Canada, Mexico and Brazil).
The company also has equity method investments operating in Europe, Asia, Africa, the Middle East, and North America (with the largest located in Germany, China, India, Malaysia, and the United States).
Linde’s international business is subject to risks customarily encountered in foreign operations, including fluctuations in foreign currency exchange rates, import and export controls, and other economic, political and regulatory policies of local governments. Also, see Item 1A. “Risk Factors” and Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.”
Seasonality – Linde’s business is generally not subject to seasonal fluctuations to any significant extent.
Research and Development – Linde’s research and development is directed toward developing new and improved methods for the production and distribution of industrial gases and the development of new markets and applications for these gases. This results in the development of new advanced air separation and hydrogen process technologies and the frequent introduction of new industrial gas applications. Research and development for industrial gases is principally conducted at Pullach, Germany; Tonawanda, New York and Burr Ridge, Illinois.
Linde conducts research and development for its surface technologies to improve the quality and durability of coatings and the use of specialty powders for new applications and industries. Surface Technologies research is conducted at Indianapolis, Indiana.
Patents and Trademarks – Linde owns or licenses a large number of patents that relate to a wide variety of products and processes. Linde’s patents expire at various times over the next 20 years. While these patents and licenses are considered important to its individual businesses, Linde does not consider its business as a whole to be materially dependent upon any one particular patent, or patent license, or family of patents. Linde also owns a large number of trademarks, of which the "Linde" trademark is the most significant.
Raw Materials and Energy Costs – Energy is the single largest cost item in the production and distribution of industrial gases. Most of Linde’s energy requirements are in the form of electricity, natural gas and diesel fuel for distribution. The company mitigates electricity, natural gas, and hydrocarbon price fluctuations contractually through pricing formulas, surcharges, and cost pass–through and tolling arrangements.
The supply of energy has not been a significant issue in the geographic areas where the company conducts business. However, energy availability and price is unpredictable and may pose unforeseen future risks.
For carbon dioxide, carbon monoxide, helium, hydrogen, specialty gases and surface technologies, raw materials are largely purchased from outside sources. Linde has contracts or commitments for, or readily available sources of, most of these raw materials; however, their long-term availability and prices are subject to market conditions.
Competition – Linde participates in highly competitive markets in the industrial gases, engineering and healthcare businesses, which are characterized by a mixture of local, regional and global players, all of which exert competitive pressure on the parties. In locations where Linde has pipeline networks, which enable the company to provide reliable and economic supply of products to larger customers, Linde derives a competitive advantage.
Competitors in the industrial and medical gases industry include global and regional companies such as L’Air Liquide S.A., Air Products and Chemicals, Inc., Messer Group GmbH, Mitsubishi Chemical Holdings Corporation (through Taiyo

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Nippon Sanso Corporation) as well as an extensive number of small to medium size independent industrial gas companies which compete locally as producers or distributors. In addition, a significant portion of the international gases market relates to customer-owned plants.

Employees and Labor Relations – As of December 31, 2018 , Linde had 80,820 employees worldwide. Linde has collective bargaining agreements with unions at numerous locations throughout the world, which expire at various dates. Linde considers relations with its employees to be good.
Environment – Information required by this item is incorporated herein by reference to the section captioned “Management’s Discussion and Analysis – Environmental Matters” in Item 7 of this 10-K.
Available Information – The company makes its periodic and current reports available, free of charge, on or through its website, www.linde.com, as soon as practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission ("SEC"). Investors may also access from the company website other investor information such as press releases and presentations. Information on the company’s website is not incorporated by reference herein. In addition, the public may read and copy any materials filed with the SEC free of charge at the SEC’s website, www.sec.gov, that contains reports, proxy information statements and other information regarding issuers that file electronically.
Executive Officers – The following Executive Officers have been elected by the Board of Directors and serve at the pleasure of the Board. It is expected that the Board will elect officers annually following each annual meeting of shareholders.
Stephen F. Angel, 63, is Chief Executive Officer of Linde. Prior to that, Mr. Angel was Chairman, President and CEO of Praxair, Inc. since 2007. Angel joined Praxair in 2001 as an executive vice president and was named president and chief operating officer in February 2006. Prior to joining Praxair, Angel spent 22 years in a variety of management positions with General Electric. Angel serves on the board of directors of PPG Industries and the U.S.-China Business Council and is a member of The Business Council. Angel received a bachelor of science degree in civil engineering from North Carolina State University and an MBA from Loyola College in Baltimore.
Dr. Christian Bruch, age 49, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. He is also the Head of Engineering for Linde and is a member of the Executive Board of Linde AG. Dr. Bruch joined The Linde Group's Gases Division in 2004 as a Business Development Manager for Airgases. In 2006 he became the Head of Tonnage Business Development for air separation projects in Europe, the Middle East and Africa. In 2009 he transferred to the Engineering Division, where he was responsible for the product line Air Separation Plants. In 2013 he was appointed a member of the Board of Directors at the Engineering Division, a position he held until becoming a member of the Executive Board of Linde AG at the beginning of 2015 responsible for the Linde Engineering Division and the Corporate & Support Function Technology & Innovation. Prior to joining The Linde Group, Dr. Bruch worked for the Swiss Institute of Technology in Zürich and for the RWE Group in Essen, Germany.
Bernd Eulitz age 53, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. He is also the Head of the Americas. Prior to this, he was appointed a Member of the Executive Board of Linde AG in January 2015, responsible for the Gases Division of Europe, Middle East and Africa. He also led the global functions Centre of Excellence and Procurement. Mr. Eulitz joined Linde AG in 2004 as head of the Sales Region East in Germany. In 2008 he was appointed CEO of PanGas AG in Switzerland and 2011 he moved to Singapore to head the Business Unit South & East Asia covering eleven countries from India to South Korea. Prior to joining Linde AG, Mr. Eulitz worked for Air Liquide and A.T. Kearney in various roles.
Kelcey E. Hoyt, age 50, became the Chief Accounting Officer of Linde in connection with the business combination in October 2018. Prior to this, she served as Vice President and Controller of Praxair, Inc. effective August 1, 2016. Prior to becoming Controller, she served as Praxair’s Director of Investor Relations since 2010. She joined Praxair in 2002 and served as Director of Corporate Accounting and SEC Reporting through 2008, and later served as Controller for various divisions within Praxair’s North American Industrial Gas business. Previously, she had five years of experience in audit at KPMG, LLP. She is a certified public accountant.
Sanjiv Lamba age 54, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. He is the Head of APAC. Mr. Lamba was appointed a Member of the Executive Board of Linde AG in 2011, responsible for the Asia, Pacific segment of the Gases Division, for Global Gases Businesses Helium & Rare Gases, Electronics as well as Asia Joint Venture Management. Mr. Lamba started his career 1989 with BOC India in Finance where he progressed to become Director of Finance. He was appointed Managing

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Director for BOC’s India’s business in 2001. Throughout his 29 years with BOC/Linde, he has worked in a number of geographies including Germany, the UK, Singapore and India where he has held numerous roles across the organization.
Eduardo F. Menezes, age 55, became an executive officer a member of the Management Committee of Linde in connection with the business combination in October 2018. He is also the Head of EMEA. Mr. Menezes previously served as Executive Vice President of Praxair, Inc. since 2012, responsible for Praxair Europe, Praxair Mexico, Praxair South America and Praxair Asia. From 2010 to March 2011, he was a Vice President of Praxair with responsibility for the North American Industrial Gases business and was named senior vice president in 2011. From 2007 to 2010, he was President of Praxair Europe. He served as Managing Director of Praxair’s business in Mexico from 2004 to 2007, as Vice President and General Manager for Praxair Distribution, Inc. from 2003 to 2004 and as Vice President, U.S. West Region, for North American Industrial Gases, from 2000 to 2003.
Anne K. Roby, age 54, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. She is the Head of Global Functions. Prior to this, Dr. Roby served as Senior Vice President of Praxair, Inc. since January 1, 2014, responsible for Global Supply Systems, R&D, Global Market Development, Global Operations Excellence, Global Strategic Sales, Global Procurement, Sustainability and Safety, Health and Environment. From 2011to 2013, she served as President of Praxair Asia, responsible for Praxair’s industrial gases business in China, India, South Korea and Thailand as well as the electronics market globally. In 2010, Dr. Roby became President of Praxair Electronics, after having served as Vice President, Global Sales, for Praxair from 2009 to 2010. Prior to this, she was Vice President of the Praxair U.S. South Region from 2006 to 2009. Dr. Roby joined Praxair in 1991 as a development associate in the Company’s R&D organization and was promoted to other positions of increasing responsibility.
Matt J. White, age 46, became an executive officer and a member of the Management Committee of Linde in connection with the business combination in October 2018. He is the Chief Financial Officer for Linde. He previously served as the Senior Vice President and Chief Financial Officer of Praxair, Inc. since January 1, 2014. Prior to this, Mr. White was President of Praxair Canada from 2011-2014. He joined Praxair in 2004 as finance director for the company’s largest business unit, North American Industrial Gases. In 2008, he became Vice President and Controller of Praxair, Inc., then was named Vice President and Treasurer in 2010. Before joining Praxair, White was vice president, finance, at Fisher Scientific and before that he held various financial positions, including group controller, at GenTek, a manufacturing and performance chemicals company.

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ITEM 1A.     RISK FACTORS

Due to the size and geographic reach of the company’s operations, a wide range of factors, many of which are outside of the company’s control, could materially affect the company’s future operations and financial performance. Management believes the following risks may significantly impact the company:
The company may fail to realize the anticipated strategic and financial benefits sought from the business combination.
The company may not realize all of the anticipated benefits of the business combination between Praxair, Inc. and Linde AG, which was completed on October 31, 2018. The success of the business combination will depend on, among other things, the company’s ability to combine Praxair, Inc.’s and Linde AG’s businesses in a manner that facilitates growth and realizes the anticipated annual synergies and cost reductions without adversely affecting current revenues and investments in future growth. The actual integration will continue to involve complex operational, technological and personnel-related challenges. Difficulties in the integration of the businesses, which may result in significant costs and delays, include:
•
managing a significantly larger combined group;
•
aligning and executing the strategy of the company;
•
integrating and unifying the offerings and services available to customers and coordinating distribution and marketing efforts in geographically separate organizations;
•
coordinating corporate and administrative infrastructures and aligning insurance coverage;
•
coordinating accounting, reporting, information technology, communications, administration and other systems;
•
addressing possible differences in corporate cultures and management philosophies;
•
the company being subject to Irish laws and regulations and legal action in Ireland;
•
coordinating the compliance program and uniform financial reporting, information technology and other standards, controls, procedures and policies;
•
the implementation, ultimate impact and outcome of post-completion reorganization transactions, such as the squeeze-out with respect to remaining minority Linde AG shareholders, which may be delayed;
•
unforeseen and unexpected liabilities related to the business combination or the combined businesses;
•
managing tax costs or inefficiencies associated with integrating operations;
•
identifying and eliminating redundant and underperforming functions and assets; and
•
effecting actions that may be required in connection with obtaining regulatory approvals.

These and other factors could result in increased costs and diversion of management’s time and energy, as well as decreases in the amount of expected revenue and earnings. The integration process and other disruptions resulting from the business combination may also adversely affect the company’s relationships with employees, suppliers, customers, distributors, licensors and others with whom Praxair, Inc. and Linde AG have business or other dealings, and difficulties in integrating the businesses could harm the reputation of the company.
If the company is not able to successfully integrate the businesses of Praxair, Inc. and Linde AG in an efficient, cost-effective and timely manner, the anticipated benefits and cost savings of the business combination may not be realized fully, or at all, or may take longer to realize than expected.
Weakening economic conditions in markets in which Linde does business may adversely impact its financial results and/or cash flows.
Linde serves a diverse group of industries across more than 100 countries, which generally leads to financial stability through various business cycles. However, a broad decline in general economic or business conditions in the industries served by its customers could adversely affect the demand for Linde’s products and impair the ability of its customers to satisfy their obligations to Linde, resulting in uncollected receivables and/or unanticipated contract terminations or project delays. For example, global political and economic uncertainty could reduce investment activities of Linde’s customers, which could adversely affect Linde’s engineering project business.
In addition, many of Linde’s customers are in businesses that are cyclical in nature, such as the chemicals, electronics, metals and energy industries. Downturns in these industries may adversely impact Linde during these cycles. Additionally, such conditions could impact the utilization of Linde’s manufacturing capacity which may require it to

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recognize impairment losses on tangible assets such as property, plant and equipment, as well as intangible assets such as goodwill, customer relationships or intellectual property.
Increases in the cost of energy and raw materials and/or disruption in the supply of these materials could result in lost sales or reduced profitability.
Energy is the single largest cost item in the production and distribution of industrial gases. Most of Linde’s energy requirements are in the form of electricity, natural gas and diesel fuel for distribution. Linde attempts to minimize the financial impact of variability in these costs through the management of customer contracts and reducing demand through operational productivity and energy efficiency. Large customer contracts typically have escalation and pass-through clauses to recover energy and feedstock costs. Such attempts may not successfully mitigate cost variability, which could negatively impact Linde’s financial condition or results of operations. The supply of energy has not been a significant issue in the geographic areas where Linde conducts business. However, regional energy conditions are unpredictable and may pose future risk.
For carbon dioxide, carbon monoxide, helium, hydrogen, specialty gases and surface technologies, raw materials are largely purchased from outside sources. Where feasible, Linde sources several of these raw materials, including carbon dioxide, hydrogen and calcium carbide, as chemical or industrial byproducts. In addition, Linde has contracts or commitments for, or readily available sources of, most of these raw materials; however, their long-term availability and prices are subject to market conditions. A disruption in supply of such raw materials could impact Linde’s ability to meet contractual supply commitments.
Linde’s international operations are subject to the risks of doing business abroad and international events and circumstances may adversely impact its business, financial condition or results of operations.
Linde has substantial international operations which are subject to risks including devaluations in currency exchange rates, transportation delays and interruptions, political and economic instability and disruptions, restrictions on the transfer of funds, trade conflicts and the imposition of duties and tariffs, import and export controls, changes in governmental policies, labor unrest, possible nationalization and/or expropriation of assets, domestic and international tax laws and compliance with governmental regulations. These events could have an adverse effect on the international operations of Linde in the future by reducing the demand for its products, decreasing the prices at which it can sell its products, reducing the revenue from international operations or otherwise having an adverse effect on its business. For example, Linde has a meaningful presence in the U.K. and the U.K.’s ongoing exit process from the EU has continued to cause, and may in the future cause, political and economic uncertainty, which could have an adverse impact on the markets which Linde supplies.
Currency exchange rate fluctuations and other related risks may adversely affect Linde's results.
Because a significant portion of Linde's revenue is denominated in currencies other than its reporting currency, the U.S. dollar, changes in exchange rates will produce fluctuations in revenue, costs and earnings and may also affect the book value of assets and liabilities and related equity. Although the company from time to time utilizes foreign exchange forward contracts to hedge these exposures, its efforts to minimize currency exposure through such hedging transactions may not be successful depending on market and business conditions. As a result, fluctuations in foreign currency exchange rates could adversely affect Linde’s financial condition, results of operations or cash flows.
Macroeconomic factors may impact Linde’s ability to obtain financing or increase the cost of obtaining financing which may adversely impact Linde’s financial results and/or cash flows.
Volatility and disruption in the U.S., European and global credit and equity markets, from time to time, could make it more difficult for Linde to obtain financing for its operations and/or could increase the cost of obtaining financing. In addition, Linde’s borrowing costs can be affected by short- and long-term debt ratings assigned by independent rating agencies which are based, in significant part, on its performance as measured by certain criteria such as interest coverage and leverage ratios. A decrease in these debt ratings could increase the cost of borrowing or make it more difficult to obtain financing.

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An impairment of goodwill or intangible assets could negatively impact the company's financial results.
As of December 31, 2018, the net carrying value of goodwill and other indefinite-lived intangible assets was $27 billion and $2 billion, respectively, primarily as a result of the business combination and the related acquisition method of accounting applied to Linde AG. In accordance with generally accepted accounting principles, the company periodically assesses these assets to determine if they are impaired. Significant negative industry or economic trends, disruptions to business, unexpected significant changes or planned changes in use of the assets, divestitures and sustained market capitalization declines may result in recognition of impairments to goodwill or other indefinite-lived assets. Any charges relating to such impairments could have a material adverse impact on Linde's results of operations in the periods recognized.
Catastrophic events could disrupt the operations of Linde and/or its customers and suppliers and may have a significant adverse impact on the results of operations.
The occurrence of catastrophic events or natural disasters such as extreme weather, including hurricanes and floods; health epidemics; and acts of war or terrorism, could disrupt or delay Linde’s ability to produce and distribute its products to customers and could potentially expose Linde to third-party liability claims. In addition, such events could impact Linde’s customers and suppliers resulting in temporary or long-term outages and/or the limitation of supply of energy and other raw materials used in normal business operations. Linde evaluates the direct and indirect business risks, consults with vendors, insurance providers and industry experts, makes investments in suitably resilient design and technology, and conducts regular reviews of the business risks with management. Despite these steps, however, these situations are outside Linde’s control and may have a significant adverse impact on its financial results.
The inability to attract and retain qualified personnel may adversely impact Linde’s business.
If Linde fails to attract, hire and retain qualified personnel, it may not be able to develop, market or sell its products or successfully manage its business. Linde is dependent upon a highly skilled, experienced and efficient workforce to be successful. Much of Linde’s competitive advantage is based on the expertise and experience of key personnel regarding marketing, technology, manufacturing and distribution infrastructure, systems and products. The inability to attract and hire qualified individuals or the loss of key employees in very skilled areas could have a negative effect on Linde’s financial results.
If Linde fails to keep pace with technological advances in the industry or if new technology initiatives do not become commercially accepted, customers may not continue to buy Linde’s products and results of operations could be adversely affected.
Linde’s research and development is directed toward developing new and improved methods for the production and distribution of industrial gases as well as for the design and construction of plants and toward developing new markets and applications for the use of industrial gases. This results in the introduction of new industrial gas applications and the development of new advanced air separation process technologies. As a result of these efforts, Linde develops new and proprietary technologies and employs necessary measures to protect such technologies within the global geographies in which Linde operates. These technologies help Linde to create a competitive advantage and to provide a platform to grow its business. If Linde’s research and development activities do not keep pace with competitors or if Linde does not create new technologies that benefit customers, future results of operations could be adversely affected.
Risks related to pension benefit plans may adversely impact Linde’s results of operations and cash flows.
Pension benefits represent significant financial obligations that will be ultimately settled in the future with employees who meet eligibility requirements. Because of the uncertainties involved in estimating the timing and amount of future payments and asset returns, significant estimates are required to calculate pension expense and liabilities related to Linde’s plans. Linde utilizes the services of independent actuaries, whose models are used to facilitate these calculations. Several key assumptions are used in the actuarial models to calculate pension expense and liability amounts recorded in the consolidated financial statements. In particular, significant changes in actual investment returns on pension assets, discount rates, or legislative or regulatory changes could impact future results of operations and required pension contributions.

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Operational risks may adversely impact Linde’s business or results of operations.
Linde’s operating results are dependent on the continued operation of its production facilities and its ability to meet customer contract requirements and other needs. Insufficient or excess capacity threatens Linde’s ability to generate competitive profit margins and may expose Linde to liabilities related to contract commitments. Operating results are also dependent on Linde’s ability to complete new construction projects on time, on budget and in accordance with performance requirements. Failure to do so may expose Linde’s business to loss of revenue, potential litigation and loss of business reputation.
Also inherent in the management of Linde’s production facilities and delivery systems, including storage, vehicle transportation and pipelines, are operational risks that require continuous training, oversight and control. Material operating failures at production, storage facilities or pipelines, including fire, toxic release and explosions, or the occurrence of vehicle transportation accidents could result in loss of life, damage to the environment, loss of production and/or extensive property damage, all of which may negatively impact Linde’s financial results.
Linde may be subject to information technology system failures, network disruptions and breaches in data security.
Linde relies on information technology systems and networks for business and operational activities, and also stores and processes sensitive business and proprietary information in these systems and networks. These systems are susceptible to outages due to fire, flood, power loss, telecommunications failures, viruses, break-ins and similar events, or breaches of security.
Linde has taken steps to address these risks and concerns by implementing advanced security technologies, internal controls, network and data center resiliency and recovery process. Despite these steps, however, operational failures and breaches of security from increasingly sophisticated cyber threats could lead to the loss or disclosure of confidential information, result in business interruption or malfunction or regulatory actions and have a material adverse impact on Linde’s operations, reputation and financial results.
The inability to effectively integrate acquisitions or collaborate with joint venture partners could adversely impact Linde’s financial position and results of operations.
In addition to the business combination, Linde has evaluated and expects to continue to evaluate, a wide array of potential strategic acquisitions and joint ventures. Many of these transactions, if consummated, could be material to its financial condition and results of operations. In addition, the process of integrating an acquired company, business or group of assets may create unforeseen operating difficulties and expenditures. Although historically Linde has been successful with its acquisition strategy and execution, the areas where Linde may face risks include:
•
the need to implement or remediate controls, procedures and policies appropriate for a larger public company at companies that prior to the acquisition lacked these controls, procedures and policies;
•
diversion of management time and focus from operating existing business to acquisition integration challenges;
•
cultural challenges associated with integrating employees from the acquired company into the existing organization;
•
the need to integrate each company’s accounting, management information, human resources and other administrative systems to permit effective management;
•
difficulty with the assimilation of acquired operations and products;
•
failure to achieve targeted synergies and cost reductions; and
•
inability to retain key employees and business relationships of acquired companies.

Foreign acquisitions and joint ventures involve unique risks in addition to those mentioned herein, including those related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries.

Also, the anticipated benefit of potential future acquisitions may not materialize. Future acquisitions or dispositions could result in the incurrence of debt, contingent liabilities or amortization expenses, or impairments of goodwill, any of which could adversely impact Linde’s financial results.

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Linde is subject to a variety of international laws and government regulations and changes in, or failure to comply with, these laws or regulations could have an adverse impact on the company’s business, financial position and results of operations.
Linde is subject to regulations in the following areas, among others:
•
environmental protection, including climate change and energy efficiency laws and policies;
•
domestic and international tax laws and currency controls;
•
safety;
•
securities laws applicable in the United States, the European Union, Germany, Ireland, and other jurisdictions;
•
trade and import/export restrictions, as well as economic sanctions laws;
•
antitrust matters;
•
data protection;
•
global anti-bribery laws, including the U.S. Foreign Corrupt Practices Act; and
•
healthcare regulations.

Changes in these or other regulatory areas, such as evolving environmental legislation in China, may impact Linde’s profitability and may give rise to new or increased compliance risks: it may become more complex and costly to ensure compliance, and the level of sanctions in the event of non-compliance may rise. Such changes may also restrict Linde’s ability to compete effectively in the marketplace. Noncompliance with such laws and regulations could result in penalties or sanctions, cancellation of marketing rights or restrictions on participation in, or even exclusion from, public tender proceedings, all of which could have a material adverse impact on Linde’s financial results and/or reputation.

Doing business globally requires Linde to comply with anti-corruption, trade, compliance and economic sanctions and similar laws, and to implement policies and procedures designed to ensure that its employees and other intermediaries comply with the applicable restrictions. These restrictions include prohibitions on the sale or supply of certain products, services and any other economic resources to embargoed or sanctioned countries, governments, persons and entities. Compliance with these restrictions requires, among other things, screening of business partners. Despite its commitment to legal compliance and corporate ethics, the company cannot ensure that its policies and procedures will always protect it from intentional, reckless or negligent acts committed by employees or agents under the applicable laws. If Linde fails to comply with laws governing the conduct of international operations, Linde may be subject to criminal and civil penalties and other remedial measures, which could materially adversely affect its reputation, business and results of operations.
The outcome of litigation or governmental investigations may adversely impact the company’s business or results of operations.
Linde’s subsidiaries are party to various lawsuits and governmental investigations arising in the ordinary course of business. Adverse outcomes in some or all of the claims pending may result in significant monetary damages or injunctive relief that could adversely affect Linde’s ability to conduct business. Linde and its subsidiaries may in the future become subject to further claims and litigation, which is impossible to predict. The litigation and other claims Linde faces are subject to inherent uncertainties. Legal or regulatory judgments or agreed settlements might give rise to expenses which are not covered, or are not fully covered, by insurance benefits and may also lead to negative publicity and reputational damage. An unfavorable outcome or determination could cause a material adverse impact on the company’s results of operations.
Potential product defects or inadequate customer care may adversely impact Linde’s business or results of operations.
Risks associated with products and services may result in potential liability claims, the loss of customers or damage to Linde’s reputation. Principal possible causes of risks associated with products and services are product defects or an inadequate level of customer care when Linde is providing services.
Linde is exposed to legal risks relating to product liability in the countries where it operates, including countries such as the United States, where legal risks (in particular through class actions) have historically been more significant than in other countries. The outcome of any pending or future products and services proceedings or investigations cannot be predicted and legal or regulatory judgments or agreed settlements may give rise to significant losses, costs and expenses.
The manufacturing and sale of products as well as the construction of plants by Linde may give rise to risks associated with the production, filling, storage, handling and transport of raw materials, goods or waste. Industrial gases are

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potentially hazardous substances and medical gases and the related healthcare services must comply with the relevant specifications in order to not adversely affect the health of patients treated with them.
Linde’s products and services, if defective or not handled or performed appropriately, may lead to personal injuries, business interruptions, environmental damages or other significant damages, which may result, among other consequences, in liability, losses, monetary penalties or compensation payments, environmental clean-up costs or other costs and expenses, exclusion from certain market sectors deemed important for future development of the business and loss of reputation. All these consequences could have a material adverse effect on Linde’s business and results of operations.
U.S. civil liabilities may not be enforceable against Linde.
Linde is organized under the laws of Ireland and substantial portions of its assets will be located outside of the United States. In addition, certain directors and officers of Linde and its subsidiaries reside outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon Linde or such persons, or to enforce outside the United States judgments obtained against such persons in U.S. courts in any action, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. In addition, it may be difficult for investors to enforce, in original actions brought in courts in jurisdictions located outside the United States, rights predicated upon the U.S. federal securities laws.
A judgment for the payment of money rendered by a court in the United States based on civil liability would not be automatically enforceable in Ireland. There is no treaty between Ireland and the United States providing for the reciprocal enforcement of foreign judgments. The following requirements must be met before the foreign judgment will be deemed to be enforceable in Ireland (i) the judgment must be for a definite sum, (ii) the judgment must be final and conclusive; and (iii) the judgment must be provided by a court of competent jurisdiction.
An Irish court will also exercise its right to refuse judgment if the foreign judgment (i) was obtained by fraud; (ii) violated Irish public policy; (iii) is in breach of natural justice; or (iv) if the judgment is irreconcilable with an earlier foreign judgment.
In addition, there is doubt as to whether an Irish court would accept jurisdiction and impose civil liability on Linde or such persons in an original action predicated solely upon the U.S. federal securities laws brought in a court of competent jurisdiction in Ireland against Linde or such member, officer or expert, respectively.
Changes in tax laws or policy could adversely impact the company’s financial position or results of operations.
Linde and its subsidiaries are subject to the tax rules and regulations in the U.S., Germany, Ireland, the U.K. and other countries in which they operate. Those tax rules and regulations are subject to change on a prospective or retroactive basis. Under current economic and political conditions, including the U.K.’s ongoing exit process from the EU, tax rates and policies in any jurisdiction, including the U.S., the U.K. and the EU, are subject to significant change. In particular,since Linde is expected to be treated as U.K. tax resident, any potential changes in the tax rules applying to U.K. tax-resident companies would directly affect Linde.
A change in Linde’s tax residency could have a negative effect on the company’s future profitability, and may trigger taxes on dividends or exit charges. If Linde ceases to be resident in the United Kingdom and becomes resident in another jurisdiction, it may be subject to United Kingdom exit charges, and/or could become liable for additional tax charges in the other jurisdiction. If Linde were to be treated as resident in more than one jurisdiction, it could be subject to duplicative taxation. Furthermore, although Linde is incorporated in Ireland and is not expected to be treated as a domestic corporation for U.S. federal income tax purposes, it is possible that the IRS could disagree with this result or that changes in U.S. federal income tax law could alter this result.  If the IRS successfully asserted such a position or the law were to change, significant adverse tax consequences may result for Linde, the company and Linde’s shareholders.  
When tax rules change, this may result in a higher tax expense and the need to make higher tax payments. In addition, changes in tax legislation may have a significant impact on Linde’s and its subsidiaries’ tax receivables and tax liabilities as well as on their deferred tax assets and deferred tax liabilities and uncertainty about the tax environment in some regions may restrict their opportunities to enforce their respective rights under the law. Linde will also operate in countries with complex tax regulations which could be interpreted in different ways. Interpretations of these regulations or changes in the tax system might have an adverse impact on the tax liabilities, profitability and business operations of

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Linde. Linde and its subsidiaries are subject to periodic audits by the tax authorities in various jurisdictions or other review actions by the relevant financial or tax authorities. The ultimate tax outcome may differ from the amounts recorded in Linde’s or its subsidiaries’ financial statements and may materially affect their respective financial results for the period when such determination is made.


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ITEM 1B.     UNRESOLVED STAFF COMMENTS
Linde has received no written SEC staff comments regarding any of its Exchange Act reports which remain unresolved.
ITEM 2.     PROPERTIES
Linde plc's principal executive offices are located in owned office space in Guildford, United Kingdom. Linde also owns principal administrative office space in Danbury, Connecticut and Tonawanda, New York, United States; Pullach and Dresden, Germany; and Schiedam, Netherlands. Other principal administrative offices are leased in Munich, Germany; Rio de Janeiro, Brazil; Hangzhou and Shanghai, China; Lidingö, Sweden; Basingstoke, United Kingdom; Bridgewater, New Jersey, Houston, Texas and Tulsa, Oklahoma, United States; North Ryde, Australia; Samara, Russia; Vadodara, India; and Singapore.
Due to the nature of Linde’s industrial gas products, it is generally uneconomical to transport them distances greater than a few hundred miles from the production facility. As a result, Linde operates a significant number of production facilities spread globally throughout a number of geographic regions.
The following is a description of production facilities for Linde by segment. No significant portion of these assets was leased at December 31, 2018 . Generally, these facilities are fully utilized and are sufficient to meet the Company's manufacturing needs.
North America
The North America segment operates production facilities in the U.S., Canada and Mexico, approximately 260 of which are cryogenic air separation plants, hydrogen plants and carbon dioxide plants. There are five major pipeline complexes in North America located in northern Indiana, Houston, along the Gulf Coast of Texas, Detroit and Louisiana. Also located throughout North America are noncryogenic air separation plants, packaged gas facilities, specialty gas plants, helium plants and other smaller plant facilities.
Europe
On December 3, 2018 Praxair completed the sale of the majority of its European industrial gas business as required for the merger (see Note 4 to the consolidated financial statements). Until the divestiture, the Europe segment had production facilities primarily in Italy, Spain, Germany, the Benelux region, the United Kingdom, Scandinavia and Russia which include approximately 70 cryogenic air separation plants and carbon dioxide plants. There were three major pipeline complexes in Europe located in Northern Spain and the Rhine and Saar regions of Germany. These pipeline complexes were primarily supplied by cryogenic air separation plants. Also located throughout Europe were noncryogenic air separation plants, packaged gas facilities and other smaller plant facilities.
South America
The South America segment operates more than 60 cryogenic air separation plants and carbon dioxide plants, primarily located in Brazil. Many of these plants support a major pipeline complex in Southern Brazil. Also located throughout South America are packaged gas facilities and other smaller plant facilities.
Asia
The Asia segment has production facilities located primarily in China, Korea, India and Thailand, approximately 70 of which are cryogenic air separation plants and carbon dioxide plants. Also located throughout Asia are noncryogenic air separation plants, hydrogen, packaged gas and other production facilities.
Surface Technologies
The Surface Technologies segment provides coating services and manufactures coating equipment at approximately 45 sites. The majority of these sites are located in the United States and Europe, with smaller operations in Asia and Brazil.
Linde AG
Linde AG conducts its operations in approximately 100 countries worldwide. Its gases facilities in Europe Middle East and Africa include approximately 230 plants, of which approximately 150 are cryogenic air separation plants, approximately 50 are hydrogen plants and approximately 30 are carbon dioxide plants. Its current facilities in the Americas include approximately 120 plants, of which approximately 60 are cryogenic air separation plants, approximately 30 are hydrogen plants and approximately 30 are carbon dioxide plants. Its facilities in the Asia/Pacific include approximately 170 plants, of which approximately 110 are cryogenic air separation plants, approximately 40 are hydrogen plants and

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approximately 20 are carbon dioxide plants. Smaller compact plants for air gases are not included in these figures. Additional plants are operated in cooperation with joint-venture partners.
On March 1, 2019 Linde AG completed the sale of a majority of its North American industrial gases business and certain of its South American business activities as required by the merger (see Note 4 to the consolidated financial statements).
The Linde Engineering Division designs and constructs turnkey process plants for third-party customers as well as for the Linde Gases Division in many locations worldwide, such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants. Plant components are produced in owned factories in Pullach and Tacherting, Germany; Hesinque, France; Tulsa, Oklahoma, United States; and Dalian, China.

ITEM 3.     LEGAL PROCEEDINGS
Information required by this item is incorporated herein by reference to the section captioned “Notes to Consolidated Financial Statements – 19. Commitments and Contingencies” in Item 8 of this 10-K.
ITEM 4.     MINE SAFETY DISCLOSURES
Not Applicable  

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PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Linde plc shares trade on the New York Stock Exchange (“NYSE”) and the Frankfurt Stock Exchange (“FSE”) under the ticker symbol “LIN”. At December 31, 2018 there were 10,439 shareholders of record.
Purchases of Equity Securities – Certain information regarding purchases made by or on behalf of the company or any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended) of its ordinary shares during the three months ended December 31, 2018 is provided below:  
Period
Total
Number of
Shares
Purchased
(Thousands)
 
Average
Price Paid
Per Share
 
Total Number of
Shares  Purchased as
Part of Publicly
Announced
Program (1)
(Thousands)
 
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Program (2)
(Millions)
October 2018
—

 
$
—

 
—

 
$
—

November 2018
—

 
$
—

 
—

 
$
—

December 2018
4,069

 
$
154.48

 
4,069

 
$
371

Fourth Quarter 2018
4,069

 
$
154.48

 
4,069

 
$
371

 
________________________
(1)
On December 10, 2018 the company’s board of directors approved the repurchase of $1.0 billion of its ordinary shares ("2018 program") which could take place from time to time on the open market (which could include the use of 10b5-1 trading plans), subject to market and business conditions. The 2018 program has a maximum repurchase amount of 5% of outstanding shares and a stated expiration date of April 30, 2019.
(2)
As of December 31, 2018, the company had purchased $629 million of its ordinary shares pursuant to the 2018 program, leaving an additional $371 million remaining authorized under the 2018 program.
On January 22, 2019 the company’s board of directors approved the repurchase of $6.0 billion of its ordinary shares ("2019 program") which could take place from time to time on the open market (which could include the use of 10b5-1 trading plans), subject to market and business conditions. The 2019 program has a maximum repurchase amount of 15% of outstanding shares and a stated expiration date of February 1, 2021.

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Peer Performance Table – The graph below compares the most recent five-year cumulative returns of the common stock of Praxair, the company's predecessor, through October 31, 2018 and Linde's ordinary shares from October 31, 2018 through December 31, 2018 with those of the Standard & Poor’s 500 Index ("SPX") and the S5 Materials Index ("S5MATR") which covers 30 companies, including Linde. The figures assume an initial investment of $100 on December 31, 2013 and that all dividends have been reinvested. CHART-6F7B865B7302528DAE4.JPG
 
2013
2014
2015
2016
2017
2018
LIN
$100
$102
$83
$97
$132
$136
SPX
$100
$114
$115
$129
$157
$149
S5MATR
$100
$107
$98
$115
$143
$121



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ITEM 6.      SELECTED FINANCIAL DATA
FIVE-YEAR FINANCIAL SUMMARY
(Dollar amounts in millions, except per share data)  

The year ended December 31, 2018 reflects the results of Praxair for the entire year and the results of Linde AG for the period beginning after October 31, 2018 (the merger date), including the impacts of purchase accounting (See Notes 1, 3 and 4 to the consolidated financial statements). The historical periods prior to 2018 reflect the results of Praxair.
Year Ended December 31,
2018(a)
 
2017(a)
 
2016(a)
 
2015(a)
 
2014(a)
From the Consolidated Statements of Income
 
 
 
 
 
 
 
 
 
Sales
$
14,900

 
$
11,437

 
$
10,534

 
$
10,776

 
$
12,273

Cost of sales, exclusive of depreciation and amortization
9,084

 
6,461

 
5,855

 
5,918

 
6,933

Selling, general and administrative
1,629

 
1,207

 
1,145

 
1,152

 
1,308

Depreciation and amortization
1,830

 
1,184

 
1,122

 
1,106

 
1,170

Research and development
113

 
93

 
92

 
93

 
96

Transaction costs and other charges
309

 
52

 
96

 
165

 
131

Net gain on sale of business
3,294

 
—

 
—

 
—

 
—

Other income (expenses) – net
18

 
4

 
23

 
28

 
9

Operating profit
5,247

 
2,444

 
2,247

 
2,370

 
2,644

Interest expense – net
202

 
161

 
190

 
161

 
213

Net pension and OPEB cost (benefit), excluding service cost
(4
)
 
(4
)
 
9

 
49

 
36

Income from continuing operations before income taxes and equity investments
5,049

 
2,287

 
2,048

 
2,160

 
2,395

Income taxes on continuing operations
817

 
1,026

 
551

 
612

 
691

Income from continuing operations before equity investments
4,232

 
1,261

 
1,497

 
1,548

 
1,704

Income from equity investments
56

 
47

 
41

 
43

 
42

Income from continuing operations (including noncontrolling interests)
4,288

 
1,308

 
1,538

 
1,591

 
1,746

Noncontrolling interests from continuing operations
(15
)
 
(61
)
 
(38
)
 
(44
)
 
(52
)
Income from continuing operations
$
4,273

 
$
1,247

 
$
1,500

 
$
1,547

 
$
1,694

Per Share Data – Linde plc Shareholders
 
 
 
 
 
 
 
 
 
Basic earnings per share from continuing operations
$
12.93

 
$
4.36

 
$
5.25

 
$
5.39

 
$
5.79

Diluted earnings per share from continuing operations
$
12.79

 
$
4.32

 
$
5.21

 
$
5.35

 
$
5.73

Cash dividends per share
$
3.30

 
$
3.15

 
$
3.00

 
$
2.86

 
$
2.60

Weighted Average Shares Outstanding (000’s) (b)
 
 
 
 
 
 
 
 
 
Basic shares outstanding
330,401

 
286,261

 
285,677

 
287,005

 
292,494

Diluted shares outstanding
334,127

 
289,114

 
287,757

 
289,055

 
295,608

Other Information and Ratios
 
 
 
 
 
 
 
 
 
Total assets
$
93,386

 
$
20,436

 
$
19,332

 
$
18,319

 
$
19,769

Total debt
$
15,296

 
$
9,000

 
$
9,515

 
$
9,231

 
$
9,225

Net debt (c)
$
10,830

 
$
8,383

 
$
8,991

 
$
9,084

 
$
9,099

Cash flow from operations
$
3,654

 
$
3,041

 
$
2,789

 
$
2,695

 
$
2,923

Net cash provided by (used for) investing activities
$
5,363

 
$
(1,314
)
 
$
(1,770
)
 
$
(1,303
)
 
$
(1,803
)
Net cash used for financing activities
$
(4,998
)
 
$
(1,656
)
 
$
(659
)
 
$
(1,310
)
 
$
(1,063
)
EBITDA (c)
$
7,133

 
$
3,675

 
$
3,410

 
$
3,519

 
$
3,856

Adjusted EBITDA (c)
$
4,516

 
$
3,727

 
$
3,506

 
$
3,684

 
$
3,987

Capital expenditures
$
1,883

 
$
1,311

 
$
1,465

 
$
1,541

 
$
1,689

Shares outstanding (000’s)
547,242

 
286,777

 
284,901

 
284,879

 
289,262

Number of employees
80,820

 
26,461

 
26,498

 
26,657

 
27,780

 
________________________
(a)
Amounts for 2018 include: (i) charges of $309 million ($306 million after-tax, or $0.92 per diluted share) for transaction costs and other charges primarily related to the merger, (ii) pension settlement charges of $14 million ($11 million after-tax, or $0.03 per diluted share) related to lump sum benefit payments made from pension plans, (iii) income tax benefit, net of $17 million

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($0.05 per diluted share) due to U.S. Tax Cuts and Jobs Act and other tax charges, (iv) a net gain on sale of businesses of $3,294 million ($2,923 million after-tax, or $8.75 per diluted share), (v) bond redemption costs of $26 million ($20 million after-tax, or $0.06 per diluted share), and (vi) the purchase accounting impacts of the merger of $714 million ($451 million after-tax and non-controlling interests, or $1.35 per diluted share).
Amounts for 2017 include: (i) charges of $52 million ($48 million after-tax, or $0.17 per diluted share) for transaction costs related to the merger, (ii) a pension settlement charge of $2 million ($1 million after-tax) related to lump sum benefit payments made from an international pension plan, and (iii) income tax charges, net of $394 million ($1.36 per diluted share) due to U.S. Tax Cuts and Jobs Act.
Amounts for 2016 include: (i) a $16 million charge to interest expense ($10 million after–tax, or $0.04 per diluted share) related to the redemption of the $325 million 5.20% notes due 2017, (ii) a pre–tax pension settlement charge of $4 million ($3 million after–tax, or $0.01 per diluted share) related to lump sum benefit payments made from the U.S. supplemental pension plan, and (iii) pre–tax charges of $96 million ($63 million after–tax and non–controlling interests, or $0.22 per diluted share) primarily related to cost reduction actions.
Amounts for 2015 include: (i) a pre-tax charge of $165 million ($125 million after-tax, or $0.43 per diluted share) related to the cost reduction program and other charges; and (ii) a pre-tax charge of $7 million ($5 million after-tax, or $0.02 per diluted share) related to a pension settlement.
Amounts for 2014 include: (i) a pre-tax charge of $131 million ($131 million after-tax, or $0.45 per diluted share) related to the Venezuela currency devaluation, (ii) a pre-tax charge of $7 million ($5 million after-tax, or $0.02 per diluted share) related to pension settlements; and (iii) a pre-tax charge of $36 million ($22 million after-tax, or $0.07 per diluted share) related to a bond redemption.
See Notes 1, 3, 4, 5, 7, 13 and 18 to the consolidated financial statements.
(b) As a result of the merger, share amounts for the year ended December 31, 2018 reflect the weighted averaging effect of Praxair shares outstanding prior to October 31, 2018 and Linde shares outstanding from October 31, 2018 through December 31, 2018.
(c)
Non-GAAP measures. See the “Non-GAAP Financial Measures” section in Item 7 for definitions and reconciliation to reported amounts. Net debt, as presented in the table above, is calculated as total debt less cash and cash equivalents.


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ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the company’s financial condition and results of operations should be read together with its consolidated financial statements and notes to the consolidated financial statements included in Item 8 of this Form 10-K.  
 
Page
Merger of Praxair and Linde AG

Business Overview
Executive Summary – Financial Results & Outlook
Consolidated Results and Other Information
Segment Discussion
Liquidity, Capital Resources and Other Financial Data
Contractual Obligations
Off-Balance Sheet Arrangements
Critical Accounting Policies
New Accounting Standards
Fair Value Measurements
Non-GAAP Financial Measures
MERGER OF PRAXAIR, INC. AND LINDE AG
On October 31, 2018 Praxair and Linde AG combined their respective businesses through an all-stock transaction, and became subsidiaries of Linde (collectively referred to as the “business combination” or "merger"). Prior to the business combination, the company did not conduct any business activities other than those required for its formation and matters contemplated by the business combination agreement. Praxair was determined to be the accounting acquirer for the merger. Accordingly, the historical financial statements of Praxair for the periods prior to the merger are considered to be the historical financial statements of Linde. The results of Linde AG are included in Linde’s consolidated results from the merger date forward. The Linde shares trade on the New York Stock Exchange and the Frankfurt Stock Exchange under the ticker symbol “LIN”. See Notes 1 and 3 to the consolidated financial statements for additional information.
In connection with the business combination, the company, Praxair and Linde AG, entered into various agreements with regulatory authorities to satisfy anti-trust requirements to secure approval to consummate the business combination. These agreements required the sale of the majority of Praxair’s European businesses (completed on December 3, 2018), the majority of Linde AG’s America’s business (completed on March 1, 2019), as well as certain divestitures of other Praxair and Linde AG businesses in Asia that are expected to be sold in 2019 (collectively, the “merger-related divestitures”). In the consolidated financial statements, Praxair’s merger-related divestitures are included in the results of operations until sold and Linde AG’s merger-related divestitures are accounted for as discontinued operations. See Notes 4 and 23 to the consolidated financial statements for additional information relating to merger-related divestitures.
Additionally, to obtain merger approval in the United States Linde, Praxair and Linde AG entered into an agreement with the U.S. Federal Trade Commission dated October 1, 2018 (“hold separate order” or “HSO”). Under the HSO, the company, Praxair and Linde AG agreed to continue to operate Linde AG and Praxair as independent, ongoing, economically viable, competitive businesses held separate, distinct, and apart from each other’s operations; and not coordinate any aspect of their operations until certain divestitures in the United States were completed. Accordingly, Linde has accounted for Linde AG as a separate segment for 2018 reporting purposes effective with the merger date. Prior to the merger date, the company’s Linde AG segment did not exist. Since the FTC hold separate order restrictions were lifted effective March 1, 2019, the company subsequently implemented a new operating segment structure as follows: Americas; EMEA (Europe/Middle East/Africa); APAC (Asia/Pacific), Engineering and Other. This new management structure will be used for 2019 reporting and comparative prior period information will be presented on a consistent basis.

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BUSINESS OVERVIEW
With the merger, Linde is the leading industrial gas company worldwide. The company's primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). The company also designs, engineers, and builds equipment that produces industrial gases primarily for internal use; and offers its customers a wide range of gas production and processing services such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants and other types of plants. The company’s surface technologies segment supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders.

Linde’s industrial gas operations are managed on a geographical basis and in 2018, 76% of sales were generated by Praxair's four geographic segments (North America, Europe, South America, and Asia), and since the merger date, the Linde AG segment generated 19% of consolidated sales. The surface technologies segment generated the remaining 5% of sales.

Linde serves a diverse group of industries including healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment. The diversity of end-markets supports financial stability for Linde in varied business cycles.
Linde generates most of its revenues and earnings in the following geographies where the company has its strongest market positions and where distribution and production operations allow the company to deliver the highest level of service to its customers at the lowest cost.  
North and South America ("Americas")
 
Europe, Middle East and Africa (“EMEA”)
 
Asia and Pacific (“APAC”)
United States
  
Germany
  
China
Canada
  
United Kingdom
  
India
Mexico
  
Scandinavia
  
South Korea
Brazil
  
Republic of South Africa*
  
Australia/New Zealand*
 
 
 
 
Taiwan
*Added with the Linde AG merger

The company manufactures and distributes its products through networks of thousands of production plants, pipeline complexes, distribution centers and delivery vehicles. Major pipeline complexes are primarily located in the United States. These networks are a competitive advantage, providing the foundation of reliable product supply to the company’s customer base. The majority of Linde’s business is conducted through long-term contracts which provide stability in cash flow and the ability to pass through changes in energy and feedstock costs to customers. The company has growth opportunities in all major geographies and in diverse end-markets such as energy, electronics, chemicals, metals, healthcare, food and beverage, and aerospace.

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EXECUTIVE SUMMARY – FINANCIAL RESULTS & OUTLOOK
2018 Year in review
On October 31, 2018 Praxair and Linde AG combined their respective businesses through an all-stock merger transaction, and became subsidiaries of Linde plc. The year ended December 31, 2018 reflects the results of Praxair for the entire year and the results of Linde AG for the period beginning after October 31, 2018.

•
Sales of $14,900 million were 30% above 2017 sales of $11,437 million , primarily driven by the merger with Linde AG that contributed 24% to sales, net of divestitures. Underlying sales increased 6% driven by volume growth primarily in North America and Asia, including new project start-ups, and higher price.
•
Reported operating profit of $ 5,247 million was 115% above 2017 . Adjusted operating profit of $2,976 million was 19% above adjusted operating profit in 2017 . Adjusted operating profit growth was driven by higher volumes and price across the geographic segments and the impact of the merger.*
•
Income from continuing operations of $4,273 million and diluted earnings per share from continuing operations of $12.79 increased from $1,247 million and $4.32 , respectively in 2017 . Adjusted income from continuing operations of $2,121 million and adjusted diluted earnings per share from continuing operations of $6.35 were 26% and 9% , respectively above 2017 adjusted amounts.*
•
Cash flow from operations was $ 3,654 million , or 25% of sales. Capital expenditures were $1,883 million ; dividends paid were $1,166 million ; and debt repayments, net were $2,908 million .
•
Cash on hand at December 31, 2018 was $4,466 million versus $617 million at December 31, 2017. This increase is primarily a result of the stock only merger with Linde AG and proceeds from the sale of Praxair's European industrial gases business. The cash is available for Corporate uses, including among others the planned squeeze-out of the 8% Linde AG noncontrolling interests and stock buybacks.

* A reconciliation of the Adjusted amounts can be found in the "Non-GAAP Financial Measures" section in this MD&A. See Notes 1, 3, 4, 5, 7, 13 and 18 to the consolidated financial statements.

2019 Outlook

The company’s business is to build, own, and operate industrial gas plants in order to supply atmospheric and process gases to customers. As such, Linde believes that its sale of gas project backlog is one indicator of future sales growth. At December 31, 2018 , Linde’s backlog of large projects under construction was $3.5 billion. This represents the total estimated capital cost of large plants under construction. APAC and Americas represent 49 percent and 42 percent of the backlog, respectively, with the remaining backlog in EMEA. These plants will primarily supply customers in the energy, chemical, and electronics end-markets.

The above guidance should be read in conjunction with the section entitled “Forward-Looking Statements.”

Linde provides quarterly updates on operating results, material trends that may affect financial performance, and financial guidance via earnings releases and investor teleconferences. These materials are available on the company’s website, https://www.linde.com/en/investors but are not incorporated herein.


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CONSOLIDATED RESULTS AND OTHER INFORMATION
The year ended December 31, 2018 reflects the results of Praxair for the entire year and the results of Linde AG for the period beginning after October 31, 2018 (the merger date), including the impacts of purchase accounting (See Notes 1, 3 and 4 to the consolidated financial statements). The historical periods prior to 2018 reflect the results of Praxair, Inc.
The following table provides selected data for 2018 , 2017 , and 2016 :  

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Variance
(Dollar amounts in millions, except per share data)
Year Ended December 31,
2018
 
2017 (d)
 
2016 (d)
 
2018 vs. 2017
 
2017 vs. 2016
Reported Amounts
 
 
 
 
 
 
 
 
 
Sales
$
14,900

 
$
11,437

 
$
10,534

 
30
 %
 
9
 %
Cost of sales, exclusive of depreciation and amortization
$
9,084

 
$
6,461

 
$
5,855

 
41
 %
 
10
 %
Gross margin (a)
$
5,816

 
$
4,976

 
$
4,679

 
17
 %
 
6
 %
As a percent of sales
39.0
%
 
43.5
%
 
44.4
%
 
 
 
 
Selling, general and administrative
$
1,629

 
$
1,207

 
$
1,145

 
35
 %
 
5
 %
As a percent of sales
10.9
%
 
10.6
%
 
10.9
%
 
 
 
 
Depreciation and amortization
$
1,830

 
$
1,184

 
$
1,122

 
55
 %
 
6
 %
Transaction costs and other charges (b)
$
309

 
$
52

 
$
96

 
 
 
 
Net gain on sale of businesses (b)
$
3,294

 
$
—

 
$
—

 
 
 
 
Other income (expense) – net
$
18

 
$
4

 
$
23

 
 
 
 
Operating Profit
$
5,247

 
$
2,444

 
$
2,247

 
115
 %
 
9
 %
Operating margin
35.2
%
 
21.4
%
 
21.3
%
 
 
 
 
Interest expense – net
$
202

 
$
161

 
$
190

 
25
 %
 
(15
)%
Net pension and OPEB cost (benefit), excluding service cost
$
(4
)
 
$
(4
)
 
$
9

 
—
 %
 
(144
)%
Effective tax rate
16.2
%
 
44.9
%
 
26.9
%
 
 
 
 
Income from equity investments
$
56

 
$
47

 
$
41

 
19
 %
 
15
 %
Noncontrolling interests from continuing operations
$
(15
)
 
$
(61
)
 
$
(38
)
 
(75
)%
 
61
 %
Income from continuing operations
$
4,273

 
$
1,247

 
$
1,500

 
243
 %
 
(17
)%
Diluted earnings per share from continuing operations
$
12.79

 
$
4.32

 
$
5.21

 
196
 %
 
(17
)%
Diluted shares outstanding (c)
334,127

 
289,114

 
287,757

 
16
 %
 
—
 %
Number of employees
80,820

 
26,461

 
26,498

 
 
 
 
Adjusted Amounts (e)
 
 
 
 
 
 
 
 
 
Operating profit
$
2,976

 
$
2,496

 
$
2,343

 
19
 %
 
7
 %
Operating margin
20.0
%
 
21.8
%
 
22.2
%
 
 
 
 
Interest expense – net
$
197

 
$
161

 
$
174

 
22
 %
 
(7
)%
Net pension and OPEB cost (benefit), excluding service cost
$
(18
)
 
$
(6
)
 
$
5

 
200
 %
 
(220
)%
Effective tax rate
23.8
%
 
27.2
%
 
27.1
%
 
 
 
 
Noncontrolling interests from continuing operations
$
(73
)
 
$
(61
)
 
$
(43
)
 
20
 %
 
42
 %
Income from continuing operations
$
2,121

 
$
1,690

 
$
1,576

 
26
 %
 
7
 %
Diluted earnings per share from continuing operations
$
6.35

 
$
5.85

 
$
5.48

 
9
 %
 
7
 %
Other Financial Data (e)
 
 
 
 
 
 
 
 
 
EBITDA
$
7,133

 
$
3,675

 
$
3,410

 
94
 %
 
8
 %
EBITDA Margin
47.9
%
 
32.1
%
 
32.4
%
 
49
 %
 
(1
)%
Adjusted EBITDA
$
4,516

 
$
3,727

 
$
3,506

 
21
 %
 
6
 %
Adjusted EBITDA Margin
30.3
%
 
32.6
%
 
33.3
%
 
(7
)%
 
(2
)%
 
________________________
(a)
Gross margin excludes depreciation and amortization expense.

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(b)
See Notes 5 and 4 to the consolidated financial statements.
(c)
As a result of the merger, share amounts for the year ended December 31, 2018 reflect the weighted averaging effect of Praxair shares outstanding prior to October 31, 2018 and Linde shares outstanding from October 31, 2018 through December 31, 2018.
(d)
Prior period information has been reclassified to conform with current year presentation as a result of the adoption of new accounting guidance on the presentation of net period pension and postretirement benefit costs. See Note 2 to the consolidated financial statements.
(e)
Adjusted amounts and other financial data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts can be found in the “Non-GAAP Financial Measures” section of this MD&A. See Notes 3, 4, 5, 13 and 18 to the consolidated financial statements.

Results of Operations
The following table provides a summary of changes in consolidated sales and adjusted operating profit:
 
 
2018 vs. 2017
 
2017 vs. 2016
 
 
% Change
 
% Change
 
 
Sales
 
Operating Profit
 
Sales
 
Operating Profit
Factors Contributing to Changes
 
 
 
 
 
 
 
 
Volume
 
4
 %
 
5
 %
 
5
%
 
8
 %
Price/Mix
 
2
 %
 
9
 %
 
1
%
 
5
 %
Cost pass-through
 
1
 %
 
—
 %
 
2
%
 
—
 %
Currency
 
(1
)%
 
—
 %
 
1
%
 
1
 %
Acquisitions/Divestitures
 
 
 
 
 
 
 
 
Europe divestiture
 
(1
)%
 
(1
)%
 
—
%
 
—
 %
Net gain on sale of businesses
 
—
 %
 
132
 %
 
—
%
 
—
 %
Linde AG - excluding purchase accounting
 
25
 %
 
10
 %
 
—
%
 
—
 %
Purchase accounting impacts - Linde AG
 
—
 %
 
(29
)%
 
—
%
 
—
 %
Other
 
—
 %
 
(11
)%
 
—
%
 
(5
)%
Reported
 
30
 %
 
115
 %
 
9
%
 
9
 %
Transaction costs and other charges
 
—
 %
 
7
 %
 
—
%
 
(2
)%
Net gain on sale of businesses
 
—
 %
 
(132
)%
 
—
%
 
—
 %
Purchase accounting impacts - Linde AG
 
—
 %
 
29
 %
 
—
%
 
—
 %
Adjusted
 
30
 %
 
19
 %
 
9
%
 
7
 %
The following tables provide consolidated sales by end-market and distribution method:

27

 
 
 
 
 
 
 
 
% of Sales*
 
% Change*
 
 
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
Sales by End-Markets
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
22
%
 
22
%
 
23
%
 
7
 %
 
4
%
Metals
 
17
%
 
17
%
 
17
%
 
7
 %
 
7
%
Energy
 
11
%
 
12
%
 
12
%
 
6
 %
 
5
%
Chemicals
 
11
%
 
10
%
 
10
%
 
14
 %
 
9
%
Electronics
 
9
%
 
9
%
 
8
%
 
8
 %
 
13
%
Healthcare
 
8
%
 
8
%
 
8
%
 
6
 %
 
4
%
Food & Beverage
 
9
%
 
9
%
 
9
%
 
7
 %
 
5
%
Aerospace
 
4
%
 
3
%
 
3
%
 
14
 %
 
11
%
Other
 
9
%
 
10
%
 
10
%
 
(1
)%
 
3
%
 
 
100
%
 
100
%
 
100
%
 
 
 
 

* Percentage of sales information excludes Linde AG. Percentage change information excludes impact of currency, natural gas/precious metals cost pass-through and acquisitions/divestitures, including the impact of the Linde AG merger. See Linde AG segment discussion.
 
 
 
% of Sales*
 
 
2018
 
2017
 
2016
Sales by Distribution Method
 
 
 
 
 
 
On-Site
 
28
%
 
30
%
 
29
%
Merchant
 
31
%
 
34
%
 
35
%
Packaged Gas
 
30
%
 
27
%
 
28
%
Other
 
11
%
 
9
%
 
8
%
 
 
100
%
 
100
%
 
100
%

* See Note 21 to the consolidated financial statements.


2018 Compared With 2017

Sales increased 30% to $14,900 million in 2018 compared to $11,437 million in 2017 primarily reflecting the merger with Linde AG which contributed 24% to sales, net of divestitures. Underlying sales increased 6% driven by higher volumes and pricing. Volume growth of 4% was driven by higher volumes in North America and Asia, including new project start-ups. Higher overall pricing across all geographic segments contributed 2% to sales. Currency translation impact decreased sales by 1%. Higher cost pass-through, primarily natural gas, increased sales by 1% with minimal impact on operating profit. The divestiture of Praxair's European businesses in December of 2018 decreased sales by 1%.
Gross margin increased $ 840 million , or 17% , versus 2017 primarily due to the merger. Gross margin as a percentage of sales declined to 39.0% in 2018 from 43.5% in 2017 and was negatively impacted by a $368 million charge for the fair value step-up of inventories acquired in the merger. Excluding this charge, gross margin in 2018 was 41.5%.
Selling, general and administrative ("SG&A") expenses increased $422 million, or 35% , in 2018 to $ 1,629 million primarily due to the merger. SG&A was 10.9% of sales in 2018 versus 10.6% in 2017, primarily due to the merger.
Depreciation and amortization expense increased $646 million, or 55% , versus 2017 . The increase is primarily due to the merger, including $346 million of purchase accounting impacts related to the fair value of fixed assets and intangible assets acquired in the merger.
Transaction costs and other charges were $309 million and $52 million in 2018 and 2017, respectively and are primarily related to the merger. See Note 5 to the consolidated financial statements.
Net gain on the sale of businesses was $3,294 million and related primarily to the divestiture of Praxair's European industrial gases business in connection with the merger. See Note 4 to the consolidated financial statements.

28

Other income (expenses) – net in 2018 was a $ 18 million benefit versus a $ 4 million benefit in 2017 (see Note 9 to the consolidated financial statements for a summary of major components). In North America, 2018 included a $30 million asset impairment charge which was more than offset by $43 million of gains on asset disposals. In Asia, 2018 included a $22 million asset impairment charge, offset by a litigation settlement gain.
Reported operating profit of $5,247 million in 2018 was $ 2,803 million , or 115% higher than reported operating profit of $ 2,444 million in 2017 . 2018 includes a net gain on sale of businesses of $3,294 million , partially offset by transaction costs and other charges of $309 million , and purchase accounting impacts of $714 million related to the Linde AG merger (see Notes 4, 5 and 3, respectively, to the consolidated financial statements). 2017 included transaction costs of $52 million (see Note 5 to the consolidated financial statements). Excluding the impact of these items, adjusted operating profit of $2,976 million in 2018 was $480 million, or 19% , higher than adjusted operating profit of $2,496 million in 2017 driven primarily by the merger. Higher volumes and price in the geographic segments and surface technologies also contributed to operating profit growth. A discussion of operating profit by segment is included in the segment discussion that follows.
Reported interest expense – net in 2018 increased $41 million, or 25% , versus 2017 . 2018 included charges of $26 million relating to the early redemption of notes and a decrease of $21 million related to purchase accounting impacts related to the fair value of debt acquired in the merger (see Notes 13 and 3 to the consolidated financial statements, respectively). Excluding these impacts, adjusted interest expense of $197 million increased $36 million, or 22%, largely attributable to interest on the debt acquired in the merger and lower capitalized interest. See Note 9 to the consolidated financial statements for further information relating to interest expense.
The reported effective tax rate ("ETR") for 2018 was 16.2% versus 44.9% in 2017 . The decrease in the ETR for the 2018 period versus the U.S. statutory rate of 21% was primarily due to the impact of the sale of Praxair's European industrial gases business. The increase in the ETR for the 2017 period versus the U.S. statutory rate of 35% was primarily due to the net $394 million charge related to the Tax Act. Excluding these and other smaller impacts as set forth in the "Non-GAAP financial measures" section of this MD&A, on an adjusted basis the ETR for the 2018 and 2017 periods was 23.8% and 27.2% , respectively. The decrease was driven primarily by the impact of the Tax Act enacted in the fourth quarter of 2017 which lowered the U.S. statutory tax rate from 35% in 2017 to 21% in 2018 (see Note 7 to the consolidated financial statements).
Linde’s equity investments are primarily located in the United States, China, and the Middle East. Equity income increased $9 million in 2018 versus 2017 and included charges of $9 million for purchase accounting impacts related to the fair value step up of equity investments acquired in the merger. Excluding this impact, equity income increased $18 million, primarily driven by income from equity investments acquired in the merger.
At December 31, 2018 , reported noncontrolling interests from continuing operations consisted primarily of noncontrolling shareholders’ investments in Asia (primarily in China) and surface technologies. Reported noncontrolling interests from continuing operations decreased $46 million to $15 million in 2018 from $61 million in 2017 . 2018 includes the impact of the merger and related purchase accounting impacts. Excluding these impacts, adjusted noncontrolling interests from continuing operations of $73 million increased $12 million , or 20% , primarily due to noncontrolling interests acquired in the merger.
Reported income from continuing operations for 2018 was $4,273 million , $3,026 million, or 243% , higher than reported income from continuing operations of $1,247 million in 2017 . Adjusted income from continuing operations of $2,121 million in 2018 was $431 million, or 26% , higher than adjusted income from continuing operations of $1,690 million in 2017 primarily due to higher adjusted operating profit and a lower effective tax rate.
Reported diluted earnings per share from continuing operations ("EPS") of $12.79 in 2018 increased $8.47 per diluted share, or 196% from $4.32 in 2017 . Adjusted diluted EPS of $6.35 in 2018 increased $0.50 per diluted share, or 9% , from adjusted diluted EPS of $5.85 in 2017 . The increase in adjusted diluted EPS was primarily due to the merger and higher adjusted income from continuing operations , partially offset by an increase in diluted shares resulting from equity acquired in the merger.
Other comprehensive losses for the year ended December 31, 2018 of $299 million resulted primarily from (i) a $221 million unfavorable impact in the funded status of Linde's retirement obligations and (ii) adverse currency translation adjustments of $76 million, net of a benefit of $318 million related to the release of currency translation adjustments on Praxair's European business (See Note 4 to the consolidated financial statements). The decrease in the funded status of retirement obligations was primarily the result of higher current year actuarial losses, as the impact of higher U.S. discount rates was largely offset by a lower actual return on assets. Unfavorable translation adjustments reflect the impact of translating local currency foreign subsidiary financial statements into U.S. dollars, and are largely driven by the strengthening of the U.S. dollar against major currencies including the Euro, Brazilian real and Canadian dollar.

29

Unfavorable currency translation adjustments included $343 million in South America and $149 million in Asia, partially offset by favorable currency translation adjustments of $231 million related to Linde AG (primarily Europe and Asia) representing translation impacts for the period from merger date through December 31, 2018. Remaining other comprehensive losses of $2 million relate to the amortization of deferred losses on the company's derivatives and unrealized losses on available for sale securities. Refer to the Currency section of the MD&A and Notes 9 and 18 to the consolidated financial statements.
The number of employees at December 31, 2018 was 80,820 , an increase of 54,359 employees from December 31, 2017 primarily driven by an increase of approximately 56,000 related to the merger partially offset by a decrease of approximately 2,500 from the divestiture of Praxair's European industrial gases business.
Other Financial Data
Earnings before interest taxes depreciation and amortization ("EBITDA") increased $3,458 million to $7,133 million in 2018 from $3,675 million in 2017 . EBITDA in 2018 includes a gain on sale of businesses and purchase accounting impacts, and both periods include transaction and other costs. Excluding the impacts of these items, adjusted EBITDA increased $789 million to $4,516 million in 2018 from $3,727 million in 2017 driven by the consolidation of Linde AG starting October 31, 2018, and higher adjusted income from continuing operations plus depreciation and amortization versus the prior year.
See the “Non-GAAP Financial Measures” section for definitions and reconciliation of these non-GAAP measures to reported amounts.

2017 Compared With 2016

Sales increased 9% to $11,437 million in 2017 compared to $10,534 million in 2016. Excluding favorable currency translation of 1% and higher cost pass-through, primarily natural gas, which increased sales by 2%, sales growth was 6%. Volume growth of 5% was driven by higher volumes in North America, Europe and Asia, including new project start-ups, and growth in all end-markets. Higher price increased sales by 1%.

Gross margin increased $297 million, or 6%, versus 2016 primarily due to higher sales. Gross margin as a percentage of sales declined to 43.5% in 2017 from 44.4% in 2016 largely driven by the contractual pass-through of higher natural gas costs to customers.

Selling, general and administrative expenses increased $62 million or 5% in 2017 to $1,207 million, and decreased to 10.6% of sales versus 10.9% of sales for 2016. Currency impacts increased SG&A by $14 million. Excluding currency impacts, SG&A increased $48 million driven by higher incentive compensation, acquisitions and cost inflation partially offset by cost reduction actions.

Depreciation and amortization expense increased $62 million versus 2016. Currency impacts increased depreciation and amortization expense by $15 million. Excluding currency impacts, depreciation and amortization expense increased $47 million, or 4%, primarily due to large project start ups and acquisitions.

During the year ended December 31, 2017, Linde recorded transaction costs and other charges of $52 million primarily related to the merger. During the year ended December 31, 2016, Linde recorded charges of $96 million related primarily to a cost reduction program. (Refer to Note 5 to the consolidated financial statements.)
    
Other income (expenses) – net in 2017 was a $4 million benefit versus a $23 million benefit in 2016 (see Note 9 to the consolidated financial statements for a summary of major components). Other income in 2016 is largely related to net gains on asset sales.

Reported operating profit of $2,444 million in 2017 was $197 million, or 9% higher than reported operating profit of $2,247 million in 2016. 2017 included transaction costs of $52 million. 2016 included charges of $96 million related to cost reduction actions. Refer to Note 5 of the consolidated financial statements for a further discussion of these items. Excluding the impact of these items, adjusted operating profit of $2,496 million in 2017 was $153 million, or 7% higher than adjusted operating profit of $2,343 million in 2016 driven by higher volumes and price. A discussion of operating profit by segment is included in the segment discussion that follows.

Reported interest expense – net in 2017 decreased $29 million, or 15%, versus 2016. 2016 included charges of $16 million relating to the early redemption of notes (see Note 13 to the consolidated financial statements). Excluding this

30

charge, adjusted interest expense decreased $13 million, or 7%, largely attributable to overall lower net debt. See Note 9 to the consolidated financial statements for further information relating to interest expense.

The reported effective tax rate for 2017 was 44.9% versus 26.9% in 2016. The ETR for the 2017 period included a net $394 million tax charge related to the Tax Act and a $5 million tax benefit related to transaction costs and a pension settlement (see Note 5 and Note 7 to the consolidated financial statements). The ETR for the 2016 period includes a $35 million tax benefit related to a pension settlement, bond redemption and cost reduction program and other charges (see Note 13 and Note 18 to the consolidated financial statements). Excluding these impacts, on an adjusted basis the ETR for the 2017 and 2016 periods was relatively flat at 27.2% and 27.1%, respectively.

Linde’s equity investments are primarily located in the United States, China, Italy, and the Middle East. Equity income increased $6 million in 2017.

At December 31, 2017, reported noncontrolling interests consisted primarily of noncontrolling shareholders’ investments in Asia (primarily in China), Europe (primarily in Italy), and surface technologies. Reported noncontrolling interests increased $23 million to $61 million in 2017 from $38 million in 2016. Reported noncontrolling interests for the year ended December 31, 2016 included a reduction of $5 million related to a cost reduction program. The remaining increase was driven by PG Technologies, LLC ("PGT"), a surface technologies joint venture with GE Aviation formed in the fourth quarter of 2016 (see Note 16 to the consolidated financial statements).

Reported income from continuing operations in 2017 was $1,247 million, or $253 million lower than $1,500 million in 2016. Adjusted income from continuing operations of $1,690 million in 2017 was $114 million, or 7% higher than $1,576 million in 2016. Adjusted income from continuing operations increased primarily due to higher adjusted operating profit and lower adjusted interest expense - net.

Reported diluted earnings per share from continuing operations of $4.32 in 2017 decreased $0.89 per diluted share, or 17% from $5.21 in 2016. The decrease included a $1.36 net income tax charge related to the Tax Act and a $0.17 charge related to transaction costs and other charges (see Note 7 and Note 5 to the consolidated financial statements). Adjusted diluted EPS from continuing operations of $5.85 in 2017 increased $0.37 per diluted share, or 7%, from adjusted diluted EPS from continuing operations of $5.48 in 2016. The increase in adjusted diluted EPS was primarily due to higher adjusted income from continuing operations.

Other comprehensive income for the year ended December 31, 2017 of $536 million includes favorable currency translation adjustments of $525 million and an $11 million favorable impact in the funded status of retirement obligations. The favorable translation adjustments reflect the impact of translating local currency foreign subsidiary financial statements into U.S. dollars, and are largely driven by the weakening of the U.S. dollar against the Canadian dollar, Euro, and Korean won. Favorable currency translation adjustments included $232 million in Asia, $153 million in North America and $106 million in Europe partially offset by unfavorable currency translation adjustments of $35 million in South America. The increase in the funded status of retirement obligations was primarily the result of lower current year actuarial losses, as the impact of lower U.S. discount rates was largely offset by a higher actual return on assets. Refer to the Currency section of the MD&A and Notes 9 and 18 to the consolidated financial statements.

The number of employees at December 31, 2017 was 26,461, a decrease of 37 employees from December 31, 2016. This decrease primarily reflects the impact of cost reduction programs implemented during the previous year.

Other Financial Data
EBITDA increased $265 million to $3,675 million in 2017 from $3,410 million in 2016. Adjusted EBITDA increased $221 million to $3,727 million in 2017 from $3,506 million in 2016 driven by higher adjusted income from continuing operations plus depreciation and amortization versus the prior year.
See the “Non-GAAP Financial Measures” section for definitions and reconciliation of these non-GAAP measures to reported amounts.





31

Related Party Transactions
The company’s related parties are primarily unconsolidated equity affiliates. The company did not engage in any material transactions involving related parties that included terms or other aspects that differ from those which would be negotiated with independent parties.

Environmental Matters

Linde’s principal operations relate to the production and distribution of atmospheric and other industrial gases, which historically have not had a significant impact on the environment. However, worldwide costs relating to environmental protection may continue to grow due to increasingly stringent laws and regulations, and Linde's ongoing commitment to rigorous internal standards. In addition, Linde may face physical risks from climate change and extreme weather.

Climate Change

Linde operates in jurisdictions that have, or are developing, laws and/or regulations to reduce or mitigate the perceived adverse effects of greenhouse gas ("GHG") emissions and faces a highly uncertain regulatory environment in this area. For example, the U.S. Environmental Protection Agency ("EPA") has promulgated rules requiring reporting of GHG emissions, and Linde and many of its suppliers and customers are subject to these rules. EPA has also promulgated regulations to restrict GHG emissions, including final rules regulating GHG emissions from light-duty vehicles and certain large manufacturing facilities, many of which are Linde suppliers or customers. In addition to these developments in the United States, GHGs are regulated in the European Union under the Emissions Trading System, which has wide implications for the company's customers and may impact certain operations of Linde in Europe. There are also requirements for mandatory reporting in Canada, which apply to certain Linde operations and will be used in developing cap-and-trade regulations on GHG emissions. These regulations are expected to impact certain Linde facilities in Canada. Climate change and energy efficiency laws and policies are also being widely introduced in jurisdictions throughout South America, Mexico and parts of Asia. China has announced plans to launch a national carbon emissions trading system, though it does not appear the regulations will have a direct impact on GHG emissions from Linde facilities. Among other impacts, such regulations are expected to raise the costs of energy, which is a significant cost for Linde. Nevertheless, Linde's long-term customer contracts routinely provide rights to recover increased electricity, natural gas, and other costs that are incurred by the company as a result of Climate Change regulation.

Linde anticipates continued growth in its hydrogen business, as hydrogen is essential to refineries that use it to remove sulfur from transportation fuels in order to meet ambient air quality standards in the United States and fuel standards in other regions. Hydrogen production plants and a large number of other manufacturing and electricity-generating plants have been identified in California and the European Union as a source of carbon dioxide emissions and these plants are subject to cap-and-trade regulations in those jurisdictions. Linde believes it will be able to mitigate the costs of these regulations through the terms of its product supply contracts. However, legislation that limits GHG emissions may impact growth by increasing capital, compliance, operating and maintenance costs and/or decreasing demand.

To manage business risks from current and potential GHG emission regulation as well as physical consequences of climate change, Linde actively monitors current developments, evaluates the direct and indirect business risks, and takes appropriate actions. Among others, actions include: increasing relevant resources and training; maintaining contingency plans; obtaining advice and counsel from expert vendors, insurance providers and industry experts; incorporating GHG provisions in commercial agreements; and conducting regular reviews of the business risks with management. Although there are considerable uncertainties, Linde believes that the business risk from potential regulations can be effectively managed through its commercial contracts. Additionally, Linde does not anticipate any material effects regarding its plant operations or business arising from potential physical risks of climate change.

Linde continuously seeks opportunities to optimize its own energy use and GHG footprint through rigorous energy efficiency, investment in renewable energy, and purchasing hydrogen as a chemical byproduct where feasible. Linde maintains related performance improvement targets and reports progress against these targets regularly to business management and annually to Linde's Board of Directors.

At the same time, Linde may benefit from business opportunities arising from governmental regulation of GHG and other emissions; uncertain costs of energy and certain natural resources; the development of renewable energy alternatives; and new technologies that help extract natural gas, improve air quality, increase energy efficiency and mitigate the impacts of climate change. Linde continues to develop new applications that can lower emissions, including GHG emissions, in

32

Linde's processes and help customers lower energy consumption and increase product throughput. Stricter regulation of water quality in emerging economies such as China provide a growing market for a number of gases, e.g., oxygen for wastewater treatment. Increased concern about drought in areas such as California may create a market for carbon dioxide for desalination. Renewable fuel standards in the European Union and U.S. create a market for second-generation biofuels which use industrial gases such as oxygen, carbon dioxide, and hydrogen.

Costs Relating to the Protection of the Environment

Environmental protection costs in 2018 were not significant. Linde anticipates that future annual environmental protection expenditures will be similar to 2018 , subject to any significant changes in existing laws and regulations. Based on historical results and current estimates, management does not believe that environmental expenditures will have a material adverse effect on the consolidated financial position, the consolidated results of operations or cash flows in any given year.

Legal Proceedings
See Note 19 to the consolidated financial statements for information concerning legal proceedings.
Retirement Benefits
Pensions
The net periodic benefit cost for the U.S. and International pension plans was $24 million in 2018 , $58 million in 2017 and $51 million in 2016 . The net periodic pension cost for 2018 includes a benefit of $44 million related to gains on settlements triggered as part of the Praxair European business divestiture and recognized on the Net gain on sale of businesses line. This also includes settlement charges related to lump sum payments (e.g., triggered by change in control or normal retirements) of $14 million in 2018 . Settlement charges for 2017 and 2016 were $2 million and $4 million , respectively.
The funded status (pension benefit obligation ("PBO") less the fair value of plan assets) for the U.S. plans was a deficit of $556 million as of December 31, 2018 versus a deficit of $560 million at December 31, 2017 . Actuarial gains on favorable liability experience that arose during the current year related primarily to higher discount rates and were largely offset by a lower return on assets. The funded status (pension benefit obligation ("PBO") less the fair value of plan assets) for international plans was a deficit of $1,241 million as of December 31, 2018 versus a deficit of $158 million at December 31, 2017. The deficit is primarily due to the Linde AG merger. Linde' AG's major international pension arrangements are in the United Kingdom and Germany.
Global pension contributions were $ 87 million in 2018 , $ 19 million in 2017 and $ 11 million in 2016 . At a minimum, Linde contributes to its pension plans to comply with local regulatory requirements (e.g., ERISA in the United States). Discretionary contributions in excess of the local minimum requirements are made based on many factors, including long-term projections of the plans' funded status, the economic environment, potential risk of overfunding, pension insurance costs and alternative uses of cash. Changes to these factors can impact the timing of discretionary contributions from year to year. Estimated required contributions for 2019 are currently expected to be in the range of $95 million to $160 million.
Linde assumes expected returns on plan assets for 2019 of 7.50% and 5.00% for the U.S. and international plans, respectively, which are consistent with the long-term expected return on its investment portfolio.
Excluding the impact of any settlements, 2019 consolidated pension expense is expected to be $6 million.
Postretirement Benefits Other Than Pensions ("OPEB")
The net periodic benefit cost for OPEB plans was a $4 million cost in 2018 , a $13 million benefit in 2017 and a $5 million cost in 2016 . 2017 includes a curtailment gain on a South American OPEB plan of $18 million.
In 2019, consolidated net periodic benefit costs for the OPEB plans is expected to be approximately $5 million.
Refer to the Critical Accounting Policies section and Note 18 to the consolidated financial statements for a more detailed discussion of the company’s retirement benefits, including a description of the various retirement plans and the assumptions used in the calculation of net periodic benefit cost and funded status.
Insurance
Linde purchases insurance to limit a variety of property and casualty risks, including those related to property, business interruption, third-party liability and workers’ compensation. Currently, the company self-retains up to $5 million per occurrence for workers’ compensation, general and vehicle liability in the United States and retains up to $5 million per

33

occurrence at its various properties worldwide. To mitigate its aggregate loss potential above these retentions, the company purchases insurance coverage from highly rated insurance companies. The company does not currently operate or participate in any captive insurance companies or other non-traditional risk transfer alternatives.
At December 31, 2018 and 2017 , the company had recorded a total of $60 million and $35 million , respectively, representing an estimate of the retained liability for the ultimate cost of claims incurred and unpaid as of the balance sheet dates. The estimated liability is established using statistical analysis and is based upon historical experience, actuarial assumptions and professional judgment. These estimates are subject to the effects of trends in loss severity and frequency and are subject to a significant degree of inherent variability. If actual claims differ from the company’s estimates, they will be adjusted at that time and financial results could be impacted.
Linde recognizes estimated insurance proceeds relating to damages at the time of loss only to the extent of incurred losses. Any insurance recoveries for business interruption and for property damages in excess of the net book value of the property are recognized only when realized or pending payments confirmed by its insurance companies.

34


SEGMENT DISCUSSION
Through October 31, 2018 the company’s operations were organized into five reportable segments, four of which have been determined on a geographic basis of segmentation: North America, Europe, South America and Asia. The company’s surface technologies business represents the fifth reportable segment. These segments are comprised of Praxair businesses for all years presented. As discussed above in the section "Business Overview - Merger of Praxair, Inc. and Linde AG" Linde AG became a separate sixth reportable segment effective with the merger on October 31, 2018 and, accordingly, Linde AG’s operations were included in the consolidated financial statements effective from the merger date (see Notes 1 and 3 to the consolidated financial statements for additional information).

The following summary of sales and operating profit by segment provides a basis for the discussion that follows (for additional information concerning Linde’s segments, see Note 20 to the consolidated financial statements). Linde evaluates the performance of its reportable segments based on operating profit, excluding the items not indicative of ongoing business trends.
(Dollar amounts in millions)
Year Ended December 31,
 
 
Variance
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
Sales
 
 
 
 
 
 
 
 
 
North America
$
6,420

 
$
6,023

 
$
5,592

 
7
 %
 
8
 %
Europe
1,592

 
1,558

 
1,392

 
2
 %
 
12
 %
South America
1,369

 
1,501

 
1,399

 
(9
)%
 
7
 %
Asia
1,964

 
1,738

 
1,555

 
13
 %
 
12
 %
Surface Technologies
682

 
617

 
596

 
11
 %
 
4
 %
Linde AG
2,873

 
—

 
—

 
 
 
 
 
$
14,900

 
$
11,437

 
$
10,534

 
30
 %
 
9
 %
Operating Profit
 
 
 
 
 
 
 
 
 
North America
$
1,648

 
$
1,517

 
$
1,431

 
9
 %
 
6
 %
Europe
316

 
301

 
274

 
5
 %
 
10
 %
South America
215

 
239

 
263

 
(10
)%
 
(9
)%
Asia
427

 
333

 
276

 
28
 %
 
21
 %
Surface Technologies
118

 
106

 
99

 
11
 %
 
7
 %
Linde AG
252

 
—

 
—

 
 
 
 
Segment operating profit
2,976

 
2,496

 
2,343

 
19
 %
 
7
 %
Transaction costs and other charges
(309
)
 
(52
)
 
(96
)
 
 
 
 
Net gain on sale of businesses
3,294

 
—

 
—

 
 
 
 
Purchase accounting impacts - Linde AG
(714
)
 
—

 
—

 
 
 
 
Consolidated operating profit
$
5,247

 
$
2,444

 
$
2,247

 
 
 
 
 

35

North America  
(Dollar amounts in millions)
Year Ended December 31,
 
 
Variance
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
 
 
 
 
 
 
 
 
 
 
Sales
$
6,420

 
$
6,023

 
$
5,592

 
7
%
 
8
%
Cost of sales, exclusive of depreciation and amortization
3,395

 
3,167

 
2,871

 
 
 
 
Gross margin
3,025

 
2,856

 
2,721

 
 
 
 
Operating expenses
717

 
708

 
676

 
 
 
 
Depreciation and amortization
660

 
631

 
614

 
 
 
 
Operating profit
$
1,648

 
$
1,517

 
$
1,431

 
9
%
 
6
%
Operating margin
25.7
%
 
25.2
%
 
25.6
%
 
 
 
 
 
 
2018 vs. 2017
 
2017 vs. 2016
 
 
% Change
 
% Change
 
 
Sales
 
Operating Profit
 
Sales
 
Operating Profit
Factors Contributing to Changes
 
 
 
 
 
 
 
 
Volume
 
4
%
 
6
 %
 
4
%
 
8
 %
Price/Mix
 
2
%
—

8
 %
 
2
%
 
5
 %
Cost pass-through
 
1
%
 
—
 %
 
2
%
 
—
 %
Currency
 
—
%
 
—
 %
 
—
%
 
—
 %
Acquisitions/Divestitures
 
—
%
 
—
 %
 
—
%
 
—
 %
Other
 
—
%
 
(5
)%
 
—
%
 
(7
)%
 
 
7
%
 
9
 %
 
8
%
 
6
 %
The following tables provide sales by end-market and distribution method:
 
 
 
 
 
 
 
% of Sales
 
% Change*
 
 
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
Sales by End-Markets
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
29
%
 
29
%
 
29
%
 
8
 %
 
4
%
Metals
 
11
%
 
12
%
 
12
%
 
5
 %
 
7
%
Energy
 
17
%
 
18
%
 
17
%
 
(1
)%
 
7
%
Chemicals
 
11
%
 
9
%
 
9
%
 
25
 %
 
5
%
Electronics
 
5
%
 
5
%
 
5
%
 
3
 %
 
17
%
Healthcare
 
7
%
 
7
%
 
7
%
 
7
 %
 
5
%
Food & Beverage
 
10
%
 
10
%
 
10
%
 
8
 %
 
5
%
Aerospace
 
2
%
 
2
%
 
2
%
 
21
 %
 
14
%
Other
 
8
%
 
8
%
 
9
%
 
(2
)%
 
1
%
 
 
100
%
 
100
%
 
100
%
 
 
 
 
* Excludes impact of currency, natural gas/precious metals cost pass-through and acquisitions/divestitures.

36

 
 
% of Sales
 
 
2018
 
2017
 
2016
Sales by Distribution Method
 
 
 
 
 
 
On-Site
 
30
%
 
30
%
 
28
%
Merchant
 
37
%
 
37
%
 
38
%
Packaged Gas
 
31
%
 
31
%
 
31
%
Other
 
2
%
 
2
%
 
3
%
 
 
100
%
 
100
%
 
100
%

The North America segment includes Linde’s industrial gases operations in the United States, Canada and Mexico.
Sales for 2018 increased $ 397 million , or 7% , versus 2017 . Higher cost pass-through, primarily higher natural gas prices passed through to hydrogen customers, increased sales by 1% with minimal impact on operating profit. Excluding cost pass–through, sales increased 6% primarily due to higher volumes to most end-markets and higher pricing.
Operating profit in 2018 increased $ 131 million , or 9% from 2017 driven by higher volumes and pricing. Operating profit for 2018 also included a $30 million asset impairment charge which was more than offset by $43 million of gains on asset disposals.
Sales for 2017 increased $431 million, or 8%, versus 2016. Higher cost pass-through, primarily higher natural gas prices passed through to hydrogen customers, increased sales by 2% with minimal impact on operating profit. Excluding cost pass–through, sales increased 6% primarily due to higher volumes to all end-markets and higher pricing.
Operating profit in 2017 increased $86 million, or 6% from 2016 driven by higher volumes and pricing which were partially offset by hurricane impacts and higher costs, primarily energy and purchased products.

Europe  
(Dollar amounts in millions)
Year Ended December 31,
 
 
Variance
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
 
 
 
 
 
 
 
 
 
 
Sales
$
1,592

 
$
1,558

 
$
1,392

 
2
%
 
12
%
Cost of sales, exclusive of depreciation and amortization
940

 
889

 
774

 
 
 
 
Gross margin
652

 
669

 
618

 
 
 
 
Operating expenses
190

 
199

 
189

 
 
 
 
Depreciation and amortization
146

 
169

 
155

 
 
 
 
Operating profit
$
316

 
$
301

 
$
274

 
5
%
 
10
%
Operating margin
19.8
%
 
19.3
%
 
19.7
%
 
 
 
 

37

 
 
2018 vs. 2017
 
2017 vs. 2016
 
 
% Change
 
% Change
 
 
Sales
 
Operating Profit
 
Sales
 
Operating Profit
Factors Contributing to Changes
 
 
 
 
 
 
 
 
Volume
 
1
 %
 
1
 %
 
5
%
 
8
 %
Price/Mix
 
2
 %
 
9
 %
 
1
%
 
3
 %
Cost pass-through
 
2
 %
 
—
 %
 
1
%
 
—
 %
Currency
 
4
 %
 
5
 %
 
2
%
 
2
 %
Acquisitions/Divestitures
 
(7
)%
 
(7
)%
 
3
%
 
2
 %
Other
 
—
 %
 
(3
)%
 
—
%
 
(5
)%
 
 
2
 %
 
5
 %
 
12
%
 
10
 %
The following tables provide sales by end-market and distribution method:
 
 
 
 
 
 
 
% of Sales
 
% Change*
 
 
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
Sales by End-Markets
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
20
%
 
20
%
 
21
%
 
5
 %
 
4
%
Metals
 
17
%
 
16
%
 
16
%
 
8
 %
 
9
%
Energy
 
4
%
 
5
%
 
5
%
 
(4
)%
 
1
%
Chemicals
 
12
%
 
12
%
 
14
%
 
6
 %
 
7
%
Electronics
 
7
%
 
7
%
 
7
%
 
2
 %
 
7
%
Healthcare
 
12
%
 
12
%
 
11
%
 
6
 %
 
4
%
Food & Beverage
 
15
%
 
14
%
 
12
%
 
11
 %
 
8
%
Aerospace
 
1
%
 
1
%
 
1
%
 
(12
)%
 
3
%
Other
 
12
%
 
13
%
 
13
%
 
(1
)%
 
8
%
 
 
100
%
 
100
%
 
100
%
 
 
 
 
* Excludes impact of currency, natural gas/precious metals cost pass-through and acquisitions/divestitures.
 
 
% of Sales

 
2018
 
2017
 
2016
Sales by Distribution Method
 

 

 

On-Site
 
18
%
 
18
%
 
19
%
Merchant
 
34
%
 
35
%
 
35
%
Packaged Gas
 
43
%
 
42
%
 
42
%
Other
 
5
%
 
5
%
 
4
%

 
100
%
 
100
%
 
100
%

Linde’s European industrial gases business operated in Spain, Ireland, Italy, France, Germany, Russia, the United Kingdom, Scandinavia and the Benelux region. In connection with the merger, Praxair was required to sell the majority of its European industrial gases business. The sale was completed on December 3, 2018 and the European business results are included in the consolidated financial statements through the date of sale. See Note 4 to the consolidated financial statements.
Sales in 2018 increased $ 34 million , or 2% from 2017 . The divestiture of the European businesses decreased sales by 7%. Excluding the divestiture impact, sales increased 9% from 2017. Higher cost pass-through increased sales by 2% with minimal impact on operating profit. Favorable currency translation increased sales by 4%. Higher volumes and higher price increased sales by 1% and 2%, respectively.

38

Operating profit in 2018 of $ 316 million increased $15 million, or 5% from 2017 . The divestiture of the European businesses decreased operating profit by 7%. Currency translation impact increased operating profit by 5%. Excluding the divestiture and currency impacts, operating profit increased 7% driven by higher price and higher volumes, partially offset by cost inflation.
Sales in 2017 increased $166 million, or 12% from 2016. Higher cost pass-through increased sales by 1% with minimal impact on operating profit. Favorable currency translation increased sales by 2%. Higher overall volumes, including new project start-ups, and higher price increased sales by 5% and 1%, respectively. The acquisition of a carbon dioxide business in the prior year largely serving the food and beverage end-market increased sales by 3%.
Operating profit in 2017 of $301 million increased $27 million, or 10% from 2016 driven by higher volumes and higher price. Favorable currency translation and the acquisition of the carbon dioxide business in the prior year each contributed 2% to operating profit growth.

South America  
(Dollar amounts in millions)
Year Ended December 31,
 
 
Variance
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
 
 
 
 
 
 
 
 
 
 
Sales
$
1,369

 
$
1,501

 
$
1,399

 
(9
)%
 
7
 %
Cost of sales, exclusive of depreciation and amortization
819

 
905

 
822

 
 
 
 
Gross margin
550

 
596

 
577

 
 
 
 
Operating expenses
187

 
198

 
181

 
 
 
 
Depreciation and amortization
148

 
159

 
133

 
 
 
 
Operating profit
$
215

 
$
239

 
$
263

 
(10
)%
 
(9
)%
Operating margin
15.7
%
 
15.9
%
 
18.8
%
 
 
 
 
 
 
2018 vs. 2017
 
2017 vs. 2016
 
 
% Change
 
% Change
 
 
Sales
 
Operating Profit
 
Sales
 
Operating Profit
Factors Contributing to Changes
 
 
 
 
 
 
 
 
Volume
 
1
 %
 
(5
)%
 
—
%
 
(2
)%
Price/Mix
 
2
 %
 
12
 %
 
1
%
 
3
 %
Cost pass-through
 
—
 %
 
—
 %
 
—
%
 
—
 %
Currency
 
(12
)%
 
(18
)%
 
6
%
 
4
 %
Acquisitions/Divestitures
 
—
 %
 
—
 %
 
—
%
 
—
 %
Other
 
—
 %
 
1
 %
 
—
%
 
(14
)%
 
 
(9
)%
 
(10
)%
 
7
%
 
(9
)%

39

The following tables provide sales by end-market and distribution method:
 
 
 
 
 
 
 
% of Sales
 
% Change*
 
 
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
Sales by End-Markets
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
15
%
 
17
%
 
18
%
 
(5
)%
 
(2
)%
Metals
 
32
%
 
31
%
 
31
%
 
4
 %
 
1
 %
Energy
 
2
%
 
2
%
 
2
%
 
1
 %
 
23
 %
Chemicals
 
10
%
 
10
%
 
9
%
 
7
 %
 
8
 %
Electronics
 
—
%
 
—
%
 
—
%
 
—
 %
 
—
 %
Healthcare
 
19
%
 
19
%
 
19
%
 
2
 %
 
3
 %
Food & Beverage
 
14
%
 
13
%
 
13
%
 
3
 %
 
2
 %
Aerospace
 
—
%
 
—
%
 
—
%
 
—
 %
 
—
 %
Other
 
8
%
 
8
%
 
8
%
 
11
 %
 
(7
)%
 
 
100
%
 
100
%
 
100
%
 
 
 
 
* Excludes impact of currency, natural gas/precious metals cost pass-through and acquisitions/divestitures.

 
 
% of Sales
 
 
2018
 
2017
 
2016
Sales by Distribution Method
 
 
 
 
 
 
On-Site
 
33
%
 
33
%
 
31
%
Merchant
 
38
%
 
38
%
 
40
%
Packaged Gas
 
27
%
 
27
%
 
27
%
Other
 
2
%
 
2
%
 
2
%
 
 
100
%
 
100
%
 
100
%
The South America segment includes Linde's industrial gases operations in Brazil, Argentina, Bolivia, Chile, Colombia, Paraguay, Peru, and Uruguay.
Sales in 2018 decreased $ 132 million , or 9% , versus 2017 . Unfavorable currency impacts decreased sales by 12% driven by the weakening of the Brazilian real and Argentine peso against the U.S. dollar. Excluding currency, sales increased 3% driven by higher price and volumes.
Operating profit decreased $ 24 million or 10% versus 2017 . Excluding unfavorable currency impacts, operating profit increased 8% driven by higher price and lower costs partially offset by unfavorable sales mix.
Effective July 1, 2018 Argentina was deemed a highly inflationary economy (see Note 5 to the consolidated financial statements).
Sales in 2017 increased $102 million, or 7%, versus 2016. Favorable currency translation impacts increased sales by 6% primarily due to the strengthening of the Brazilian Real against the U.S. dollar. Excluding currency, sales increased 1% driven by higher price. Volumes were flat as new project contribution was offset by negative underlying base volumes in Brazil due to weak industrial production. Growth in on-site volumes due to new plant start-ups accounted for the increase in on-site sales as a percentage of total segment sales.
Operating profit decreased $24 million or 9% versus 2016. Excluding currency translation, operating profit decreased 13% driven by unfavorable product sales mix and cost inflation which were partially offset by higher price.


40

Asia  
(Dollar amounts in millions)
Year Ended December 31,
 
 
Variance
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
 
 
 
 
 
 
 
 
 
 
Sales
$
1,964

 
$
1,738

 
$
1,555

 
13
%
 
12
%
Cost of sales, exclusive of depreciation and amortization
1,215

 
1,098

 
998

 
 
 
 
Gross margin
749

 
640

 
557

 
 
 
 
Operating expenses
118

 
122

 
102

 
 
 
 
Depreciation and amortization
204

 
185

 
179

 
 
 
 
Operating profit
$
427

 
$
333

 
$
276

 
28
%
 
21
%
Operating margin
21.7
%
 
19.2
%
 
17.7
%
 
 
 
 
 
 
2018 vs. 2017
 
2017 vs. 2016
 
 
% Change
 
% Change
 
 
Sales
 
Operating Profit
 
Sales
 
Operating Profit
Factors Contributing to Changes
 
 
 
 
 
 
 
 
Volume
 
9
%
 
14
 %
 
11
 %
 
19
 %
Price/Mix
 
2
%
 
14
 %
 
1
 %
 
8
 %
Cost pass-through
 
1
%
 
—
 %
 
1
 %
 
—
 %
Currency
 
1
%
 
1
 %
 
1
 %
 
1
 %
Acquisitions / Divestitures
 
—
%
 
—
 %
 
(2
)%
 
—
 %
Other
 
—
%
 
(1
)%
 
—
 %
 
(7
)%
 
 
13
%
 
28
 %
 
12
 %
 
21
 %
The following tables provide sales by end-market and distribution method:
 
 
 
 
 
 
 
% of Sales
 
% Change*
 
 
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
Sales by End-Markets
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
9
%
 
9
%
 
9
%
 
16
 %
 
13
 %
Metals
 
26
%
 
27
%
 
28
%
 
12
 %
 
15
 %
Energy
 
5
%
 
3
%
 
3
%
 
104
 %
 
14
 %
Chemicals
 
14
%
 
15
%
 
14
%
 
3
 %
 
20
 %
Electronics
 
34
%
 
33
%
 
33
%
 
13
 %
 
12
 %
Healthcare
 
1
%
 
1
%
 
1
%
 
10
 %
 
(1
)%
Food & Beverage
 
2
%
 
2
%
 
2
%
 
(6
)%
 
(1
)%
Aerospace
 
—
%
 
—
%
 
—
%
 
—
 %
 
—
 %
Other
 
9
%
 
10
%
 
10
%
 
(6
)%
 
10
 %
 
 
100
%
 
100
%
 
100
%
 
 
 
 
* Excludes impact of currency, natural gas/precious metals cost pass-through and acquisitions/divestitures.

41

 
 
% of Sales
 
 
2018
 
2017
 
2016
Sales by Distribution Method
 
 
 
 
 
 
On-Site
 
50
%
 
50
%
 
50
%
Merchant
 
32
%
 
30
%
 
29
%
Packaged Gas
 
11
%
 
13
%
 
14
%
Other
 
7
%
 
7
%
 
7
%
 
 
100
%
 
100
%
 
100
%

The Asia segment includes Linde’s industrial gases operations in China, India, Korea and Thailand, with smaller operations in Taiwan and the Middle East.
Sales in 2018 increased $226 million , or 13% versus 2017. Cost pass-through, primarily energy, and currency impacts each increased sales by 1%. Volume growth of 9% was primarily attributable to base volume growth in China, Korea and India and new project start-ups in China. Higher price increased sales by 2% driven by China. Sales growth was the strongest in the metals, energy and electronics end-markets.
Operating profit for 2018 increased $ 94 million , or 28% , as compared to the prior year driven by higher volumes and price. Operating profit for 2018 included a $22 million asset impairment charge, offset by a litigation settlement gain.
Sales in 2017 increased $183 million, or 12% versus 2016. Favorable currency translation and cost pass-through each increased sales by 1%. Divestitures decreased sales by 2% due to the sale of an ownership interest in a majority-owned joint venture in India in 2016. Excluding these impacts, sales increased 12% driven by base volume growth in China, Korea and India, new project start-ups in China and Korea and higher price.
Operating profit for 2017 increased $57 million, or 21%, as compared to the prior year driven by higher volumes and price, partially offset by cost inflation.

Surface Technologies  
(Dollar amounts in millions)
Year Ended December 31,
 
 
Variance
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
 
 
 
 
 
 
 
 
 
 
Sales
$
682

 
$
617

 
$
596

 
11
%
 
4
%
Cost of sales, exclusive of depreciation and amortization
448

 
402

 
391

 
 
 
 
Gross margin
234

 
215

 
205

 
 
 
 
Operating expenses
72

 
69

 
66

 
 
 
 
Depreciation and amortization
44

 
40

 
40

 
 
 
 
Operating profit
$
118

 
$
106

 
$
99

 
11
%
 
7
%
Operating margin
17.3
%
 
17.2
%
 
16.6
%
 
 
 
 

42

 
 
2018 vs. 2017
 
2017 vs. 2016
 
 
% Change
 
% Change
 
 
Sales
 
Operating Profit
 
Sales
 
Operating Profit
Factors Contributing to Changes
 
 
 
 
 
 
 
 
Volume/Price
 
8
%
 
19
 %
 
2
%
 
4
%
Cost pass-through
 
1
%
 
—
 %
 
—
%
 
—
%
Currency
 
2
%
 
2
 %
 
—
%
 
—
%
Acquisitions/Divestitures
 
—
%
 
—
 %
 
2
%
 
1
%
Other
 
—
%
 
(10
)%
 
—
%
 
2
%
 
 
11
%
 
11
 %
 
4
%
 
7
%

The following table provides sales by end-market:
 
 
 
 
 
 
 
% of Sales
 
% Change*
 
 
2018
 
2017
 
2016
 
2018 vs. 2017
 
2017 vs. 2016
Sales by End-Markets
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
12
%
 
11
%
 
11
%
 
22
 %
 
2
 %
Metals
 
8
%
 
9
%
 
9
%
 
(4
)%
 
—
 %
Energy
 
18
%
 
19
%
 
23
%
 
4
 %
 
(12
)%
Chemicals
 
2
%
 
2
%
 
2
%
 
(4
)%
 
(7
)%
Electronics
 
1
%
 
1
%
 
1
%
 
33
 %
 
32
 %
Healthcare
 
—
%
 
—
%
 
—
%
 
—
 %
 
—
 %
Food & Beverage
 
3
%
 
3
%
 
4
%
 
(3
)%
 
(4
)%
Aerospace
 
45
%
 
44
%
 
40
%
 
12
 %
 
11
 %
Other
 
11
%
 
11
%
 
10
%
 
5
 %
 
2
 %
 
 
100
%
 
100
%
 
100
%
 
 
 
 
* Excludes impact of currency, natural gas/precious metals cost pass-through and acquisitions/divestitures.

Surface Technologies provides high-performance coatings and thermal-spray powders and equipment in the Americas, Europe, and Asia.
Sales increased $ 65 million , or 11% versus 2017 primarily due to higher volumes to the aerospace and manufacturing end-markets and higher price. Currency translation increased sales by 2%.
Operating profit increased $ 12 million , or 11% versus 2017 . Currency translation increased operating profit by 2%. Excluding currency impacts, operating profit increased 9% driven by increased volumes and price partially offset by project ramp up costs.
Sales increased $21 million, or 4% versus 2016 primarily due to higher volumes to the aerospace end-market and acquisitions driven by a majority-owned joint venture with GE aviation.
Operating profit increased $7 million, or 7% versus 2016 due to higher volumes and acquisitions.







43

Linde AG  
(Dollar amounts in millions)
Year Ended December 31,
 
2018
 
 
Sales
$
2,873

Cost of sales, exclusive of depreciation and amortization
1,899

Gross margin
974

Operating expenses
440

Depreciation and amortization
282

Operating profit
$
252

Operating margin
8.8
%

The following tables provide sales by end-market and distribution method:
 
 
 
 
 
% of Sales
 
 
2018
Sales by End-Markets
 
 
Manufacturing
 
19
%
Metals
 
9
%
Chemicals & Energy
 
13
%
Electronics
 
7
%
Healthcare
 
23
%
Food & Beverage
 
6
%
Engineering
 
18
%
Other
 
5
%
 
 
100
%
* Excludes impact of currency, natural gas/precious metals cost pass-through and acquisitions/divestitures.

 
 
% of Sales
 
 
2018
 
Sales by Distribution Method
 
 
 
On-Site
 
17
%
 
Merchant
 
18
%
 
Packaged Gas
 
44
%
 
Other
 
21
%
 
 
 
100
%
 

 
Linde AG became a sixth reportable segment effective with the merger on October 31, 2018. Sales of $2,873 million and operating profit of $252 million represent results for the two month period from merger date through December 31, 2018.




44

Currency
The results of Linde’s non-U.S. operations are translated to the company’s reporting currency, the U.S. dollar, from the functional currencies used in the countries in which the company operates. For most foreign operations, Linde uses the local currency as its functional currency. There is inherent variability and unpredictability in the relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Linde’s results of operations in any given period.
To help understand the reported results, the following is a summary of the significant currencies underlying Linde’s consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):  
   
Percent of
2018
Consolidated
Sales
 
Statements of Income
 
Balance Sheets
   
Average Year Ended December 31,    
 
December 31,
Currency
2018
 
2017
 
2016
 
2018
 
2017
Euro
16
%
 
0.85

 
0.89

 
0.90

 
0.87

 
0.83

Brazilian real
7
%
 
3.63

 
3.19

 
3.47

 
3.87

 
3.31

Chinese yuan
7
%
 
6.60

 
6.76

 
6.64

 
6.88

 
6.51

Canadian dollar
6
%
 
1.30

 
1.30

 
1.32

 
1.36

 
1.26

Mexican peso
4
%
 
19.20

 
18.86

 
18.65

 
19.65

 
19.66

Korean won
3
%
 
1,100

 
1,131

 
1,160

 
1,111

 
1,067

British pound
3
%
 
0.75

 
0.78

 
0.74

 
0.78

 
0.74

Indian rupee
3
%
 
68

 
65

 
67

 
70

 
64

Australia dollars
1
%
 
1.34

 
—

 
—

 
1.42

 
—

Taiwan dollars
1
%
 
30.13

 
30.43

 
32.25

 
30.55

 
29.73

Norwegian krone
<1%

 
8.13

 
8.26

 
8.39

 
8.64

 
8.20

Argentina peso (a)
<1%

 
26.19

 
16.51

 
14.74

 
37.70

 
18.65

 
(a) Effective July 1, 2018 Argentina was deemed a highly inflationary economy (see Note 5 to the consolidated financial statements).


45

LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA  
(Millions of dollars)  
Year Ended December 31,
2018
 
2017
 
2016
Net Cash Provided by (Used for)
 
 
 
 
 
Operating Activities
 
 
 
 
 
Income from continuing operations (including noncontrolling interests)
$
4,288

 
$
1,308

 
$
1,538

Non-cash charges (credits):
 
 
 
 
 
    Add: Transaction costs and other charges, net of payments (a)
40

 
26

 
83

 Add: Amortization of merger-related inventory step-up
368

 
—

 
—

    Less: Net gain on sale of businesses (b)
(2,923
)
 
—

 
—

    Add: Tax Act income tax charge, net
(61
)
 
394

 
—

    Add: Depreciation and amortization
1,830

 
1,184

 
1,122

    Add (Less): Deferred income taxes, excluding Tax Act
(187
)
 
136

 
(13
)
    Add (Less): non-cash charges and other
237

 
102

 
(4
)
        Income from continuing operations adjusted for non-cash charges and other
3,592

 
3,150

 
2,726

Less: Pension contributions
(87
)
 
(19
)
 
(11
)
Add (Less): Working capital
202

 
(158
)
 
52

Add (Less): Other
(53
)
 
68

 
22

Net cash provided by operating activities
$
3,654

 
$
3,041

 
$
2,789

Investing Activities
 
 
 
 
 
Capital expenditures
$
(1,883
)
 
$
(1,311
)
 
$
(1,465
)
Acquisitions, net of cash acquired
(25
)
 
(33
)
 
(363
)
Divestitures and asset sales, net of cash divested
5,908

 
30

 
58

Cash acquired in merger transaction
1,363

 
—

 
—

Net cash provided by (used for) investing activities
$
5,363

 
$
(1,314
)
 
$
(1,770
)
Financing Activities
 
 
 
 
 
Debt increases (decreases) – net
$
(2,908
)
 
$
(771
)
 
$
357

Issuances (purchases) of ordinary shares – net
(522
)
 
108

 
(89
)
Cash dividends – Linde plc shareholders
(1,166
)
 
(901
)
 
(856
)
Noncontrolling interest transactions and other
(402
)
 
(92
)
 
(71
)
Net cash (used) for financing
$
(4,998
)
 
$
(1,656
)
 
$
(659
)
 
 
 
 
 
 
Effect of exchange rate changes on cash
$
(60
)
 
$
22

 
$
17

Cash and cash equivalents, end-of-period
$
4,466

 
$
617

 
$
524

 
 
 
 
 
 
____________________
(a)
See Note 5 to the consolidated financial statements.
(b)
See Note 4 to the consolidated financial statements.
Cash increased $3,849 million in 2018 versus 2017 . The primary sources of cash in 2018 were cash flows from operations of $3,654 million , proceeds from divestitures and asset sales of $5,908 million and cash acquired in the merger of $1,363 million . The primary uses of cash included capital expenditures of $1,883 million , cash dividends to shareholders of $1,166 million , net debt repayments of $2,908 million and net purchases of ordinary shares of $522 million .


46

Cash Flows From Operations  
CHART-5B306AFBFC535ACFA75.JPG

2018 compared with 2017
Cash flows from operations was $3,654 million , or 25% of sales, an increase of $613 million from $3,041 million , or 27% of sales in 2017. The increase was primarily attributable to the merger, higher net income adjusted for non-cash charges and favorable working capital requirements, partially offset by unfavorable changes in other long–term assets and liabilities and higher pension contributions.

2017 compared with 2016
Cash flows from operations was $3,041 million, or 27% of sales, an increase of $252 million from $2,789 million, or 26% of sales in 2016. The increase was primarily attributable to higher net income adjusted for non-cash charges, a $103 million increase in dividends received from equity companies, primarily in China, and favorable changes in other long–term assets and liabilities which were partially offset by higher working capital requirements and pension contributions.



 












47

Investing
CHART-FB759303A8545C22B1C.JPG

2018 compared with 2017
Net cash used provided by investing activities of $5,363 million increased $6,677 million from 2017 primarily driven by proceeds from the divestiture of Praxair's European business and cash acquired in the merger, partially offset by higher capital expenditures.
Capital expenditures in 2018 were $1,883 million , an increase of $572 million from 2017 , driven primarily by the merger with Linde AG. Capital expenditures during 2018 related primarily to investments in new plant and production equipment for growth and density. Approximately 50% of the capital expenditures were in North America with the rest in Asia, Europe, South America and Linde AG.
Acquisition expenditures in 2018 were $25 million , a decrease of $8 million from 2017 . Additionally, $1,363 million of cash was acquired in the merger (see Note 3 to the consolidated financial statements).
Divestitures and asset sales in 2018 totaled $5,908 million primarily driven by proceeds from merger-related divestitures including $5,562 million from the sale of Praxair's European business and $214 million related to the sale of Praxair's Italian joint venture (see Note 4 to the consolidated financial statements).
2017 compared with 2016
Net cash used for investing activities of $1,314 million decreased $456 million versus 2016 due to lower acquisitions and capital expenditures, partially offset by lower proceeds from divestiture and asset sales.

Capital expenditures in 2017 were $1,311 million, a decrease of $154 million from 2016. Capital expenditures during 2017 related primarily to investments in new plant and production equipment for growth and density. Approximately 60% of the capital expenditures were in North America with the rest in Asia, Europe and South America.

Acquisition expenditures in 2017 were $33 million, a decrease of $330 million from 2016. Acquisitions in the prior year were primarily comprised of the acquisition of a European carbon dioxide business and packaged gases businesses in North America and Europe (see Note 3 to the consolidated financial statements).

Divestitures and asset sales in 2017 totaled $30 million of proceeds from asset sales. 2016 divestitures and asset sales were $58 million which included proceeds from asset sales and the sale of an ownership interest in a majority-owned joint venture in India.

48

Financing
Linde’s financing strategy is to secure long-term committed funding by issuing public notes and debentures and commercial paper backed by a long-term bank credit agreement. Linde’s international operations are funded through a combination of local borrowing and inter-company funding to minimize the total cost of funds and to manage and centralize currency exchange exposures. As deemed necessary, Linde manages its exposure to interest-rate changes through the use of financial derivatives (see Note 14 to the consolidated financial statements and Item 7A. Quantitative and Qualitative Disclosures About Market Risk).
Cash used by financing activities was $4,998 million in 2018 compared to $1,656 million in 2017 . The primary financing uses of cash were for net debt repayments, cash dividends and net purchases of Linde ordinary shares. Cash dividends of $1,166 million increased $265 million from 2017 driven primarily by higher shares outstanding after the merger and a 5% increase in dividends per share from $3.15 to $3.30. Net purchases of ordinary shares were $522 million in 2018 versus net issuances of ordinary shares of $108 million in 2017 driven by increased share repurchases. Noncontrolling interest transactions and other payments was $402 million in 2018 versus $92 million in 2017. Amounts paid in 2018 include $315 million for the purchase of the noncontrolling interest in Praxair's Italian joint venture in a merger-related transaction (see Note 4 to the consolidated financial statements) and $25 million in interest related to the early redemption of bonds (see Note 13 to the consolidated financial statements); while 2017 include dividends paid to NCI joint venture partners and repayment of project advances. The cash used for debt repayments-net of $2,908 million increased $2,137 million from $771 million during 2017 while cash increased $3,849 million. Net debt (debt minus cash) increased $2,447 million primarily due to debt acquired in the merger partially offset by the repayments of debt and increased cash.
The company believes that it has sufficient operating flexibility, cash reserves, and funding sources to maintain adequate amounts of liquidity to meet its business needs around the world. In March 2019, Linde's credit ratings as reported by Standard & Poor’s and Moody’s were A-1 and P-1 for short-term debt, respectively, and A and A2 for long-term debt, respectively.
Note 13 to the consolidated financial statements includes information with respect to the company’s debt repayments in 2018 , current debt position, debt covenants and the available credit facilities; and Note 14 includes information relating to derivative financial instruments. Linde's credit facilities are with major financial institutions and are non-cancelable until maturity. Therefore, the company believes the risk of the financial institutions being unable to make required loans under the credit facilities, if requested, to be low. Linde’s major bank credit and long-term debt agreements contain standard covenants. The company was in compliance with these covenants at December 31, 2018 and expects to remain in compliance for the foreseeable future.
Linde’s total net debt outstanding at December 31, 2018 was $10,830 million , $2,447 million higher than $8,383 million at December 31, 2017 . The December 31, 2018 net debt balance includes $14,258 million in public securities, $1,038 million representing primarily worldwide bank borrowings net of $4,466 million of cash. Linde’s global effective borrowing rate was approximately 1.96% for 2018 .
In March 2018, Linde repaid $500 million of 1.20% notes that became due and in November 2018, Linde repaid $475 million of 1.25% notes that became due.
Additionally, in December 2018, Linde repaid $600 million of 4.50% notes due 2019 and €600 million of 1.50% notes due 2020 resulting in a $26 million interest charge ($20 million after-tax, or $0.06 per diluted share) (see Note 13 to the consolidated financial statements).
Also in December 2018, Linde repaid €750 million of 3.125% notes that became due.
In February 2019, Linde repaid $500 million of 1.90% notes that became due.
In June 2018, the company's $500 million 364-day revolving credit facility with a syndicate of banks expired and was not renewed.

On December 10, 2018 the company announced a $1.0 billion share repurchase program, of which $629 million had been repurchased through December 31, 2018. This program was completed in February of 2019. On January 22, 2019, the company’s board of directors approved the additional repurchase of $6.0 billion of its ordinary shares with a stated expiration date of February 1, 2021. For additional information related to the share repurchase programs, see Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

CONTRACTUAL OBLIGATIONS
The following table sets forth Linde’s material contract obligations and other commercial commitments as of December 31, 2018 :  

49

(Millions of dollars)
Due or expiring by December 31,
   
2019
 
2020
 
2021
 
2022
 
2023
 
Thereafter
 
Total
Long-term debt obligations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt and capitalized lease maturities (Note 13)
$
1,523

 
$
1,642

 
$
1,864

 
$
2,336

 
$
1,788

 
$
4,658

 
$
13,811

Contractual interest
315

 
283

 
232

 
169

 
141

 
621

 
1,761

Operating leases (Note 6)
305

 
236

 
186

 
145

 
102

 
326

 
1,300

Retirement obligations
245

 
29

 
30

 
31

 
31

 
180

 
546

Unconditional purchase obligations
842

 
767

 
721

 
675

 
583

 
3,267

 
6,855

Construction commitments
2,100

 
902

 
249

 
4

 
—

 
—

 
3,255

Total Contractual Obligations
$
5,330

 
$
3,859

 
$
3,282

 
$
3,360

 
$
2,645

 
$
9,052

 
$
27,528

Contractual interest on long-term debt of $ 1,761 million represents interest the company is contracted to pay on outstanding long-term debt, current portion of long-term debt and capital lease obligations, calculated on a basis consistent with planned debt maturities, excluding the interest impact of interest rate swaps. At December 31, 2018 , Linde had fixed-rate debt of $12,565 million and floating-rate debt of $2,731 million . The rate assumed for floating-rate debt was the rate in effect at December 31, 2018 .
Retirement obligations of $ 546 million include estimates of pension plan contributions and expected future benefit payments for unfunded pension and OPEB plans. Pension plan contributions are forecasted for 2019 only. For purposes of the table, $125 million of estimated required contributions have been included for 2019. Expected future unfunded pension and OPEB benefit payments are forecasted only through 2028. Contribution and unfunded benefit payment estimates are based upon current valuation assumptions. Estimates of pension contributions after 2019 and unfunded benefit payments after 2028 are not included in the table because the timing of their resolution cannot be estimated. Retirement obligations are more fully described in Note 18 to the consolidated financial statements.
Unconditional purchase obligations of $6,855 million represent contractual commitments under various long and short-term take-or-pay arrangements with suppliers and are not included on Linde's balance sheet. These obligations are primarily minimum-purchase commitments for helium, electricity, natural gas and feedstock used to produce atmospheric and process gases. A significant portion of these obligations is passed on to customers through similar take-or-pay or other contractual arrangements. Purchase obligations that are not passed along to customers through such contractual arrangements are subject to market conditions, but do not represent a material risk to Linde. Approximately $2,224 million of the purchase obligations relates to power and is intended to secure the uninterrupted supply of electricity and feedstock to Linde's plants to reliably satisfy customer product supply obligations, and extend through 2030. Certain of the power contracts contain various cancellation provisions requiring supplier agreement, and many are subject to annual escalations based on local inflation factors.

Construction commitments of $3,255 million represent outstanding commitments to complete authorized construction projects as of December 31, 2018. A significant portion of Linde’s capital spending is related to the construction of new production facilities to satisfy customer commitments which may take a year or more to complete.

Liabilities for uncertain tax positions totaling $367 million, including interest and penalties, and tax liabilities for deemed repatriation of earnings of $291 million are not included in the table because the timing of their resolution cannot be estimated. See Note 7 to the consolidated financial statements for disclosures surrounding uncertain income tax positions.
OFF-BALANCE SHEET ARRANGEMENTS
As discussed in Note 19 to the consolidated financial statements, at December 31, 2018 , Linde had undrawn outstanding letters of credit, bank guarantees and surety bonds entered into in connection with normal business operations and they are not reasonably likely to have a material impact on Linde’s consolidated financial condition, results of operations, or liquidity.
CRITICAL ACCOUNTING POLICIES
The policies discussed below are considered by management to be critical to understanding Linde’s financial statements and accompanying notes prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Their application places significant importance on management’s judgment as a result of the need to make estimates of matters that are inherently uncertain. Linde’s financial position, results of operations and cash flows

50

could be materially affected if actual results differ from estimates made. These policies are determined by management and have been reviewed by Linde’s Audit Committee.
Purchase Accounting

As discussed below, Linde AG’s assets and liabilities were measured at fair value as of the date of the merger on a preliminary basis. Estimates of fair value represent management's best estimate of assumptions about future events and uncertainties. In determining the fair value, Linde utilized various forms of the income, cost and market approaches depending on the asset or liability being fair valued. The estimation of fair value includes significant judgments related to future cash flows (sales, costs, customer attrition rates, and contributory asset charges), discount rates, competitive trends, market comparables and others. Inputs were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates. The estimates and assumptions used to determine the preliminary estimated fair value assigned to each class of assets and liabilities, as well as asset lives, have a material impact to the company's consolidated financial statements, and are based upon assumptions believed to be reasonable but that are inherently uncertain.

Due to the timing of the business combination, the magnitude of and multi-national nature of the net assets acquired, and the hold separate order (See Note 1 to the consolidated financial statements) which deferred integration of the two merged companies, at December 31, 2018 the valuation process to determine the fair values is not complete and further adjustments are expected in 2019. The company has estimated the preliminary fair value of net assets acquired based on information currently available and will continue to adjust those estimates as additional information becomes available. The areas where the fair value assessments are not finalized and, therefore, subject to adjustment during the measurement period relate primarily to identifiable intangible assets, property, plant and equipment, net assets held for sale, equity investments, income taxes, noncontrolling interests, contingencies and goodwill. As the company finalizes the fair value of net assets acquired and liabilities assumed, additional purchase price allocation adjustments will be recorded during the measurement period, but no later than one year from the date of the acquisition. The company will reflect measurement period adjustments in the period in which the adjustments are determined. Any adjustments to the fair value of assets and liabilities acquired will be offset to goodwill and any income statement impacts will be recorded at that time.
See Note 3 to the consolidated financial statements for additional information.

Depreciation and Amortization
Depreciable Lives of Property, Plant and Equipment
Linde’s net property, plant and equipment at December 31, 2018 was $29,717 million , representing 32% of the company’s consolidated total assets and including $19,491 million of Linde AG assets acquired at fair value in the merger. Depreciation expense for the year ended December 31, 2018 was $1,615 million , or 13% of total operating costs. This includes $225 million of purchase accounting impacts. Management judgment is required in the determination of the estimated depreciable lives that are used to calculate the annual depreciation expense and accumulated depreciation.
Property, plant and equipment are recorded at cost and depreciated over the assets’ estimated useful lives on a straight-line basis for financial reporting purposes. The estimated useful life represents the projected period of time that the asset will be productively employed by the company and is determined by management based on many factors, including historical experience with similar assets, technological life cycles, geographic locations and contractual supply relationships with on-site customers. Circumstances and events relating to these assets, such as on-site contract modifications, are monitored to ensure that changes in asset lives or impairments (see “Asset Impairments”) are identified and prospective depreciation expense or impairment expense is adjusted accordingly. Linde’s largest asset values relate to cryogenic air-separation production plants with depreciable lives of principally 15 years.
Based upon the assets as of December 31, 2018 , if depreciable lives of machinery and equipment, on average, were increased or decreased by one year, annualized depreciation expense, including Linde AG for a full year on a pro forma basis, would be decreased by approximately $528 million or increased by approximately $390 million , respectively.
See Notes 3, 9 and 10 to the consolidated financial statements for additional information.
Amortization of Other Intangible Assets
Linde’s net other intangible assets at December 31, 2018 was $16,223 million , representing 17% of the company’s consolidated total assets and including $15,636 million of Linde AG other intangible assets acquired at fair value in the merger ($13,967 million with finite lives and $1,669 million with indefinite lives). Amortization expense related to finite-lived intangible assets for the year ended December 31, 2018 was $215 million , or 2% of total operating costs. This

51

includes $121 million of purchase accounting impacts. Management judgment is required in the determination of the estimated amortizable lives that are used to calculate the annual amortization expense and accumulated amortization. See Note 12 to the consolidated financial statements.
Based upon the assets as of December 31, 2018 , if amortization lives of other intangible assets, on average, were increased or decreased by one year, annualized amortization expense, including Linde AG for a full year on a pro forma basis, would be decreased by approximately $65 million or increased by approximately $49 million , respectively.
See Notes 3, 9, and 12 to the consolidated financial statements for additional information.
Revenue Recognition
Long Term Construction Contracts    
The company designs and manufactures equipment for air separation and other varied gas production and processing plants manufactured specifically for end customers. Revenue from sale of equipment is generally recognized over time as Linde has an enforceable right to payment for performance completed to date and performance does not create an asset with alternative use. For contracts recognized over time, revenue is recognized primarily using a cost incurred input method. Costs incurred to date relative to total estimated costs at completion are used to measure progress toward satisfying performance obligations. Costs incurred include material, labor, and overhead costs and represent work contributing and proportionate to the transfer of control to the customer. Contract modifications are typically accounted for as part of the existing contract and are recognized as a cumulative adjustment for the inception-to-date effect of such change. We assess performance as progress towards completion is achieved on specific projects, earnings will be impacted by changes to our forecast of revenues and costs on these projects.
Pension Benefits
Pension benefits represent financial obligations that will be ultimately settled in the future with employees who meet eligibility requirements. Because of the uncertainties involved in estimating the timing and amount of future payments, significant estimates are required to calculate pension expense and liabilities related to the company’s plans. The company utilizes the services of independent actuaries, whose models are used to facilitate these calculations.
Several key assumptions are used in actuarial models to calculate pension expense and liability amounts recorded in the financial statements. Management believes the three most significant variables in the models are the expected long-term rate of return on plan assets, the discount rate, and the expected rate of compensation increase. The actuarial models also use assumptions for various other factors, including employee turnover, retirement age, and mortality. Linde management believes the assumptions used in the actuarial calculations are reasonable, reflect the company’s experience and expectations for the future and are within accepted practices in each of the respective geographic locations in which it operates. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. The sensitivities to each of the key assumptions presented below exclude the impact of special items that occurred during the year (e.g., settlement gains from divestitures, settlement charges resulting from change in control provisions, etc.).
The weighted-average expected long-term rates of return on pension plan assets were 7.62% for U.S. plans and 5.13% for international plans for the year ended December 31, 2018 ( 8.00% and 7.91% , respectively at December 31, 2017 ). The expected long term rate of return on the U.S. and international plan assets is estimated based on the plans' investment strategy and asset allocation, historical capital market performance and, to a lesser extent, historical plan performance. A 0.50% change in these expected long-term rates of return, with all other variables held constant, would change Linde’s pension expense by approximately $38 million.
The company has consistently used a market-related value of assets rather than the fair value at the measurement date to determine annual pension expense. The market-related value recognizes investment gains or losses over a five-year period. As a result, changes in the fair value of assets from year to year are not immediately reflected in the company’s annual pension expense. Instead, annual pension expense in future periods will be impacted as deferred investment gains or losses are recognized in the market-related value of assets over the five-year period. The consolidated market-related value of assets was $8,530 million, or $286 million higher than the fair value of assets of $8,244 million at December 31, 2018 . These net deferred investment gains of $286 million will be recognized in the calculation of the market-related value of assets ratably over the next four years and will impact future pension expense. Future actual investment gains or losses will impact the market-related value of assets and, therefore, will impact future annual pension expense in a similar manner.
Discount rates are used to calculate the present value of plan liabilities and pension costs and are determined annually by management. For fiscal year 2016, Praxair changed the approach that it used to determine the service and interest cost components of pension and OPEB expense for significant plans to the spot rate approach. Linde AG also adopted the spot

52

rate approach for its material U.S. and international pension plans as of the merger date. Under this approach U.S. plans that do not use the spot rate approach continue to determine discount rates by using a cash flow matching model provided by the company's independent actuaries. The model includes a portfolio of corporate bonds graded Aa or better by at least half of the ratings agencies and matches the U.S. plans' projected cash flows to the calculated spot rates. Discount rates for the remaining international plans are based on market yields for high-quality fixed income investments representing the approximate duration of the pension liabilities on the measurement date. Refer to Note 18 to the consolidated financial statements for a summary of the discount rates used to calculate plan liabilities and benefit costs, and to the Retirement Benefits section of the Consolidated Results and Other Information section of this MD&A for a further discussion of 2018 benefit costs. A 0.50% change in discount rates, with all other variables held constant, would decrease/increase Linde’s pension expense by approximately $24 million. A 0.50% reduction in discount rates would increase the PBO by approximately $806 million whereas a 0.50% increase in discount rates would have a favorable impact to the PBO of approximately $710 million.
The weighted-average expected rate of compensation increase was 3.25% for U.S. plans and 2.38% for international plans at December 31, 2018 ( 3.25% and 3.35% , respectively, at December 31, 2017 ). The estimated annual compensation increase is determined by management every year and is based on historical trends and market indices. A 0.50% change in the expected rate of compensation increase, with all other variables held constant, would change Linde’s pension expense by approximately $8 million and would impact the PBO by approximately $60 million.
Asset Impairments
Goodwill and Other Indefinite-Lived Intangibles Assets
At December 31, 2018 , the company had goodwill of $26,874 million , of which $24,320 million was recorded in connection with the Linde AG merger, and $1,669 million of other indefinite-lived intangible assets acquired in the merger. Goodwill represents the aggregate of the excess consideration paid for acquired businesses over the fair value of the net assets acquired. Indefinite-lived other intangibles relate to the Linde name.
The company performs a goodwill impairment test annually in the second quarter or more frequently if events or circumstances indicate that an impairment loss may have been incurred, and no impairments were indicated. The company has continuously re-evaluated the likelihood of goodwill impairments in its reporting units subsequent to the second quarter test, and does not believe there is indication of impairment for any of its reporting units. At December 31, 2018 , Linde’s enterprise value was approximately $96 billion (outstanding shares multiplied by the year-end stock price plus debt, and without any control premium) while its total capital was approximately $68 billion .
The impairment test allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than carrying value then the company will estimate and compare the fair value of its reporting units to their carrying value, including goodwill. Reporting units are determined based on one level below the operating segment level. Fair value is determined through the use of projected future cash flows, multiples of earnings and sales and other factors.
Such analysis requires the use of certain market assumptions and discount factors, which are subjective in nature. As applicable, estimated values can be affected by many factors beyond the company's control such as business and economic trends, government regulation, and technological changes. Management believes that the qualitative factors used to perform its annual goodwill impairment assessment are appropriate and reasonable. Although the 2018 qualitative assessment indicated that it is more likely than not that the fair value of each reporting unit substantially exceeded its carrying value, changes in circumstances or conditions affecting this analysis could have a significant impact on the fair value determination, which could then result in a material impairment charge to the company's results of operations.
Other indefinite-lived intangible assets are evaluated for impairment on an annual basis or more frequently if events and circumstances indicate that an impairment loss may have been incurred, and no impairments were indicated.

See Notes 3, 11 and 12 to the consolidated financial statements.

Long-Lived Assets
Long-lived assets, including Property, plant and equipment and finite-lived other intangible assets, are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an individual asset or asset group may not be recoverable. For purposes of this test, asset groups are determined based upon the lowest level for which

53

there are independent and identifiable cash flows. Based upon Linde's business model, for property, plant and equipment an asset group may be a single plant and related assets used to support on-site, merchant and packaged gas customers. Alternatively, the asset group may be a pipeline complex which includes multiple interdependent plants and related assets connected by pipelines within a geographic area used to support the same distribution methods.
Income Taxes
At December 31, 2018 , Linde had deferred tax assets of $2,039 million (net of valuation allowances of $237 million ), and deferred tax liabilities of $8,961 million . At December 31, 2018 , uncertain tax positions totaled $319 million (see Notes 2 and 7 to the consolidated financial statements). Income tax expense was $817 million for the year ended December 31, 2018 , or about 16.2% of pre-tax income (see Note 7 to the consolidated financial statements for additional information related to taxes).
In the preparation of consolidated financial statements, Linde estimates income taxes based on diverse legislative and regulatory structures that exist in various jurisdictions where the company conducts business. Deferred income tax assets and liabilities represent tax benefits or obligations that arise from temporary differences due to differing treatment of certain items for accounting and income tax purposes. Linde evaluates deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character (e.g. capital gain versus ordinary income treatment), amount and timing to result in their recovery. A valuation allowance is established when management determines that it is more likely than not that a deferred tax asset will not be realized to reduce the assets to their realizable value. Considerable judgments are required in establishing deferred tax valuation allowances and in assessing exposures related to tax matters. As events and circumstances change, related reserves and valuation allowances are adjusted to income at that time. Linde’s tax returns are subject to audit and local taxing authorities could challenge the company’s tax positions. The company’s practice is to review tax filing positions by jurisdiction and to record provisions for uncertain income tax positions, including interest and penalties when applicable. Linde believes it records and/or discloses such potential tax liabilities as appropriate and has reasonably estimated its income tax liabilities and recoverable tax assets. If new information becomes available, adjustments are charged or credited against income at that time. Management does not anticipate that such adjustments would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a material impact on the company’s reported results of operations.
In 2018, Linde completed its accounting and updated its provisional estimate related to the deemed repatriation of foreign earnings under the 2017 Tax Act in accordance with Staff Accounting Bulletin Number 118 resulting in a net reduction to income tax expense of $61 million (see Note 7 to the consolidated financial statements). A provision is made for taxes on undistributed earnings of foreign subsidiaries and related companies to the extent that such earnings are not deemed to be permanently reinvested.

Contingencies
The company accrues liabilities for non-income tax contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. If new information becomes available or losses are sustained in excess of recorded amounts, adjustments are charged against income at that time. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a material impact on the company’s reported results of operations.
Linde is subject to various claims, legal proceedings and government investigations that arise from time to time in the ordinary course of business. These actions are based upon alleged environmental, tax, antitrust and personal injury claims, among others (see Note 19 to the consolidated financial statements). Such contingencies are significant and the accounting requires considerable management judgments in analyzing each matter to assess the likely outcome and the need for establishing appropriate liabilities and providing adequate disclosures. Linde believes it records and/or discloses such contingencies as appropriate and has reasonably estimated its liabilities.
NEW ACCOUNTING STANDARDS
See Note 2 to the consolidated financial statements for information concerning new accounting standards and the impact of the implementation of these standards on the company’s financial statements.
FAIR VALUE MEASUREMENTS
Linde does not expect changes in the aggregate fair value of its financial assets and liabilities to have a material impact on the consolidated financial statements. See Note 15 to the consolidated financial statements.

54

NON-GAAP FINANCIAL MEASURES
The following non-GAAP measures are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management use to help evaluate the company’s financial leverage and operating performance. Special items which the company does not believe to be indicative of on-going business performance are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.

The non-GAAP measures in the following reconciliations are presented in the Selected Financial Data (Item 6) or this MD&A.

Adjusted Amounts

Certain amounts for 2018, 2017, 2016, 2015 and 2014 have been included for reference purposes and to facilitate the calculations contained herein.
(Dollar amounts in millions, except per share data)
2018
 
2017
 
2016
 
2015
 
2014
Year Ended December 31,
 
 
 
 
Adjusted Operating Profit and Margin
 
 
 
 
 
 
 
 
 
Reported operating profit
$
5,247

 
$
2,444

 
$
2,247

 
$
2,370

 
$
2,644

Less: Net gain on sale of businesses
(3,294
)
 


 


 
—

 
—

Add: Transaction costs and other charges
309

 
52

 
—

 
—

 
—

Add: Purchase accounting impacts - Linde AG
714

 
—

 
—

 
—

 
—

Add: Venezuela currency devaluation
—

 
—

 
—

 
—

 
131

Add: Cost reduction program
—

 
—

 
96

 
165

 
—

Total adjustments
(2,271
)
 
52

 
96

 
165

 
131

Adjusted operating profit
$
2,976

 
$
2,496

 
$
2,343

 
$
2,535

 
$
2,775

Reported percent change
115
%
 
9
 %
 
(5
)%
 
(10
)%
 
(2
)%
Adjusted percent change
19
%
 
7
 %
 
(8
)%
 
(9
)%
 
2
 %
Reported sales
$
14,900

 
$
11,437

 
$
10,534

 
$
10,776

 
$
12,273

Reported operating margin
35.2
%
 
21.4
 %
 
21.3
 %
 
22.0
 %
 
21.5
 %
Adjusted operating margin
20.0
%
 
21.8
 %
 
22.2
 %
 
23.5
 %
 
22.6
 %
 
 
 
 
 
 
 
 
 
 
Adjusted Net pension and OPEB cost (benefit), excluding service cost
 
 
 
 
 
 
 
 
 
Reported net pension and OPEB cost (benefit), excluding service cost
$
(4
)
 
$
(4
)
 
$
9

 
49

 
36

Less: Pension settlement charge
(14
)
 
(2
)
 
(4
)
 
(7
)
 
(7
)
Adjusted net pension and OPEB cost (benefit), excluding service cost
$
(18
)
 
$
(6
)
 
$
5

 
$
42

 
$
29

 
 
 
 
 
 
 
 
 
 
Adjusted Interest Expense - Net
 
 
 
 
 
 
 
 
 
Reported interest expense
202

 
161

 
190

 
161

 
213

Less: Bond redemption
(26
)
 
—

 
(16
)
 
—

 
(36
)
Add: Purchase accounting impacts - Linde AG
21

 
—

 
—

 
—

 
—

Adjusted interest expense - net
$
197

 
$
161

 
$
174

 
$
161

 
$
177

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

55

(Dollar amounts in millions, except per share data)
2018
 
2017
 
2016
 
2015
 
2014
Year Ended December 31,
 
 
 
 
Adjusted Income Taxes and Effective Tax Rate
 
 
 
 
 
 
Reported income taxes
$
817

 
$
1,026

 
$
551

 
$
612

 
$
691

Add: Bond redemption
6

 
—

 
6

 
—

 
14

Add: Pension settlement charge
3

 
1

 
1

 
2

 
2

Add: Cost reduction program
—

 
—

 
28

 
39

 
—

Less: Tax Act
61

 
(394
)
 
—

 
—

 
—

Add: Transaction costs and other charges
3

 
4

 
—

 
—

 
—

Less: Net gain on sale of businesses
(371
)
 
—

 
—

 
—

 
—

Add: Other tax charge
(44
)
 
—

 
—

 
—

 
—

Add: Purchase accounting impacts - Linde AG
191

 
—

 
—

 
—

 
—

Total adjustments
(151
)
 
(389
)
 
35

 
41

 
16

Adjusted income taxes
$
666

 
$
637

 
$
586

 
$
653

 
$
707

Reported income before income taxes and equity investments
$
5,049

 
$
2,287

 
$
2,048

 
$
2,160

 
$
2,395

Add: Bond redemption
26

 
—

 
16

 
—

 
36

Add: Pension settlement charge
14

 
2

 
4

 
7

 
7

Add: Venezuela currency devaluation
—

 
—

 
—

 
—

 
131

Add: Cost reduction program
—

 
—

 
96

 
165

 
—

Add: Transaction costs and other charges
309

 
52

 
—

 
—

 
—

Less: Net gain on sale of businesses
(3,294
)
 
—

 
—

 
—

 
—

Add: Purchase accounting impacts - Linde AG
693

 
—

 
—

 
—

 
—

Total adjustments
(2,252
)
 
54

 
116

 
172

 
174

Adjusted income before income taxes and equity investments
$
2,797

 
$
2,341

 
$
2,164

 
$
2,332

 
$
2,569

Reported effective tax rate
16.2
%
 
44.9
 %
 
26.9
 %
 
28.3
 %
 
28.9
 %
Adjusted effective tax rate
23.8
%
 
27.2
 %
 
27.1
 %
 
28.0
 %
 
27.5
 %
Adjusted Noncontrolling Interests from Continuing Operations
 
 
 
 
 
 
Reported noncontrolling interests from continuing operations
$
(15
)
 
$
(61
)
 
$
(38
)
 
$
(44
)
 
$
(52
)
Add: Purchase accounting impacts - Linde AG
(59
)
 
—

 
—

 
—

 
—

Less: Cost reduction program
1

 
—

 
(5
)
 
(1
)
 
—

Total adjustments
(58
)
 
—

 
(5
)
 
(1
)
 
—

Adjusted noncontrolling interests from continuing operations
$
(73
)
 
$
(61
)
 
$
(43
)
 
$
(45
)
 
$
(52
)
Adjusted Income from Continuing Operations
 
 
 
 
 
 
Reported income from continuing operations
$
4,273

 
$
1,247

 
$
1,500

 
$
1,547

 
$
1,694

Add: Bond redemption
20

 
—

 
10

 
—

 
22

Add: Pension settlement charge
11

 
1

 
3

 
5

 
5

Add: Venezuela currency devaluation
—

 
—

 
—

 
—

 
131

Add: Cost reduction program
1

 
—

 
63

 
125

 
—

Less: Net gain on sale of businesses
(2,923
)
 
—

 
—

 
—

 
—

Add: Other tax charges
44

 
—

 
—

 
—

 
—

Add: Tax Act
(61
)
 
394

 
—

 
—

 
—

Add: Transaction costs and other charges
305

 
48

 
—

 
—

 
—

Add: Purchase accounting impacts - Linde AG
451

 
—

 
—

 
—

 
—

Total adjustments
(2,152
)
 
443

 
76

 
130

 
158

Adjusted income from continuing operations
$
2,121

 
$
1,690

 
$
1,576

 
$
1,677

 
$
1,852

Reported percent change
243
%
 
(17
)%
 
(3
)%
 
(9
)%
 
(3
)%
Adjusted percent change
26
%
 
7
 %
 
(6
)%
 
(9
)%
 
5
 %

56

(Dollar amounts in millions, except per share data)
2018
 
2017
 
2016
 
2015
 
2014
Year Ended December 31,
 
 
 
 
Adjusted Diluted Earnings Per Share from Continuing Operations
 
 
 
 
 
 
 
 
 
Reported diluted earnings per share from continuing operations
$
12.79

 
$
4.32

 
$
5.21

 
$
5.35

 
$
5.73

Add: Bond redemption
0.06

 
—

 
0.04

 
—

 
0.07

Add: Pension settlement charge
0.03

 
—

 
0.01

 
0.02

 
0.02

Add: Venezuela currency devaluation
—

 
—

 
—

 
—

 
0.45

Add: Cost reduction program
—

 
—

 
0.22

 
0.43

 
—

Add: Tax Act
(0.18
)
 
1.36

 
—

 
—

 
—

Add: Transaction costs and other charges
0.92

 
0.17

 
—

 
—

 
—

Add: Net gain on sale of businesses
(8.75
)
 
—

 
—

 
—

 
—

Less: Other tax charges
0.13

 
—

 
—

 
—

 
—

Less: Purchase accounting impacts - Linde AG
1.35

 
—

 
—

 
—

 
—

Total adjustments
(6.44
)
 
1.53

 
0.27

 
0.45

 
0.54

Adjusted diluted earnings per share from continuing operations
$
6.35

 
$
5.85

 
$
5.48

 
$
5.80

 
$
6.27

Reported percent change
196
%
 
(17
)%
 
(3
)%
 
(7
)%
 
(2
)%
Adjusted percent change
9
%
 
7
 %
 
(6
)%
 
(7
)%
 
6
 %
 
 
 
 
 
 
 
 
 
 























57

EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin
These measures are used by investors, financial analysts and management to assess a company’s profitability.
(Dollar amounts in millions)
2018
 
2017
 
2016
 
2015
 
2014
Year Ended December 31,
 
 
 
 
Reported income from continuing operations
$
4,273

 
$
1,247

 
$
1,500

 
$
1,547

 
$
1,694

Add: noncontrolling interest from continuing operations
15

 
61

 
38

 
44

 
52

Add: interest expense - net
202


161


190


161


213

Add: net pension and OPEB cost (benefit), excluding service cost
(4
)
 
(4
)
 
9

 
49

 
36

Add: income taxes
817


1,026


551


612


691

Add: depreciation and amortization
1,830


1,184


1,122


1,106


1,170

EBITDA
$
7,133

 
$
3,675

 
$
3,410

 
$
3,519

 
$
3,856

 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
Add: Cost reduction program and other charges, net
$
—

 
$
—

 
$
96

 
$
165

 
$
—

Add: Venezuela currency devaluation
—

 
—

 
—

 
—

 
131

Add: Transaction costs and other charges
309

 
52

 
—

 
—

 
—

Add: Net gain on sale of businesses
(3,294
)
 
—

 
—

 
—

 
—

Add: Purchase accounting impacts - Linde AG
368

 
—

 
—

 
—

 
—

Adjusted EBITDA
$
4,516

 
$
3,727

 
$
3,506

 
$
3,684

 
$
3,987

 
 
 
 
 
 
 
 
 
 
Reported Sales
$
14,900

 
$
11,437

 
$
10,534

 
$
10,776

 
$
12,273

EBITDA Margin
47.9
%
 
32.1
%
 
32.4
%
 
32.7
%
 
31.4
%
Adjusted EBITDA Margin
30.3
%
 
32.6
%
 
33.3
%
 
34.2
%
 
32.5
%
 
 
 
 
 
 
 
 
 
 



58

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Linde is exposed to market risks relating to fluctuations in interest rates and currency exchange rates. The objective of financial risk management at Linde is to minimize the negative impact of interest rate and foreign exchange rate fluctuations on the company’s earnings, cash flows and equity.
To manage these risks, Linde uses various derivative financial instruments, including interest-rate swaps, treasury rate locks, currency swaps, forward contracts, and commodity contracts. Linde only uses commonly traded and non-leveraged instruments. These contracts are entered into primarily with major banking institutions thereby minimizing the risk of credit loss. Also, see Notes 2 and 14 to the consolidated financial statements for a more complete description of Linde’s accounting policies and use of such instruments.
The following discussion presents the sensitivity of the market value, earnings and cash flows of Linde’s financial instruments to hypothetical changes in interest and exchange rates assuming these changes occurred at December 31, 2018 . The range of changes chosen for these discussions reflects Linde’s view of changes which are reasonably possible over a one-year period. Market values represent the present values of projected future cash flows based on interest rate and exchange rate assumptions.
Interest Rate Risk
At December 31, 2018 , Linde had debt totaling $15,296 million ( $9,000 million at December 31, 2017 ). For fixed-rate instruments, interest rate changes affect the fair market value but do not impact earnings or cash flows. Conversely, for floating-rate instruments, interest rate changes generally do not affect the fair market value of the instrument but impact future earnings and cash flows, assuming that other factors are held constant. At December 31, 2018 , including the impact of derivatives Linde had fixed-rate debt of $12,565 million and floating-rate debt of $2,731 million , representing 82% and 18%, respectively, of total debt. At December 31, 2017 , Linde had fixed-rate debt of $8,253 million and floating-rate debt of $747 million, representing 92% and 8%, respectively, of total debt.
Fixed Rate Debt
In order to mitigate interest rate risk, when considered appropriate interest-rate swaps are entered into as hedges of underlying financial instruments to effectively change the characteristics of the interest rate without actually changing the underlying financial instrument. At December 31, 2018 , Linde had fixed-to-floating interest rate swaps outstanding that were designated as hedging instruments of the underlying debt issuances - refer to Note 14 to the consolidated financial statements for additional information. This sensitivity analysis assumes that, holding all other variables constant (such as foreign exchange rates, swaps and debt levels), a one-percentage-point increase in interest rates would decrease the unrealized fair market value of the fixed-rate debt portfolio by approximately $594 million ($450 million in 2017 ). A 100 basis point increase in interest rates would result in an approximate $92 million increase to derivative assets recorded.
Variable Rate Debt
At December 31, 2018 , the after-tax earnings and cash flows impact of a one-percentage point increase in interest rates, including the offsetting impact of derivatives, on the variable-rate debt portfolio would be approximately $24 million. At December 31, 2017 the impact of a one-percentage point increase was $6 million, holding all other variables constant.
Foreign Currency Risk
Linde’s exchange-rate exposures result primarily from its investments and ongoing operations in South America (primarily Brazil, Argentina, Chile and Colombia), Europe (primarily Germany, Scandinavia, and the United Kingdom), Canada, Mexico, Asia Pacific (primarily Australia, China, India, and Korea) and other business transactions such as the procurement of equipment from foreign sources. Linde frequently utilizes currency contracts to hedge these exposures. At December 31, 2018 , Linde had a notional amount outstanding of $9,412 million ($2,693 million at December 31, 2017 ) related to foreign exchange contracts. The majority of these were to hedge recorded balance sheet exposures, primarily intercompany loans denominated in non-functional currencies. See Note 14 to the consolidated financial statements.
Holding all other variables constant, if there were a 10% adverse change in foreign-currency exchange rates for the portfolio, the fair market value of foreign-currency contracts outstanding at December 31, 2018 and 2017 would decrease by approximately $307 million and $174 million, respectively, which would be largely offset by an offsetting gain on the foreign-currency fluctuation of the underlying exposure being hedged.

59
Table of Contents

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
Page
 
 
Audited Consolidated Financial Statements
 
 
 
Notes to Consolidated Financial Statements
 



60
Table of Contents

MANAGEMENT’S STATEMENT OF RESPONSIBILITY FOR FINANCIAL STATEMENTS
Linde’s consolidated financial statements are prepared by management, which is responsible for their fairness, integrity and objectivity. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America applied on a consistent basis, except for accounting changes as disclosed, and include amounts that are estimates and judgments. All historical financial information in this annual report is consistent with the accompanying financial statements.
Linde maintains accounting systems, including internal accounting controls, monitored by a staff of internal auditors, that are designed to provide reasonable assurance of the reliability of financial records and the protection of assets. The concept of reasonable assurance is based on recognition that the cost of a system should not exceed the related benefits. The effectiveness of those systems depends primarily upon the careful selection of financial and other managers, clear delegation of authority and assignment of accountability, inculcation of high business ethics and conflict-of-interest standards, policies and procedures for coordinating the management of corporate resources, and the leadership and commitment of top management. In compliance with Section 404 of the Sarbanes-Oxley Act of 2002, Linde assessed its internal control over financial reporting and issued a report (see below).
PricewaterhouseCoopers LLP, an independent registered public accounting firm, has completed an audit of Linde’s 2018 , 2017 and 2016 consolidated financial statements and of its internal control over financial reporting as of December 31, 2018 in accordance with the standards of the Public Company Accounting Oversight Board (United States) as stated in their report.
The Audit Committee of the Board of Directors, which consists solely of non-employee directors, is responsible for overseeing the functioning of the accounting system and related controls and the preparation of annual financial statements. The Audit Committee periodically meets with management, internal auditors and the independent accountants to review and evaluate their accounting, auditing and financial reporting activities and responsibilities, including management’s assessment of internal control over financial reporting. The independent registered public accounting firm and internal auditors have full and free access to the Audit Committee and meet with the committee, with and without management present.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Linde’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including the company’s principal executive officer and principal financial officer, the company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control – Integrated F ramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (often referred to as COSO). Based on this evaluation, management concluded that the company’s internal control over financial reporting was effective as of December 31, 2018 .
Linde’s evaluation of internal control over financial reporting as of December 31, 2018 did not include the internal control over financial reporting related to Linde AG because the business was acquired in a merger accounted for as a business combination consummated during 2018. Total assets and sales for Linde AG represent approximately 26.4% and 19.3%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2018.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited and issued their opinion on the effectiveness of the company’s internal control over financial reporting as of December 31, 2018 as stated in their report.  
/s/    S TEPHEN  F. A NGEL
 
/s/     K ELCEY  E . H OYT
Stephen F. Angel
Chief Executive Officer
  
Kelcey E. Hoyt
Chief Accounting Officer
/s/    M ATTHEW  J. W HITE
 
Matthew J. White
Chief Financial Officer
  

March 18, 2019

61
Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Linde plc

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Linde plc and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded Linde Aktiengesellschaft (“Linde AG”) from its assessment of internal control over financial reporting as of December 31, 2018 because the business was acquired in a merger accounted for as a business combination consummated during 2018. We have also excluded Linde AG from our audit of internal control over financial reporting. Linde AG is a subsidiary whose total assets and total sales excluded from management’s assessment and our audit of internal control over financial reporting represent 26.4% and 19.3%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2018.





62

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



/s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
March 18, 2019

We have served as the Company’s or its predecessor auditor since 1992.  
 



63


CONSOLIDATED STATEMENTS OF INCOME
LINDE PLC AND SUBSIDIARIES
(Dollar amounts in millions, except per share data)  
Year Ended December 31,
2018
 
2017
 
2016
Sales
$
14,900

 
$
11,437

 
$
10,534

Cost of sales, exclusive of depreciation and amortization
9,084

 
6,461

 
5,855

Selling, general and administrative
1,629

 
1,207

 
1,145

Depreciation and amortization
1,830

 
1,184

 
1,122

Research and development
113

 
93

 
92

Transaction costs and other charges
309

 
52

 
96

Net gain on sale of businesses
3,294

 
—

 
—

Other income (expenses) – net
18

 
4

 
23

Operating Profit
5,247

 
2,444

 
2,247

Interest expense – net
202

 
161

 
190

Net pension and OPEB cost (benefit), excluding service cost
(4
)
 
(4
)
 
9

Income From Continuing Operations Before Income Taxes and Equity Investments
5,049

 
2,287

 
2,048

Income taxes on continuing operations
817

 
1,026

 
551

Income From Continuing Operations Before Equity Investments
4,232

 
1,261

 
1,497

Income from equity investments
56

 
47

 
41

Income From Continuing Operations (Including Noncontrolling Interests)
4,288

 
1,308

 
1,538

Income from discontinued operations, net of tax
117

 
—

 
—

Net Income (Including Noncontrolling Interests)
4,405

 
1,308

 
1,538

Less: noncontrolling interests from continuing operations
(15
)
 
(61
)
 
(38
)
Less: noncontrolling interests from discontinued operations
(9
)
 
—

 
—

Net Income – Linde plc
$
4,381

 
$
1,247

 
$
1,500

 

 
 
 
 
Net Income – Linde plc
 
 
 
 
 
Income from continuing operations
$
4,273

 
$
1,247

 
$
1,500

Income from discontinued operations
$
108

 
$
—

 
$
—

 
 
 
 
 
 
Per Share Data – Linde plc Shareholders

 
 
 
 
Basic earnings per share from continuing operations
$
12.93

 
$
4.36

 
$
5.25

Basic earnings per share from discontinued operations
0.33

 
—

 
—

Basic earnings per share
$
13.26

 
$
4.36

 
$
5.25

Diluted earnings per share from continuing operations
$
12.79

 
$
4.32

 
$
5.21

Diluted earnings per share from discontinued operations
0.32

 
—

 
—

Diluted earnings per share
$
13.11

 
$
4.32

 
$
5.21

 

 
 
 
 
Weighted Average Shares Outstanding (000’s):

 
 
 
 
Basic shares outstanding
330,401

 
286,261

 
285,677

Diluted shares outstanding
334,127

 
289,114

 
287,757

The accompanying Notes are an integral part of these financial statements.


64
Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
LINDE PLC AND SUBSIDIARIES
(Dollar amounts in millions)  


Year Ended December 31,
2018
 
2017
 
2016
 NET INCOME (INCLUDING NONCONTROLLING INTERESTS)
$
4,405

 
$
1,308

 
$
1,538

 
 
 
 
 
 
OTHER COMPREHENSIVE INCOME (LOSS)
 
 
 
 
 
Translation adjustments:
 
 
 
 
 
Foreign currency translation adjustments
(401
)
 
433

 
116

Reclassifications to net income (Note 4)
318

 
—

 
—

Income taxes
7

 
92

 
(48
)
Translation adjustments
(76
)
 
525

 
68

Funded status - retirement obligations (Note 18):
 
 
 
 
 
Retirement program remeasurements
(260
)
 
(39
)
 
(163
)
Reclassifications to net income
94

 
55

 
60

Income taxes
(55
)
 
(5
)
 
27

Funded status - retirement obligations
(221
)
 
11

 
(76
)
Derivative instruments (Note 14):
 
 
 
 
 
Current year unrealized gain (loss)
—

 
—

 
1

Reclassifications to net income
(1
)
 
—

 
(1
)
Income taxes
—

 
—

 
—

Derivative instruments
(1
)
 
—

 
—

Securities (Note 9):
 
 
 
 
 
Current year unrealized gain (loss)
(1
)
 
—

 
—

Reclassifications to net income
—

 
—

 
—

Income taxes
—

 
—

 
—

Securities
(1
)
 
—

 
—

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
(299
)
 
536

 
(8
)
 
 
 
 
 
 
COMPREHENSIVE INCOME (INCLUDING NONCONTROLLING INTERESTS)
4,106

 
1,844

 
1,530

Less: noncontrolling interests
(83
)
 
(95
)
 
(34
)
COMPREHENSIVE INCOME - LINDE PLC
$
4,023

 
$
1,749

 
$
1,496


The accompanying Notes are an integral part of these financial statements.



65
Table of Contents

CONSOLIDATED BALANCE SHEETS
LINDE PLC AND SUBSIDIARIES
(Dollar amounts in millions)  
December 31,
2018
 
2017
Assets
 
 
 
Cash and cash equivalents
$
4,466

 
$
617

Accounts receivable – net
4,297

 
1,710

Contract assets
283

 
—

Inventories
1,651

 
614

Assets held for sale
5,498

 
—

Prepaid and other current assets
1,077

 
344

Total Current Assets
17,272

 
3,285

Property, plant and equipment – net
29,717

 
11,825

Equity investments
1,838

 
727

Goodwill
26,874

 
3,233

Other intangible assets – net
16,223

 
785

Other long-term assets
1,462

 
581

Total Assets
$
93,386

 
$
20,436

Liabilities and Equity

 
 
Accounts payable
$
3,219

 
$
922

Short-term debt
1,485

 
238

Current portion of long-term debt
1,523

 
979

Contract liabilities
1,546

 
—

Accrued taxes
657

 
242

Liabilities of assets held for sale
768

 
—

Other current liabilities
3,758

 
926

Total Current Liabilities
12,956

 
3,307

Long-term debt
12,288

 
7,783

Other long-term liabilities
3,435

 
1,588

Deferred credits
7,611

 
1,236

Total Liabilities
36,290

 
13,914

Commitments and contingencies (Note 19)

 

Redeemable noncontrolling interests
16

 
11

Linde plc Shareholders’ Equity:
 
 
 
       Ordinary shares (2018: €0.001 par value, authorized 1,750,000,000 shares, issued 551,310,272 ordinary shares; 2017: and Common stock $0.01 par value, authorized 800,000,000 shares, issued 383,230,625 shares)
1

 
4

Additional paid-in capital
40,151

 
4,084

Retained earnings
16,529

 
13,224

Accumulated other comprehensive income (loss)
(4,456
)
 
(4,098
)
Less: Treasury stock, at cost (2018 – 4,068,642 shares and
2017 – 96,453,634 shares)
(629
)
 
(7,196
)
Total Linde plc Shareholders’ Equity
51,596

 
6,018

Noncontrolling interests
5,484

 
493

Total Equity
57,080

 
6,511

Total Liabilities and Equity
$
93,386

 
$
20,436

The accompanying Notes are an integral part of these financial statements.

66
Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS
LINDE PLC AND SUBSIDIARIES
(Millions of dollars)
Year Ended December 31,
2018
 
2017
 
2016
Increase (Decrease) in Cash and Cash Equivalents
 
 
 
 
 
Operations
 
 
 
 
 
Net income – Linde plc
$
4,381

 
$
1,247

 
$
1,500

Less: income from discontinued operations, net of tax and noncontrolling interests
(108
)
 
—

 
—

Add: Noncontrolling interests from continuing operations
15

 
61

 
38

Income from continuing operations (including noncontrolling interests)
$
4,288

 
$
1,308

 
$
1,538

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Transaction costs and other charges, net of payments
40

 
26

 
83

Amortization of merger-related inventory step-up
368

 
—

 
—

Tax Act income tax charge, net
(61
)
 
394

 
—

Depreciation and amortization
1,830

 
1,184

 
1,122

Deferred income taxes, excluding Tax Act
(187
)
 
136

 
(13
)
Share-based compensation
62

 
59

 
39

Net gain on sale of businesses, net of tax
(2,923
)
 
—

 
—

Non-cash charges and other
175

 
43

 
(43
)
Working capital
 
 
 
 
 
Accounts receivable
(124
)
 
(92
)
 
(33
)
Inventory
(4
)
 
(22
)
 
(13
)
Prepaid and other current assets
43

 
(66
)
 
6

Payables and accruals
287

 
22

 
92

Pension contributions
(87
)
 
(19
)
 
(11
)
Long-term assets, liabilities and other
(53
)
 
68

 
22

Net cash provided by operating activities
3,654

 
3,041

 
2,789

Investing
 
 
 
 
 
Capital expenditures
(1,883
)
 
(1,311
)
 
(1,465
)
Acquisitions, net of cash acquired
(25
)
 
(33
)
 
(363
)
Divestitures and asset sales, net of cash divested
5,908

 
30

 
58

Cash acquired in merger transaction
1,363

 
—

 
—

Net cash provided by (used for) investing activities
5,363

 
(1,314
)
 
(1,770
)
Financing
 
 
 
 
 
Short-term debt borrowings (repayments) – net
208

 
(199
)
 
191

Long-term debt borrowings
8

 
11

 
936

Long-term debt repayments
(3,124
)
 
(583
)
 
(770
)
Issuances of ordinary shares
77

 
120

 
139

Purchases of ordinary shares
(599
)
 
(12
)
 
(228
)
Cash dividends – Linde plc shareholders
(1,166
)
 
(901
)
 
(856
)
Noncontrolling interest transactions and other
(402
)
 
(92
)
 
(71
)
Net cash used for financing activities
(4,998
)
 
(1,656
)
 
(659
)
Discontinued Operations
 
 
 
 
 
Cash provided by operating activities
$
48

 
$
—

 
$
—

Cash used for investing activities
(23
)
 
—

 
—

Cash provided by financing activities
2

 
—

 
—

Net cash provided by discontinued operations
27

 
—

 
—

Effect of exchange rate changes on cash and cash equivalents
(60
)
 
22

 
17

Change in cash and cash equivalents
3,986

 
93

 
377

Cash and cash equivalents, beginning-of-period
617

 
524

 
147

Cash and cash equivalents, including discontinued operations
$
4,603

 
$
617

 
$
524

Cash and cash equivalents of discontinued operations
(137
)
 
—

 
—


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Table of Contents

Cash and cash equivalents, end-of-period
$
4,466

 
$
617

 
$
524

 
 
 
 
 
 
Supplemental Data
 
 
 
 
 
Income taxes paid
$
757

 
$
565

 
$
585

Interest paid, net of capitalized interest (Note 9)
$
214

 
$
184

 
$
189

The accompanying Notes are an integral part of these financial statements.


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CONSOLIDATED STATEMENTS OF EQUITY
LINDE PLC AND SUBSIDIARIES
(Dollar amounts in millions, except per share data, shares in thousands)  
 
Linde plc Shareholders’ Equity
 
 
 
 
 
Ordinary shares
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated  Other
Comprehensive
Income (Loss)
(Note 9)
 
Treasury Stock
 
Linde plc
Shareholders’
Equity
 
Noncontrolling
Interests
 
Total Equity
Activity
Shares
 
Amounts
 
Shares
 
Amounts
 
Balance, December 31, 2015
383,231

 
$
4

 
$
4,005

 
$
12,229

 
$
(4,596
)
 
98,352

 
$
(7,253
)
 
$
4,389

 
$
404

 
$
4,793

Net Income
 
 
 
 
 
 
1,500

 
 
 
 
 
 
 
1,500

 
35

 
1,535

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
(4
)
 
 
 
 
 
(4
)
 
(11
)
 
(15
)
Noncontrolling interests:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends and other capital reductions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
(28
)
 
(28
)
Additions (Reductions)
 
 
 
 
50

 
 
 
 
 
 
 
 
 
50

 
20

 
70

Redemption value adjustments (Note 16)
 
 
 
 
 
 
6

 
 
 
 
 
 
 
6

 
 
 
6

Dividends ($3.00 per common share)
 
 
 
 
 
 
(856
)
 
 
 
 
 
 
 
(856
)
 
 
 
(856
)
Issuances of common stock:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the dividend reinvestment and stock purchase plan
 
 
 
 
 
 
 
 
 
 
(60
)
 
7

 
7

 
 
 
7

For employee savings and incentive plans
 
 
 
 
(20
)
 
 
 
 
 
(2,044
)
 
143

 
123

 
 
 
123

Other
 
 
 
 
 
 
 
 
 
 
 
 
5

 
5

 
 
 
5

Purchases of common stock
 
 
 
 
 
 
 
 
 
 
2,082

 
(238
)
 
(238
)
 
 
 
(238
)
Share-based compensation
 
 
 
 
39

 
 
 
 
 
 
 
 
 
39

 
 
 
39

Balance, December 31, 2016
383,231

 
$
4

 
$
4,074

 
$
12,879

 
$
(4,600
)
 
98,330

 
$
(7,336
)
 
$
5,021

 
$
420

 
$
5,441

Net Income
 
 
 
 
 
 
1,247

 
 
 
 
 
 
 
1,247

 
59

 
1,306

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
502

 
 
 
 
 
502

 
34

 
536

Noncontrolling interests:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends and other capital reductions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
(35
)
 
(35
)
Additions (Reductions)
 
 
 
 
—

 
 
 
 
 
 
 
 
 
—

 
15

 
15

Redemption value adjustments (Note 16)
 
 
 
 
 
 
(1
)
 
 
 
 
 
 
 
(1
)
 
 
 
(1
)
Dividends ($3.15 per common share)
 
 
 
 
 
 
(901
)
 
 
 
 
 
 
 
(901
)
 
 
 
(901
)

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Table of Contents

 
Linde plc Shareholders’ Equity
 
 
 
 
 
Ordinary shares
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated  Other
Comprehensive
Income (Loss)
(Note 9)
 
Treasury Stock
 
Linde plc
Shareholders’
Equity
 
Noncontrolling
Interests
 
Total Equity
Activity
Shares
 
Amounts
 
Shares
 
Amounts
 
Issuances of common stock:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the dividend reinvestment and stock purchase plan
 
 
 
 
 
 
 
 
 
 
(50
)
 
7

 
7

 
 
 
7

For employee savings and incentive plans
 
 
 
 
(49
)
 
 
 
 
 
(1,835
)
 
134

 
85

 
 
 
85

Purchases of common stock
 
 
 
 
 
 
 
 
 
 
9

 
(1
)
 
(1
)
 
 
 
(1
)
Share-based compensation
 
 
 
 
59

 
 
 
 
 
 
 
 
 
59

 
 
 
59

Balance, December 31, 2017
383,231

 
$
4

 
$
4,084

 
$
13,224

 
$
(4,098
)
 
96,454

 
$
(7,196
)
 
$
6,018

 
$
493

 
$
6,511

Net Income available for Linde plc shareholders
 
 
 
 
 
 
4,381

 
 
 
 
 
 
 
4,381

 
21

 
4,402

Other comprehensive loss
 
 
 
 
 
 
 
 
(265
)
 
 
 
 
 
(265
)
 
59

 
(206
)
Noncontrolling interests:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends and other capital reductions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
(49
)
 
(49
)
Additions (Reductions) - (Note 16)
 
 
 
 
(127
)
 
 
 
 
 
 
 
 
 
(127
)
 
(186
)
 
(313
)
Redemption value adjustments (Note 16)
 
 
 
 
 
 
(3
)
 
 
 
 
 
 
 
(3
)
 
 
 
(3
)
Dividends ($3.30 per common share)
 
 
 
 
 
 
(1,166
)
 
 
 
 
 
 
 
(1,166
)
 
 
 
(1,166
)
Issuances of ordinary shares:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the dividend reinvestment and stock purchase plan
 
 
 
 
 
 
 
 
 
 
(31
)
 
5

 
5

 
 
 
5

For employee savings and incentive plans
255

 
—

 
(46
)
 
 
 
 
 
(1,109
)
 
79

 
33

 
 
 
33

Purchases of ordinary shares
 
 
 
 
 
 
 
 
 
 
4,079

 
(630
)
 
(630
)
 
 
 
(630
)
Share-based compensation
 
 
 
 
62

 
 
 
 
 
 
 
 
 
62

 
 
 
62

Tax Act Reclassification (Note 7)
 
 
 
 
 
 
93

 
(93
)
 
 
 
 
 
—

 
 
 
—

Impact of merger (Notes 3 and 16)
167,824

 
(3
)
 
36,178

 
 
 
 
 
(95,324
)
 
7,113

 
43,288

 
5,146

 
48,434

Balance, December 31, 2018
551,310

 
$
1

 
$
40,151

 
$
16,529

 
$
(4,456
)
 
4,069

 
$
(629
)
 
$
51,596

 
$
5,484

 
$
57,080

The accompanying Notes are an integral part of these financial statements


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Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LINDE PLC AND SUBSIDIARIES
NOTE 1. FORMATION OF LINDE PLC AND BUSINESS COMBINATION OF PRAXAIR, INC. AND LINDE AG
Formation of Linde plc

Linde plc ("Linde" or “the company”), a public limited company incorporated in Ireland, was formed in accordance with the requirements of the business combination agreement, dated as of June 1, 2017, as amended (the “business combination agreement”). Pursuant to the business combination agreement, among other things, Praxair, Inc., a Delaware corporation (“Praxair”), and Linde Aktiengesellschaft, a stock corporation incorporated under the laws of Germany (“Linde AG”), agreed to combine their respective businesses through an all-stock transaction, and become subsidiaries of the company (collectively referred to as “business combination” or “merger”). On October 31, 2018, Linde plc completed the business combination. Prior to the business combination, the company did not conduct any business activities other than those required for its formation and matters contemplated by the business combination agreement.
Business Combination of Praxair, Inc. and Linde AG
The business combination has been accounted for using the acquisition method of accounting in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") 805, “Business Combinations” , with Praxair representing the accounting acquirer. Pursuant to Rule 12g-3(a) under the Exchange Act, as of October 31, 2018, the company became the successor issuer to Praxair. Also, the Linde plc shares are deemed to be registered under Section 12(b) of the Exchange Act, and the company is subject to the informational requirements of the Exchange Act and the rules and regulations promulgated thereunder. The Linde shares trade on the New York Stock Exchange and the Frankfurt Stock Exchange under the ticker symbol “LIN”. Prior to the business combination, the Praxair shares were registered pursuant to Section 12(b) of the Exchange Act and listed on the NYSE. In connection with the completion of the business combination, the Praxair shares were suspended from trading on the NYSE as of close of business (New York Time) on October 30, 2018. On November 1, 2018, Praxair filed a Form 25 to delist and deregister its three series of Euro-denominated notes, including its 1.50% Notes due 2020, 1.20% Notes due 2024 and 1.625% Notes due 2025, that were listed on the NYSE. Trading of the Euro-denominated notes on the NYSE was suspended as of close of business (New York Time) on November 9, 2018, and Praxair filed a Form 15 with the SEC terminating the registration under the Exchange Act of its securities and suspending Praxair’s reporting obligations under Section 15(d) of the Exchange Act.
In connection with the business combination, the company, Praxair and Linde AG entered into various agreements with regulatory authorities to satisfy anti-trust requirements to secure approval to consummate the business combination. These agreements included the sale of the majority of Praxair’s European businesses (subsequently completed on December 3, 2018), the majority of Linde AG’s America’s business (subsequently completed on March 1, 2019), as well as certain divestitures of other Praxair and Linde AG businesses in Asia that are expected to be sold in 2019 (collectively, the “merger-related divestitures”). See Note 4 for additional information relating to merger-related divestitures.
To obtain merger approval in the United States. Linde, Praxair and Linde AG entered into an agreement with the U.S. Federal Trade Commission dated October 1, 2018 (“hold separate order” or “HSO”). Under the HSO, the company, Praxair and Linde AG agreed to (i) continue to operate Linde AG and Praxair as independent, ongoing, economically viable, competitive businesses held separate, distinct, and apart from each other’s operations; (ii) not coordinate any aspect of the operations of Linde AG and Praxair, including the marketing or sale of any products; and (iii) maintain separate financial ledgers, books, and records that report on a periodic basis, consistent with past practices, the assets, liabilities, expenses, revenues, and income of each, until certain divestitures in the United States have been completed. The restrictions under the hold separate order were lifted March 1, 2019, concurrent with the sale of the required merger-related divestitures in the United States.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation – The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (" U.S. GAAP") and include the accounts of all significant subsidiaries where control exists and, in limited situations, variable-interest entities where the company is the primary beneficiary. Intercompany transactions and balances are eliminated in consolidation and any significant related-party transactions have been disclosed.
Equity investments generally consist of 20% to 50% owned operations where the company exercises significant influence, but does not have control. Equity income from equity investments in corporations is reported on an after-tax basis.

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Pre-tax income from equity investments that are partnerships or limited-liability corporations ("LLC") is included in other income (expenses) – net with related taxes included in Income taxes. Equity investments are reviewed for impairment whenever events or circumstances reflect that an impairment loss may have incurred. Operations less than 20% owned, where the company does not exercise significant influence, are generally carried at cost.
Changes in ownership interest that result either in consolidation or deconsolidation of an investment are recorded at fair value through earnings, including the retained ownership interest, while changes that do not result in either consolidation or deconsolidation of a subsidiary are treated as equity transactions.
Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While actual results could differ, management believes such estimates to be reasonable.
Operations – Linde is the largest industrial gases company worldwide. The company produces, sells and distributes atmospheric, process and specialty gases, and high-performance surface coatings to a diverse group of industries including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, and metals. Linde’s Engineering Division offers its customers an extensive range of gas production and processing services including suppling plant components and services directly to customers.
Revenue Recognition – Effective January 1, 2018, Linde adopted the FASB's Accounting Standards Update No. 2014-09 ("ASC 606") relating to Revenue Recognition.  Revenue is recognized as control of goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled to receive in exchange for the goods or services.  Refer to footnote 21 for additional details regarding Linde revenue recognition policies.  Prior to adoption of ASC 606 revenue was recognized when a firm sales agreement exists, collectability of a fixed or determinable sales price is reasonably assured, and when title and risks of ownership transfer to the customer for product sales or, in the case of other revenues when obligations are satisfied or services are performed.  The adoption of ASC 606 resulted in no differences in revenue recognition compared to previous policies.
Cash Equivalents – Cash equivalents are considered to be highly liquid securities with original maturities of three months or less.
Inventories – Inventories are stated at the lower of cost or net realizable value. Cost is determined using the average-cost method.
Property, Plant and Equipment – Net – Property, plant and equipment are carried at cost, net of accumulated depreciation. The company capitalizes interest as part of the cost of constructing major facilities (see Note 10). Depreciation is calculated on the straight-line method based on the estimated useful lives of the assets, which range from 3 years to 40 years (see Note 10). Linde uses accelerated depreciation methods for tax purposes where appropriate. Maintenance of property, plant and equipment is generally expensed as incurred.
The company performs a test for impairment whenever events or changes in circumstances indicate that the carrying amount of an individual asset or asset group may not be recoverable. Should projected undiscounted future cash flows be less than the carrying amount of the asset or asset group, an impairment charge reducing the carrying amount to fair value is required. Fair value is determined based on the most appropriate valuation technique, including discounted cash flows.
Asset-Retirement Obligations – An asset-retirement obligation is recognized in the period in which sufficient information exists to determine the fair value of the liability with a corresponding increase to the carrying amount of the related property, plant and equipment which is then depreciated over its useful life. The liability is initially measured at discounted fair value and then accretion expense is recorded in each subsequent period. The company’s asset-retirement obligations are primarily associated with its on-site long-term supply arrangements where the company has built a facility on land leased from the customer and is obligated to remove the facility at the end of the contract term. The company's asset-retirement obligations are not material to its consolidated financial statements.
Foreign Currency Translation – For most foreign operations, the local currency is the functional currency and translation gains and losses are reported as part of the accumulated other comprehensive income (loss) component of equity as a cumulative translation adjustment (see Note 9).
Financial Instruments – Linde enters into various derivative financial instruments to manage its exposure to fluctuating interest rates, currency exchange rates, commodity pricing and energy costs. Such instruments primarily include interest-rate swap and treasury rate lock agreements; currency-swap agreements; forward contracts; currency options; and commodity-swap agreements. These instruments are not entered into for trading purposes. Linde only uses commonly traded and non-leveraged instruments.

72

There are three types of derivatives the company enters into: (i) those relating to fair-value exposures, (ii) those relating to cash-flow exposures, and (iii) those relating to foreign currency net investment exposures. Fair-value exposures relate to recognized assets or liabilities, and firm commitments; cash-flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities, or forecasted transactions; and net investment exposures relate to the impact of foreign currency exchange rate changes on the carrying value of net assets denominated in foreign currencies.
When a derivative is executed and hedge accounting is appropriate, it is designated as either a fair-value hedge, cash-flow hedge, or a net investment hedge. Currently, Linde designates all interest-rate and treasury rate locks as hedges for accounting purposes; however, currency contracts are generally not designated as hedges for accounting purposes unless they are related to forecasted transactions. Whether designated as hedges for accounting purposes or not, all derivatives are linked to an appropriate underlying exposure. On an ongoing basis, the company assesses the hedge effectiveness of all derivatives designated as hedges for accounting purposes to determine if they continue to be highly effective in offsetting changes in fair values or cash flows of the underlying hedged items. If it is determined that the hedge is not highly effective, then hedge accounting will be discontinued prospectively.
Changes in the fair value of derivatives designated as fair-value hedges are recognized in earnings as an offset to the change in the fair values of the underlying exposures being hedged. The changes in fair value of derivatives that are designated as cash-flow hedges are deferred in accumulated other comprehensive income (loss) and are reclassified to earnings as the underlying hedged transaction affects earnings. Any ineffectiveness is recognized in earnings immediately. Hedges of net investments in foreign subsidiaries are recognized in the cumulative translation adjustment component of accumulated other comprehensive income (loss) on the consolidated balance sheets to offset translation gains and losses associated with the hedged net investment. Derivatives that are entered into for risk-management purposes and are not designated as hedges (primarily related to anticipated net income and currency derivatives other than for firm commitments) are recorded at their fair market values and recognized in current earnings.
See Note 14 for additional information relating to financial instruments.
Goodwill – Acquisitions are accounted for using the acquisition method which requires allocation of the purchase price to assets acquired and liabilities assumed based on estimated fair values. Any excess of the purchase price over the fair value of the assets and liabilities acquired is recorded as goodwill. Allocations of the purchase price are based on preliminary estimates and assumptions at the date of acquisition and are subject to revision based on final information received, including appraisals and other analyses which support underlying estimates.
The company performs a goodwill impairment test annually in the second quarter or more frequently if events or circumstances indicate that an impairment loss may have been incurred. The applicable guidance allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than carrying value then the company will estimate and compare the fair value of its reporting units to their carrying value, including goodwill. Reporting units are determined based on one level below the operating segment level. As applicable, fair value is determined through the use of projected future cash flows, multiples of earnings and sales and other factors. Such analysis requires the use of certain market assumptions and discount factors, which are subjective in nature.
See Notes 3 and 11 for additional information relating to goodwill.
Other Intangible Assets – Other intangible assets, primarily customer relationships and brands/tradenames, are amortized over the estimated period of benefit. The determination of the estimated period of benefit will be dependent upon the use and underlying characteristics of the intangible asset. Linde evaluates the recoverability of its intangible assets subject to amortization when facts and circumstances indicate that the carrying value of the asset may not be recoverable. If the carrying value is not recoverable, impairment is measured as the amount by which the carrying value exceeds its estimated fair value. Fair value is generally estimated based on either appraised value or other valuation techniques. Indefinite lived intangible assets related to the Linde brand are evaluated for impairment on an annual basis or more frequently if events or circumstances indicate an impairment loss may have occurred.
See Notes 3 and 12 for additional information relating to other intangible assets.
Assets Held for Sale and Discontinued Operations – Assets held for sale, as well as liabilities directly related to these assets, are classified separately in the consolidated balance sheets as held for sale if the requirements of the FASB’s Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment , are satisfied. The main requirements of ASC 360 are: (i) management having the authority to approve the action has committed to a plan to sell the assets and an active program to locate a buyer has been initiated, (ii) the assets are available for sale in their present condition at a reasonable market price, and (iii) a sale within the next twelve months is probable. Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Amortization and depreciation has been

73

discontinued. The process involved in determining the fair value less costs to sell involves estimates and assumptions that are subject to uncertainty.
Discontinued operations are reported as soon as a business is classified as held for sale, or has already been disposed of, and when the business to be disposed of represents a strategic shift that has (or will have) a major effect on the company’s operations and financial results. Businesses acquired with the intent of divesting are also required to be reported as discontinued operations. The profit/loss from discontinued operations is reported separately from the expenses and income from continuing operations in the consolidated statements of income. In the consolidated statement of cash flows, the cash flows from discontinued operations are shown separately from the cash flows from continuing operations. The information provided in the Notes relates to continuing operations. If the information relates exclusively to discontinued operations, this is highlighted accordingly.
See Note 4 for additional information relating to assets held for sale and discontinued operations.

Income Taxes – Deferred income taxes are recorded for the temporary differences between the financial statement and tax bases of assets and liabilities using currently enacted tax rates. Valuation allowances are established against deferred tax assets whenever circumstances indicate that it is more likely than not that such assets will not be realized in future periods.
Under the guidance for accounting for uncertainty in income taxes, the company can recognize the benefit of an income tax position only if it is more likely than not (greater than 50% ) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position. Otherwise, no benefit can be recognized. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Additionally, the company accrues interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. Interest and penalties are classified as income tax expense in the financial statements.
See Note 7 for additional information relating to income taxes, including the U.S. Tax Cuts and Jobs Act enacted in December 2017.
Retirement Benefits – Most Linde employees participate in a form of defined benefit or contribution retirement plan, and additionally certain employees are eligible to participate in various post-employment health care and life insurance benefit plans. The cost of contribution plans is recognized in the year earned while the cost of other plans is recognized over the employees’ expected service period to the company, all in accordance with the applicable accounting standards. The funded status of the plans is recorded as an asset or liability in the consolidated balance sheets. Funding of retirement benefits varies and is in accordance with local laws and practices.
See Note 18 for additional information relating to retirement programs.
Share-based Compensation – The company has historically granted share-based awards which consist of stock options, restricted stock and performance-based stock. Share-based compensation expense is generally recognized on a straight-line basis over the stated vesting period. For stock awards granted to full-retirement-eligible employees, compensation expense is recognized over the period from the grant date to the date retirement eligibility is achieved. For performance-based awards, compensation expense is recognized only if it is probable that the performance condition will be achieved.
See Note 17 for additional disclosures relating to share-based compensation.
Reclassifications – Certain prior years’ amounts have been reclassified to conform to the current year’s presentation, including reclassifications on the consolidated statements of income and segment operating profit relating to the adoption of accounting guidance on the presentation of net periodic pension and postretirement benefit costs.
As a result of the merger, certain reclassifications of prior period amounts were made to improve comparability and conform with the current presentation. Presentation changes were made to the consolidated balance sheets. In addition, certain reclassifications of prior period data were made in the Notes to the Consolidated Financial Statements to conform with the current period presentation. These reclassifications include: (i) the reclassification of capitalized software from property plant and equipment - net to other intangibles - net (see Note 10), and (ii) the reclassification of VAT receivables and VAT payables from accounts receivable and accounts payable, respectively, to other current assets and other current liabilities, respectively, (see Note 9).
Recently Issued Accounting Standards
Accounting Standards Implemented in 2018
The following standards were effective for Linde in 2018 and their adoption did not have a significant impact on the consolidated financial statements:

74

•
Revenue Recognition – In May 2014, the Financial Accounting Standards Board ("FASB") issued updated guidance on the reporting and disclosure of revenue. Effective January 1, 2018, Linde has adopted this guidance using the modified retrospective transition method. No material differences in revenue recognition accounting were identified under the new guidance compared with the company's historic revenue recognition accounting (see Note 21).
•
Classification of Certain Cash Receipts and Cash Payments – In August 2016, the FASB issued updated guidance on the classification of certain cash receipts and cash payments within the statement of cash flows. The update provides accounting guidance for specific cash flow issues with the objective of reducing diversity in practice. The adoption of this guidance did not have a material impact on the financial statements.
•
Intra-Entity Asset Transfers – In October 2016, the FASB issued updated guidance for income tax accounting of intra-entity transfers of assets other than inventory. The update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory in the period when the transfer occurs. The adoption of this guidance did not have a material impact on the financial statements.
•
Pension Costs - In March 2017, the FASB issued updated guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires the service cost component be reported in the same line item or items as other compensation costs arising from services rendered by employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and not included within operating profit. This guidance was adopted in the first quarter 2018. Accordingly, non-service related components of net periodic pension and postretirement benefit costs were reclassified out of "Operating Profit" to "Net pension and OPEB cost (benefit), excluding service cost" using the practical expedient to use the amounts disclosed in the retirement benefits note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements (see Note 18).
•
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income – In February 2018, the FASB issued updated guidance which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The company adopted this guidance in the fourth quarter of 2018 resulting in a reclassification adjustment of $93 million .
Accounting Standards to be Implemented
•
Leases – In February 2016, the FASB issued updated guidance on the accounting and financial statement presentation of leases. The new guidance requires lessees to recognize a right-of-use asset and lease liability for all leases, except those that meet certain scope exceptions, and would require expanded quantitative and qualitative disclosures. This guidance will be effective for the company beginning in the first quarter 2019 and requires companies to transition using a modified retrospective approach. Linde has implemented a new application to administer the accounting and disclosure requirements and is finalizing its determination of the impact the standard will have on its consolidated financial statements.

•
Credit Losses on Financial Instruments – In June 2016, the FASB issued an update on the measurement of credit losses. The guidance introduces a new accounting model for expected credit losses on financial instruments, including trade receivables, based on estimates of current expected credit losses. This guidance will be effective for the company beginning in the first quarter 2020, with early adoption permitted beginning in the first quarter 2019 and requires companies to apply the change in accounting on a prospective basis. The company is currently evaluating the impact this update will have on the consolidated financial statements.
•
Simplifying the Test for Goodwill Impairment – In January 2017, the FASB issued updated guidance on the measurement of goodwill. The new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The guidance will be effective for the company beginning in the first quarter 2020 with early adoption permitted. The company does not expect this guidance to have a material impact.
•
Derivatives and Hedging - In August 2017, the FASB issued updated guidance on accounting for hedging activities. The new guidance changes both the designation and measurement for qualifying hedging relationships and the presentation of hedge results. This guidance will be effective for the company

75

beginning in the first quarter 2019. The company does not expect the standard to have a material impact on the consolidated financial statements.




76

NOTE 3. BUSINESS COMBINATIONS
Merger of Praxair, Inc. and Linde AG

As described in Note 1, on October 31, 2018 Praxair and Linde AG combined their respective businesses through an all-stock transaction and became subsidiaries of the company.
In connection with the business combination, each share of common stock of Praxair par value $0.01 per share, (excluding any shares held in treasury immediately prior to the effective time of the merger, which were automatically canceled and retired for no consideration) was converted into one ordinary share, par value €0.001 per share, of Linde plc. Additionally, each tendered share of common stock of Linde AG was converted into 1.54 ordinary shares of Linde plc.
As provided in the business combination agreement, at the effective time of the business combination outstanding Praxair stock options and other equity awards were generally converted into stock options and equity awards on a 1:1 basis with respect to Linde shares. Outstanding Linde AG share-based compensation awards were either settled in cash (for the portion vested), or are required to be converted into similar stock options and equity awards with respect to Linde shares (for the portion unvested), after giving effect to the 1.54 exchange ratio. This grant is expected to occur in the first half of 2019. See Notes 16 and 17 for additional information.
Preliminary Allocation of Purchase Price

In accordance with the FASB’s ASC 805, "Business Combinations" , Praxair was determined to be the accounting acquirer. As such, the company has applied the acquisition method of accounting with respect to the identifiable assets and liabilities of Linde AG, which have been measured at estimated fair value as of the date of the business combination.
In accordance with the business combination agreement, Linde AG shareholders that accepted the exchange offer received Linde shares in exchange for Linde AG shares at an exchange ratio of 1.54 Linde shares for each Linde AG share. Because Praxair is the accounting acquirer, the fair value of the equity issued by Linde plc to Linde AG shareholders in the exchange transaction was determined by reference to the market price of Praxair shares. Accordingly, the purchase consideration below reflects the estimated fair value of the 92% of Linde AG shares tendered and Linde shares issued in exchange for those Linde AG shares, which is based on the final closing price of Praxair shares prior to the effective time of the merger on October 31, 2018 of $164.50 per share.
The purchase price and estimated fair value of Linde AG’s net assets acquired as of the merger date on October 31, 2018 is presented as follows:
(in thousands, except value per share data, Linde AG exchange ratio, and purchase price)
Linde AG common stock tendered as of October 31, 2018 (i)
170,875 Shares
Business combination agreement exchange ratio (ii)
1.54 : 1
Linde plc ordinary shares issued in exchange for Linde AG
263,148
Per share price of Praxair, Inc. common stock (iii)
$164.50
Purchase price (millions of dollars)
$43,288
 
(i)
Number of Linde AG shares tendered in the 2017 Exchange Offer.
 
(ii)
Exchange ratio for Linde AG shares as set forth in the business combination agreement.
 
(iii)
Closing price of Praxair shares on the New York Stock Exchange prior to the effective time of the business combination on October 31, 2018.

In accordance with ASC 805, Linde AG's assets and liabilities were measured at estimated fair values at October 31, 2018, primarily using Level 3 inputs except debt which was Level 1. Estimates of fair value represent management's best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows (sales, costs, customer attrition rates, and contributory asset charges), discount rates, competitive trends, market comparables, and others. Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates.
The following table summarizes the preliminary allocation of purchase price to the identifiable assets acquired and liabilities assumed by Linde, with the excess of the purchase price over the fair value of Linde AG’s net assets recorded as goodwill. Due to the timing of the business combination, the magnitude of and multi-national nature of the net assets acquired, and the hold separate order (See Note 1) which deferred integration of the two merged companies, at December 31,

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2018 the valuation process to determine the fair values is not complete and further adjustments are expected in 2019. The company has estimated the preliminary fair value of net assets acquired based on information currently available and will continue to adjust those estimates as additional information becomes available, analysis is able to be performed, refinement of market participant assumptions, finalization of tax returns in the pre-merger period and the application of push-down accounting at the subsidiary level. The areas where the fair value assessments are not finalized and, therefore, subject to adjustment during the measurement period relate primarily to identifiable intangible assets, property, plant and equipment, net assets held for sale, equity investments, income taxes, noncontrolling interests, contingencies and goodwill. As the company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price allocation adjustments will be recorded during the measurement period, but no later than one year from the date of the acquisition. The company will reflect measurement period adjustments in the period in which the adjustments are determined.
Therefore, final determination of the fair values will likely result in further adjustments to the values presented in the following table:
Millions of dollars
Estimated Fair Value
Assets
 
Cash and cash equivalents
$
1,363

Accounts receivable – net
2,859

Inventories
1,452

Assets held for sale
5,180

Prepaid and other current assets
1,251

Property, plant and equipment
19,381

Equity investments
1,395

Goodwill
24,146

Other intangible assets
15,592

Other long-term assets
1,024

Total Assets Acquired
$
73,643

Less: Liabilities Assumed
 
Accounts payable
$
3,360

Short-term debt
1,177

Current portion of long-term debt
1,864

Accrued taxes
159

Liabilities of assets held for sale
676

Other current liabilities
3,016

Long-term debt
6,295

Other long-term liabilities
1,908

Deferred credits, including deferred income taxes
6,754

Total Liabilities Assumed
$
25,209

Less: Noncontrolling Interests
5,146

Purchase Price (i)
$
43,288

 
(i)
See above for the calculation of the purchase price.

Summary of Significant Fair Value Methods
The methods used to determine the fair value of significant identifiable assets and liabilities included in the preliminary allocation of purchase price are discussed below.
Inventories
Acquired inventory is comprised of finished goods, work in process and raw materials. The fair value of finished goods was calculated as the estimated selling price, adjusted for costs of the selling effort and a reasonable profit allowance relating

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to the selling effort. The fair value of work in process inventory was primarily calculated as the estimated selling price, adjusted for estimated costs to complete the manufacturing, estimated costs of the selling effort, as well as a reasonable profit margin on the remaining manufacturing and selling effort. The fair value of raw materials and supplies was determined based on replacement cost which approximates historical carrying value. The preliminary fair value step-up of inventories is being recognized in “Cost of sales” as the inventory is sold.
Assets held for sale and Liabilities of assets held for sale
As described in Note 1, as a condition of the European Commission ("EC"), the U.S. Department of Justice ("DOJ"), and other governmental regulatory authorities approval of the merger, Linde plc, Praxair and Linde AG were required to divest various businesses in Europe, the Americas and Asia. The fair value of these businesses has been determined based on the estimated net selling prices or sales agreements. Actual amounts may differ from this preliminary determination. See Note 4 for further information on merger-related divestitures.
Property, Plant and Equipment
The fair value of property, plant and equipment was primarily calculated using replacement costs adjusted for the age and condition of the asset, and is summarized below:
Property, plant and equipment ("PP&E")
(in millions)
Production plants
$
10,739

Storage tanks
1,809

Transportation equipment and other
574

Cylinders
2,493

Buildings
1,970

Land and improvements
647

Construction in progress
1,149

Preliminary fair value of PP&E
$
19,381


The final fair value determination for property, plant and equipment or estimates of remaining useful lives may differ from this preliminary determination.
Identifiable Intangible Assets
The fair value of identifiable intangible assets is summarized below:
 
Weighted Average Amortization Period (in years)
 

(in millions)
Identifiable intangible assets
 
 
 
 
Customer relationships
27
 
$
12,555

 
Linde Brand
Indefinite
 
1,648

 
Brands/Tradenames
27
 
578

 
Other intangibles
8
 
811

Preliminary fair value of identifiable intangible assets
26
 
$
15,592


The fair value estimate for all other identifiable intangible assets is based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). The final fair value determination for identifiable intangibles or estimates of remaining useful lives may differ materially from this preliminary determination.
The fair value of the customer relationships intangible asset was valued using a multi-period excess earnings method, a form of the income approach, which incorporates the estimated future cash flows to be generated from Linde AG’s existing customer base. Excess earnings are the earnings remaining after deducting the market rates of return on the estimated values of contributory assets, including debt-free net working capital, tangible assets, and other identifiable intangible assets. The excess earnings are thereby calculated for each year of multi-year projection periods and discounted to present value.

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Brands/Tradenames includes $1,648 million related to the Linde brand which is considered to have an indefinite life. Other intangibles primarily includes acquired technology. These intangible assets were valued using the relief from royalty method under the income approach; this method estimates the cost savings generated by a company related to the ownership of an asset for which it would otherwise have had to pay royalties or license fees on revenues earned through the use of the asset and discounted to present value.

Pension and Other Postretirement Liabilities
Linde recognized a pretax net liability representing the unfunded portion of Linde AG’s defined-benefit pension and other postretirement benefit ("OPEB") plans. Refer to Note 18 for further information on pensions and OPEB arrangements.
Long-Term Debt
The fair value for long-term debt was primarily obtained from third party quotes, as the majority of the Linde AG bond portfolio is publicly traded.
Deferred Income Tax Assets and Liabilities
The deferred income tax assets and liabilities include the expected future federal, state and foreign tax consequences associated with temporary differences between the preliminary fair values of the assets acquired and liabilities assumed and the respective tax bases. Tax rates utilized in calculating deferred income taxes generally represent the enacted statutory tax rates at the effective date of the merger in the jurisdictions in which legal title of the underlying asset or liability resides. The final fair value of deferred income tax assets and liabilities may differ from this preliminary determination.
Refer to Note 7 for further information related to income taxes.
Noncontrolling Interests
Noncontrolling interests include the fair value of noncontrolling interests of Linde AG, including approximately $3.2 billion relating to the 8% of Linde AG shares which were not tendered in the Exchange Offer and are intended to be the subject of a cash-merger squeeze-out. The company’s wholly-owned indirect subsidiary, Linde Intermediate Holding AG "Linde Holding"), which directly owns the 92% of Linde AG shares acquired in the Exchange Offer, determined the adequate cash compensation to be paid to the 8% remaining Linde AG minority shareholders in exchange for the transfer of their Linde AG shares for each Linde AG share. The cash-merger squeeze-out was approved by the shareholders of Linde AG at an extraordinary shareholders meeting of Linde AG on December 12, 2018, but remains subject to court approval. Also, as required by German law, a guarantee was obtained from a financial institution guaranteeing the fulfillment of Linde Holding's obligations to pay the minority shareholders of Linde AG all amounts due in connection with the squeeze-out transaction. The remaining noncontrolling interests relate to the fair value of historic noncontrolling interests of Linde AG and its subsidiaries. The final fair value determination for noncontrolling interests may differ from this preliminary determination.
Equity Investments
The fair value of equity investments was determined using a discounted cash flow approach. The final fair value of equity investments may differ from this preliminary determination.
Other Assets Acquired and Liabilities Assumed (excluding Goodwill)
Linde utilized the carrying values, net of allowances, to value accounts and notes receivable and accounts payable as well as other current assets and liabilities as it was determined that carrying values represented the fair value of those items at the merger date. 
Goodwill
The excess of the consideration for the merger over the preliminary fair value of net assets acquired was recorded as goodwill. The merger resulted in the recognition of $24,146 million of goodwill, which is not deductible for tax purposes. The goodwill balance is primarily attributed to the assembled workforce, expanded market opportunities and cost and other operating synergies anticipated upon the integration of the operations of Praxair and Linde AG. The push down of goodwill to reporting units is not final and may differ from this preliminary determination.
Results of Linde AG Operations Since Merger
The results of operations of Linde AG have been included in the company’s consolidated statements of income since the merger. The following table provides Linde AG “Sales” and “Income (loss) from continuing operations” included in the company's results since the merger.

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Millions of dollars
Linde AG Results of Operations
November 1, - December 31, 2018
Sales
$
2,873

Income (loss) from continuing operations*
$
(385
)
* Includes net charges of $451 million related to the impacts of purchase accounting.
Unaudited Pro Forma Information

Linde's unaudited pro forma results presented below were prepared pursuant to the requirements of ASC 805 and give effect to the merger as if it had been consummated on January 1, 2017. The pro forma results have been prepared for comparative purposes only, and do not necessarily represent what the revenue or results of operations would have been had the merger been completed on January 1, 2017. In addition, these results are not intended to be a projection of future operating results and do not reflect synergies that might be achieved.
The unaudited pro forma results include adjustments for the preliminary purchase accounting impact (including, but not limited to, depreciation and amortization associated with the acquired tangible and intangible assets, amortization of the fair value adjustment to investment in nonconsolidated affiliates, and reduction of interest expense related to the fair value adjustment to long-term debt along with the related tax and non-controlling interest impacts), the alignment of accounting policies, adjustments due to IFRS compliant reporting conversion to U.S. GAAP and the elimination of transactions between Praxair and Linde AG.
The unaudited pro forma results for all periods presented below exclude the results of operations of the Linde AG merger-related divestitures (See Note 4) as these divestitures are reflected as discontinued operations. The Praxair merger-related divestitures (See Note 4) are included in the results from continuing operations, including the results from Praxair's European business through the disposition date of December 3, 2018, in the unaudited pro forma results presented below, for all periods presented, as these divestitures do not qualify for discontinued operations.
The unaudited pro forma results are summarized below:
Millions of dollars
2018
 
2017
Sales (a)
$
29,774

 
$
28,449

Income from continuing operations
$
4,739

 
$
871

(a) Includes sales from Praxair's merger-related divestitures of $1,625 million and $1,553 million for the years ended December 31, 2018 and 2017, respectively.

Significant nonrecurring amounts reflected in the pro forma results are as follows:

A $3,294 million gain ( $2,923 million after tax) was recorded in the fourth quarter 2018 as a result of the divestiture of Praxair's European industrial gases business and is included in the December 31, 2018 pro forma income from continuing operations.

From January 1, 2017 through December 31, 2018, Praxair, Inc. and Linde AG collectively incurred pre-tax costs of $736 million ( $680 million after tax) to prepare for and close the merger. These merger costs were reflected within the results of operations in the pro forma results as if they were incurred on January 1, 2017. Any costs incurred related to merger-related divestitures and integration and to prepare for the intended business separations were reflected in the pro forma results in the period in which they were incurred.
The company incurred pre-tax charges of $368 million ( $279 million after tax) and $10 million ( $8 million after tax) in 2018 related to the fair value step‑up of inventories acquired and sold as well as a pension settlement due to the payout to certain participants as a result of change in control provisions within a U.S. nonqualified pension plan, respectively. The 2018 pro forma results were adjusted to exclude these charges. The pro forma results for 2017 were adjusted to include these charges, as well as charges incurred subsequent to December 31, 2018 but less than a year from the date of the merger of $13 million ( $10 million after tax) related to the remaining fair value step-up of inventories to be sold and $51 million ( $40 million after tax) related to an additional pension settlement within the U.S. nonqualified pension plan will occur in the first quarter of 2019 upon payment. See Note 18 for further information relating to the U.S. nonqualified pension plan settlements.


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2018 Non-Merger Related Acquisitions
Non-merger related acquisitions of $25 million during the year ended December 31, 2018 are not material individually or in the aggregate.
2017 Acquisitions
During the year ended December 31, 2017, Linde had acquisitions totaling $33 million , primarily acquisitions of packaged gas businesses and a carbon dioxide joint venture in North America. These transactions resulted in goodwill and other intangible assets of $24 million and $3 million , respectively (see Notes 11 and 12).
2016 Acquisitions
During the year ended December 31, 2016, Linde had acquisitions totaling $363 million , primarily the acquisition of Yara International ASA's European carbon dioxide business ("European CO2 business") and packaged gases businesses in North America and Europe. These transactions resulted in goodwill and other intangible assets of $141 million and $82 million , respectively (see Notes 11 and 12). In addition, Linde purchased a remaining 34% share in a Scandinavian joint venture for $104 million (see Note 16).
On June 1, 2016 Linde completed an acquisition of a European CO2 business, which is a leading supplier of liquid CO2 and dry ice primarily to the European food and beverage industries. The business operates CO2 liquefaction plants and dry ice production facilities across the UK, Ireland, Norway, Denmark, Germany, Netherlands, Belgium, France and Italy. This acquisition was accounted for as a business combination; accordingly, the results of operations were consolidated from June 1, 2016 in the European business segment.
The purchase price for the acquisition was approximately $230 million ( €206 million ) and resulted in $121 million of intangible assets. The intangible assets primarily consist of $69 million of goodwill and $51 million of customer relationships that will be amortized over their estimated life of 20 years. This business was subsequently sold as part of the merger Divestitures (see Note 4).

NOTE 4. MERGER-RELATED DIVESTITURES, DISCONTINUED OPERATIONS AND NET ASSETS HELD FOR SALE
As described in Note 1, as a condition of the European Commission ("EC"), the U.S. Department of Justice ("DOJ"), and other governmental regulatory authorities approval of the merger, Linde plc, Praxair and Linde AG were required to divest the following businesses:
Praxair Merger-Related Divestitures - Primarily European Industrial Gases Business
As a condition of the EC regulatory approval of the merger transaction, Praxair agreed to sell the majority of its industrial gases business in Europe. The sale was completed on December 3, 2018 in two transactions, as described below:

•
The Società Italiana Acetilene e Derivati S.p.A. ("SIAD") Sale and Purchase Agreement dated December 5, 2017 whereby Praxair agreed, inter alia , to sell its 34% non-controlling participation in its Italian joint venture SIAD to its joint venture partner Flow Fin in exchange for Flow Fin’s 40% non-controlling participation in Praxair’s majority-owned Italian joint venture, Rivoira S.p.A., and cash payment of a net purchase price of €90 million ( $102 million as of October 31, 2018) by Praxair to Flow Fin. This transaction was completed on October 31, 2018, and;

•
The Praxair Europe Sale and Purchase Agreement dated July 5, 2018 pursuant to which Praxair sold the majority of its European businesses to Taiyo Nippon Sanso Corporation for €5,000 million in cash consideration ( $5,700 million at December 3, 2018), reduced by estimated normal closing adjustments of €86 million ( $96 million ). These transactions were completed on December 3, 2018.

In connection with these transactions, the company recognized a net pre-tax gain of $3,294 million ( $2,923 million after tax) in the consolidated statements of income and related to the Europe segment.

The net carrying value of Praxair's European business assets and liabilities divested on December 3, 2018 is presented below:

82

Millions of dollars
Carrying Value
Assets
 
Cash and cash equivalents
$
38

Accounts receivable – net
311

Inventories
67

Prepaid and other current assets
22

Property, plant and equipment – net
1,342

Equity investments
234

Goodwill
620

Other intangible assets – net
115

Other long-term assets
36

Total Assets Divested
$
2,785

Liabilities
 
Accounts payable
$
215

Accrued taxes
27

Other current liabilities
111

Long-term debt
2

Other long-term liabilities
92

Deferred credits
174

Total Liabilities Divested
$
621

Noncontrolling interests
$
200

Accumulated other comprehensive income (loss)
 
Pension/OPEB funded status obligation, net of taxes
(8
)
Cumulative translation adjustment, net of taxes
(318
)
Net Assets Divested
$
2,290

Additionally, to satisfy regulatory requirements to consummate the business combination, Praxair agreed to the following transactions which will be completed during 2019:
•
Praxair's Chilean business which will be sold as part of the Americas' SPA (as defined below) for $21 million proceeds which is further described below.
•
Various transactions within China, India and South Korea.
2018 sales related to these businesses were approximately $160 million .
Effective October 22, 2018, the date of final regulatory approvals, these businesses have been accounted for as Assets Held for Sale on the Consolidated Balance Sheets. These businesses were evaluated for discontinued operations accounting treatment under U.S. GAAP and it was determined that they did not meet the definition of a discontinued operation as these transactions did not represent a strategic shift with a major effect, after considering the impact of the merger.

Linde AG Merger-Related Divestitures - Primarily Americas Industrial Gases Business
As a condition of the U.S. regulatory approval of the merger, Linde AG agreed to sell the majority of its industrial gases business in the Americas, as described below:

•
The Linde AG Americas Sales and Purchase Agreement, dated July 16, 2018, as and further amended on September 22, 2018, October 19, 2018, and February 20, 2019 whereby Linde AG and Praxair, Inc. entered into an agreement with a consortium comprising companies of the German industrial gases manufacturer Messer Group and CVC Capital Partners Fund VII to sell the majority of Linde AG’s industrial gases business in North America and certain industrial gases business activities of Linde AG's in South America for $2.97 billion in cash consideration after purchase price adjustments for certain items relating to assets and liabilities

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of the sold businesses. In addition, divestitures include $531 million of proceeds for incremental plant sales within the Americas under other agreements. These transactions were completed on March 1, 2019.

•
Various transactions within China, India and South Korea.

Discontinued Operations
Only the sales of the Linde AG merger-related divestitures meet the criteria for discontinued operations, Praxair merger-related divestitures do not qualify as discontinued operations. As such, operations related to the Linde AG merger-related divestitures are included within Income from discontinued operations, net of tax for periods subsequent to the merger, as summarized below:
Millions of dollars
November 1, - December 31, 2018
Net sales
$
388

Cost of sales
173

Other operating costs
90

Operating profit
$
125

Income from equity investments
1

Income taxes
9

Income from discontinued operations, net of tax
$
117

Noncontrolling interests
(9
)
Income from discontinued operations, net of tax and noncontrolling interests
$
108


For the year ended December 31, 2018 there were no material amounts of depreciation, amortization, capital expenditures, or significant operating or investing non-cash items related to discontinued operations.

Net Assets Held for Sale

Net assets held for sale includes both the Linde AG merger-related divestitures that meet the criteria for discontinued operations and the Praxair merger-related divestitures that do not. As of December 31, 2018, the following assets and liabilities are reported as components of the net assets held for sale in the consolidated balance sheets:
Millions of dollars
Carrying / Fair Market Value
Assets
 
Cash and cash equivalents
$
182

Accounts receivable – net
297

Inventories
209

Prepaid and other current assets
54

Property, plant and equipment – net
2,005

Other Assets
187

Asset adjustments for estimated fair value (Note 3)
2,564

Total Assets Classified as Assets Held for Sale
$
5,498

Liabilities
 
Accounts payable
125

Deferred credits
206

Other liabilities
437

Total Liabilities Classified as Assets Held for Sale
768

Net Assets Classified as Held for Sale
$
4,730



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NOTE 5. TRANSACTION COSTS AND OTHER CHARGES
2018 Charges
Transaction costs and other charges were $309 million for the year ended December 31, 2018 ( $306 after-tax and noncontrolling interests, or $0.92 per diluted share).
Transaction Costs
On October 31, 2018, Praxair and Linde AG combined under Linde plc, as contemplated by the business combination agreement (see Note 1). In connection with the business combination, Linde incurred transaction costs which totaled $236 million for the year ended December 31, 2018 ( $236 million after-tax).
Other Charges
Also included in Transaction costs and other charges are other charges of $73 million for the year ended December 31, 2018 ( $70 million after-tax) comprised of the following; (i) a $40 million charge ( $40 million after-tax) related to an unfavorable development related to a supplier contract in China, (ii) restructuring charges of $21 million ( $18 million after-tax) and (iii) a $12 million charge ( $12 million after-tax) associated with the transition to hyper-inflationary accounting in Argentina.
2017 Charges
Transaction Costs
In connection with the intended business combination, Linde incurred transaction costs which totaled $52 million for the year ended December 31, 2017 ( $48 million after-tax or $0.17 per diluted share).
2016 Charges
Cost Reduction Program and Other Charges
In the third quarter of 2016, Linde recorded pre-tax charges totaling $96 million ( $63 million after-tax and noncontrolling interests of $0.22 per diluted share). Following is a summary of the pre-tax charge by reportable segment:
(millions of dollars)
Severance costs
 
Other Charges
 
Total
North America
$
14

 
$
29

 
$
43

Europe
12

 
3

 
15

South America
5

 
7

 
12

Asia
6

 
13

 
19

Surface Technologies
3

 
4

 
7

Total
$
40

 
$
56

 
$
96


The severance costs of  $40 million  are for the elimination of  730  positions. The other charges of  $56 million  are primarily related to (i) the consolidation of operations for efficiencies and cost reduction primarily in North America and Surface Technologies, (ii) integration costs for acquisitions in Europe and North America, and (iii) asset write-downs and other charges related to the impacts of weaker underlying industrial activity, primarily in the Americas and Asia. Amounts related to asset write-downs are net of expected sale proceeds, which are not significant.
The total cash requirement of the cost reduction program and other charges was approximately $50 million . The actions are completed.
Classification in the consolidated financial statements
The pre-tax charges for each year are shown within operating profit in a separate line item on the consolidated statements of income. In the consolidated balance sheets, reductions in assets are recorded against the carrying value of the related assets and unpaid amounts are recorded primarily as short-term liabilities. On the consolidated statement of cash flows, the pre-tax impact of these charges, net of cash payments, is shown as an adjustment to reconcile net income to net cash provided by operating activities. In Note 20 - Segment Information, Linde excluded these charges from its management definition of segment operating profit; a reconciliation of segment operating profit to consolidated operating profit is shown within the segment operating profit table.


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NOTE 6. LEASES
In the normal course of its business, Linde enters into various leases as the lessee, primarily involving manufacturing and distribution equipment and office space. Total lease and rental expenses under operating leases were $193 million in 2018 , $146 million in 2017 and $141 million in 2016 . The increase in 2018 is a result of the merger.
At December 31, 2018 , minimum payments due under operating leases are as follows:  
(Millions of dollars)
 
2019
$
305

2020
236

2021
186

2022
145

2023
102

Thereafter
326

 
$
1,300

Capital leases are included in property, plant and equipment – net (see Note 10). Related obligations are included in debt. Capital lease expense is recognized as part of depreciation and interest.
At December 31, 2018 , minimum payments due under capital leases are as follows:  
(Millions of dollars)
 
2019
18

2020
17

2021
12

2022
10

2023
5

Thereafter
42

 
$
104

 
 
Finance charge included in minimum lease payments
$
23

Linde’s leases where it is the lessor are not material.

NOTE 7. INCOME TAXES
The year ended December 31, 2018 reflects Praxair for the entire year and the Linde AG for the period beginning October 31, 2018 (the merger date), including the impacts of purchase accounting. The amounts for historical periods prior to 2018 solely reflect the results of Praxair. See Notes 1 and 3.
Pre-tax income applicable to U.S. and foreign operations is as follows:  
(Millions of dollars)
Year Ended December 31,
2018
 
2017
 
2016
United States
$
931

 
$
1,003

 
$
954

Foreign (a)
4,118

 
1,284

 
1,094

Total income before income taxes
$
5,049

 
$
2,287

 
$
2,048

(a) includes a $3,294 million gain related to Europe divestiture (see Notes 4 and 9).    
U.S. Tax Cuts and Jobs Act (Tax Act)
On December 22, 2017 the U.S. government enacted the Tax Cuts and Jobs Act ("Tax Act"). This comprehensive tax legislation significantly revised the U.S. corporate income tax rules by, among other things, lowering the corporate income

86

tax rate from 35% to 21% , implementing a territorial tax system and imposing a one-time tax on accumulated earnings of foreign subsidiaries. Given the substantial uncertainties surrounding the Tax Act and the short period of time between December 22, 2017 and December 31, 2017 to calculate the U.S. Federal, U.S. state, and non-U.S. tax impacts of the Tax Act, at December 31, 2017 the company accounted for its income tax charge on a provisional (estimated) basis as allowed by SEC Staff Accounting Bulletin No. 118 ("SAB 118"). The company’s 2017 net provisional income tax charge of $394 million has three main components: (i) an estimated $467 million U.S. Federal and state tax charge for deemed repatriation of accumulated foreign earnings; (ii) an estimated $260 million charge for foreign withholding taxes related to anticipated future repatriation of foreign earnings; and (iii) an estimated $333 million deferred tax benefit for the revaluation of net deferred tax liabilities from 35% to the new 21% tax rate. The $467 million U.S. federal and state tax charge for deemed repatriation of accumulated foreign earnings includes $422 million of deemed repatriation tax payable over eight years, of which $388 million is classified as of December 31, 2017 as other long-term liabilities on the consolidated balance sheets (see Note 9).
During 2018, the company continued to evaluate the Tax Act, additional guidance from the Internal Revenue Service, its historical foreign earnings and taxes and other items that could impact its net provisional tax charge. Additionally, the company continued to review its foreign capital structures, organizational cash needs and the foreign withholding tax cost of planned repatriation. In the fourth quarter of 2018, the company completed its accounting and updated its provisional estimates in accordance with SAB 118 resulting in a net reduction to tax expense of $61 million , $41 million U.S. federal and $20 million of state income tax (net of federal tax benefit). This resulted in a deemed repatriation tax payable of $291 million payable over the remaining seven years, of which $265 million is classified as of December 31, 2018 as other long-term liabilities on the consolidated balance sheets (see Note 9).
Further, the Tax Act enacted new provisions related to the taxation of foreign earnings, known as GILTI. The company has elected as an accounting policy to account for GILTI as period costs when incurred.
Additionally, in the fourth quarter of 2018 the company adopted Accounting Standards Update 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", electing to reclassify the income tax effects of the Tax Act from Accumulated Other Comprehensive Income ("AOCI") to retained earnings. This resulted in a net reduction to AOCI and a net increase to retained earnings of $93 million , $98 million directly related to the federal income tax rate change reduced by $5 million indirectly related to the federal tax rate change on state income taxes.
Provision for Income Taxes
The following is an analysis of the provision for income taxes:  
(Millions of dollars)
Year Ended December 31,
2018 (a)
 
2017 (a)
 
2016
Current tax expense (benefit)
 
 
 
 
 
U.S. federal
$
390

 
$
565

 
$
266

State and local
(7
)
 
84

 
32

Foreign
620

 
374

 
266

 
1,003

 
1,023

 
564

Deferred tax expense (benefit)
 
 
 
 
 
U.S. federal
8

 
(221
)
 
3

State and local
15

 
19

 
7

Foreign
(209
)
 
205

 
(23
)
 
(186
)
 
3

 
(13
)
Total income taxes
$
817

 
$
1,026

 
$
551

 

(a)
Includes a benefit of $61 million and a charge of $394 million related to the Tax Act in 2018 and 2017, respectively and a charge of $371 million related to divestitures in 2018 (see Note 4) as follows:

87

 
2018
 
2017
Current tax expense (benefit)
 
 
 
U.S. federal
$
219

 
$
414

State and local
(36
)
 
53

Foreign
114

 
60

 
297

 
527

Deferred tax expense (benefit)
 
 
 
U.S. federal
6

 
(333
)
State and local
7

 
—

Foreign
—

 
200

 
13

 
(133
)
Total income taxes
$
310

 
$
394

Effective Tax Rate Reconciliation
For purposes of the effective tax rate reconciliation, the company utilized the U.S. statutory income tax rate of 21% in 2018 and 35% in years 2017 and 2016. An analysis of the difference between the provision for income taxes and the amount computed by applying the U.S. statutory income tax rate to pre-tax income follows:       
(Dollar amounts in millions)
Year Ended December 31,
2018
 
2017
 
2016
U.S. statutory income tax
$
1,060

 
21.0
 %
 
$
801

 
35.0
 %
 
$
717

 
35.0
 %
State and local taxes – net of federal benefit
30

 
0.6
 %
 
32

 
1.4
 %
 
28

 
1.4
 %
U.S. tax credits and deductions (a)
(12
)
 
(0.2
)%
 
(27
)
 
(1.2
)%
 
(32
)
 
(1.6
)%
Foreign tax differentials (b)
57

 
1.1
 %
 
(145
)
 
(6.3
)%
 
(140
)
 
(6.8
)%
Share Based Compensation
(22
)
 
(0.4
)%
 
(35
)
 
(1.5
)%
 
(20
)
 
(1.0
)%
Tax Act
(61
)
 
(1.2
)%
 
394

 
17.2
 %
 
—

 
—
 %
Divestitures (c)
(321
)
 
(6.4
)%
 
—

 
—
 %
 
—

 
—
 %
Other – net (d)
86

 
1.7
 %
 
6

 
0.3
 %
 
(2
)
 
(0.1
)%
Provision for income taxes
$
817

 
16.2
 %
 
$
1,026

 
44.9
 %
 
$
551

 
26.9
 %
 
________________________
(a)
U.S. tax credits and deductions relate to foreign derived intangible income in 2018, the research and experimentation tax credit in 2018, 2017 and 2016 and manufacturing deduction in years 2017 and 2016.
(b)
Primarily related to differences between the U.S. tax rate ( 21% in year 2018 and 35% in years 2017 and 2016) and the statutory tax rate in the countries where the company operates. Other permanent items and tax rate changes were not significant.
(c)
Divestitures primarily relate to the sale of the company’s European business (see Note 4).
(d)
Other - net includes $34 million of U.S tax related to GILTI in 2018 and an increase in unrecognized tax benefits in Europe of $44 million .
Net Deferred Tax Liabilities
Net deferred tax liabilities included in the consolidated balance sheets are comprised of the following:  

88

(Millions of dollars)
December 31,
2018
 
2017
Deferred tax liabilities
 
 
 
Fixed assets
$
3,935

 
$
1,128

Goodwill
124

 
143

Other intangible assets
3,684

 
72

Subsidiary/equity investments
570

 
200

Other
648

 
93

 
$
8,961

 
$
1,636

Deferred tax assets
 
 
 
Carryforwards
$
526

 
$
209

Benefit plans and related (a)
575

 
257

Inventory
63

 
16

Accruals and other (b)
1,112

 
261

 
$
2,276

 
$
743

Less: Valuation allowances (c)
(237
)
 
(76
)
 
$
2,039

 
$
667

Net deferred tax liabilities
$
6,922

 
$
969

Recorded in the consolidated balance sheets as (Note 9):
 
 
 
Other long-term assets
510

 
198

Deferred credits
7,432

 
1,167

 
$
6,922

 
$
969

________________________
(a)
Includes deferred taxes of $292 million and $217 million in 2018 and 2017 , respectively, related to pension / OPEB funded status (see Notes 9 and 18).
(b)
Includes $104 million and $130 million in 2018 and 2017 , respectively, related to research and development costs.
(c)
Summary of valuation allowances relating to deferred tax assets follows (millions of dollars):
 
 
2018
 
2017
 
2016
 
Balance, January 1,
$
(76
)
 
$
(132
)
 
$
(123
)
 
Income tax (charge) benefit (i)
(51
)
 
59

 
(13
)
 
Merger with Linde AG
(121
)
 
—

 
—

 
Other, including write-offs
7

 
—

 
6

 
Translation adjustments
4

 
(3
)
 
(2
)
 
Balance, December 31,
$
(237
)
 
$
(76
)
 
$
(132
)
(i)
2017 includes a $59 million benefit related to the utilization of foreign tax credits under the Tax Act.

The company evaluates deferred tax assets quarterly to ensure that estimated future taxable income will be sufficient in character (e.g., capital gain versus ordinary income treatment), amount and timing to result in their recovery. After considering the positive and negative evidence, a valuation allowance is established to reduce the assets to their realizable value when management determines that it is more likely than not (i.e., greater than 50% likelihood) that a deferred tax asset will not be realized. Considerable judgment is required in establishing deferred tax valuation allowances.
At December 31, 2018 , the company had $526 million of deferred tax assets relating to net operating losses (“NOLs”) and tax credits and $237 million of valuation allowances. These deferred tax assets include $445 million relating to NOLs of which $55 million expire within 5 years, $125 million expire after 5 years and $265 million have no expiration. The deferred tax assets also include $ 81 million related to credits of which $13 million expire within 5 years, $38 million expire after 5 years, and $30 million have no expiration. The valuation allowances of $237 million primarily relate to NOLs and are required because management has determined, based on financial projections and available tax strategies, that it is unlikely

89

that the NOLs will be utilized before they expire. If events or circumstances change, valuation allowances are adjusted at that time resulting in an income tax benefit or charge.
The company has $570 million of foreign income taxes accrued related to its investments in subsidiaries and equity investments as of December 31, 2018.   A provision has not been made for any additional foreign income tax at December 31, 2018 on approximately $30 billion related to its investments in subsidiaries because the company intends to remain indefinitely reinvested.  While the $30 billion could become subject to additional foreign income tax if there is a sale of a subsidiary or earnings are remitted as dividends, it is not practicable to estimate the unrecognized deferred tax liability.
Uncertain Tax Positions
Unrecognized income tax benefits represent income tax positions taken on income tax returns but not yet recognized in the consolidated financial statements. The company has unrecognized income tax benefits totaling $319 million , $54 million and $56 million as of December 31, 2018 , 2017 and 2016 , respectively. If recognized, essentially all of the unrecognized tax benefits and related interest and penalties would be recorded as a benefit to income tax expense on the consolidated statement of income.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:  
(Millions of dollars)
2018
 
2017
 
2016
Unrecognized income tax benefits, January 1
$
54

 
$
56

 
$
68

Additions for tax positions of prior years (a)
104

 
48

 
6

Reductions for tax positions of prior years
(7
)
 
(26
)
 
(15
)
Additions for current year tax positions (b)
179

 
—

 
—

Reductions for settlements with taxing authorities (c)
(3
)
 
(26
)
 
(2
)
Foreign currency translation and other
(8
)
 
2

 
(1
)
Unrecognized income tax benefits, December 31
$
319

 
$
54

 
$
56

 
________________________
(a)
Increase primarily relates to tax positions in the United States and Europe.
(b)
2018 includes $167 million related to the merger with Linde AG.
(c)
Settlements are uncertain tax positions that were effectively settled with the taxing authorities, including positions where the company has agreed to amend its tax returns to eliminate the uncertainty.
The company classifies interest income and expense related to income taxes as tax expense in the consolidated statement of income. The company recognized net interest expense of $32 million in 2018 , net interest expense of $8 million in 2017 , and net interest income of $10 million in 2016 . The company had $48 million and $8 million of accrued interest and penalties as of December 31, 2018 and December 31, 2017 , respectively which were recorded in other long-term liabilities in the consolidated balance sheets (see Note 9).

90


As of December 31, 2018 , the company remained subject to examination in the following major tax jurisdictions for the tax years as indicated below:  
Major tax jurisdictions
Open Years
North and South America
 
United States
2014 through 2018
Canada
2011 through 2018
Mexico
2012 through 2018
Brazil
2005 through 2018
 
 
Europe and Africa
 
Belgium
2013 through 2018
Germany
2011 through 2018
Luxembourg
2013 through 2018
Netherlands
2013 through 2018
Republic of South Africa
2014 through 2018
Scandinavia
2008 through 2018
Spain
2004 through 2018
United Kingdom
2015 through 2018
 
 
Asia and Australia
 
Australia
2013 through 2018
China
2008 through 2018
India
2006 through 2018
Korea
2013 through 2018
New Zealand
2014 through 2018
Taiwan
2014 through 2018
The company is currently under audit in a number of jurisdictions. As a result, it is reasonably possible that some of these matters will conclude or reach the stage where a change in unrecognized income tax benefits may occur within the next twelve months. At the time new information becomes available, the company will record any adjustment to income tax expense as required. Final determinations, if any, are not expected to be material to the consolidated financial statements. The company is also subject to income taxes in many hundreds of state and local taxing jurisdictions that are open to tax examinations.

91

NOTE 8. EARNINGS PER SHARE – LINDE PLC SHAREHOLDERS
Basic and Diluted earnings per share - Linde plc shareholders is computed by dividing Income From Continuing Operations, Income From discontinued operations, net of tax, and Net income – Linde plc for the period by the weighted average number of either basic or diluted shares outstanding, as follows:  
 
2018
 
2017
 
2016
Numerator (millions of dollars)
 
 
 
 
 
Income From Continuing Operations
$
4,273

 
$
1,247

 
$
1,500

Income from discontinued operations, net of tax
108

 
—

 
—

Net Income – Linde plc
$
4,381

 
$
1,247

 
$
1,500

Denominator (thousands of shares)
 
 
 
 
 
Weighted average shares outstanding
330,088

 
285,893

 
285,289

Shares earned and issuable under compensation plans
313

 
368

 
388

Weighted average shares used in basic earnings per share *
330,401

 
286,261

 
285,677

Effect of dilutive securities
 
 
 
 
 
Stock options and awards
3,726

 
2,853

 
2,080

Weighted average shares used in diluted earnings per share *
334,127

 
289,114

 
287,757

Basic earnings per share from continuing operations
$
12.93

 
$
4.36

 
$
5.25

Basic earnings per share from discontinued operations
$
0.33

 
$
—

 
$
—

Basic Earnings Per Share
$
13.26

 
$
4.36

 
$
5.25

Diluted earnings per share from continuing operations
$
12.79

 
$
4.32

 
$
5.21

Diluted earnings per share from discontinued operations
$
0.32

 
$
—

 
$
—

Diluted Earnings Per Share
$
13.11

 
$
4.32

 
$
5.21

* As a result of the merger, share amounts for the year ended December 31, 2018 reflect a weighted average effect of Praxair shares outstanding prior to October 31, 2018 and Linde plc shares outstanding on and after October 31, 2018.    
There were no antidilutive shares for the years ended December 31, 2018 or 2017. Stock options of 2,602,770 for the year ended December 31, 2016 were antidilutive and therefore excluded in the computation of diluted earnings per share.

NOTE 9. SUPPLEMENTAL INFORMATION
The year ended December 31, 2018 reflects Praxair for the entire year and the Linde AG for the period beginning after October 31, 2018 (the merger date), including the impacts of purchase accounting. The amounts for historical periods prior to 2018 solely reflect the results of Praxair. See Notes 1 and 3.
Income Statement
(Millions of dollars)
Year Ended December 31,
2018
 
2017
 
2016
Selling, General and Administrative
 
 
 
 
 
Selling
$
757

 
$
511

 
$
493

General and administrative
872

 
696

 
652

 
$
1,629

 
$
1,207

 
$
1,145

Year Ended December 31,
2018
 
2017
 
2016
Depreciation and Amortization (a)
 
 
 
 
 
Depreciation
$
1,615

 
$
1,093

 
$
1,028

Amortization of other intangibles (Note 12)
215

 
91

 
94

 
$
1,830

 
$
1,184

 
$
1,122


92

Year Ended December 31,
2018
 
2017
 
2016
Other Income (Expenses) – Net
 
 
 
 
 
Currency related net gains (losses)
$
4

 
$
(3
)
 
$
1

Partnership income
8

 
6

 
5

Severance expense
(7
)
 
(6
)
 
(7
)
Asset divestiture gains (losses) – net
6

 
4

 
16

Other – net
7

 
3

 
8

 
$
18

 
$
4

 
$
23


Year Ended December 31,
2018
 
2017
 
2016
Interest Expense – Net
 
 
 
 
 
Interest incurred on debt
$
196

 
$
189

 
$
208

Interest capitalized
(20
)
 
(28
)
 
(34
)
Bond redemption (b)
26

 
—

 
16

 
$
202

 
$
161

 
$
190


Year Ended December 31,
2018
 
2017
 
2016
Income Attributable to Noncontrolling Interests
 
 
 
 
 
Noncontrolling interests' operations (c)
$
12

 
$
59

 
$
35

Redeemable noncontrolling interests' operations (Note 16)
3

 
2

 
3

Noncontrolling interests from continuing operations
$
15

 
$
61

 
$
38

Noncontrolling interests from discontinued operations
$
9

 
$
—

 
$
—


Balance Sheet
(Millions of dollars)
December 31,
2018
 
2017
Accounts Receivable
 
 
 
Trade
$
4,368

 
$
1,814

Other
42

 
34

 
4,410

 
1,848

Less: allowance for doubtful accounts (d)
(113
)
 
(138
)
 
$
4,297

 
$
1,710


December 31,
2018
 
2017
Inventories
 
 
 
Raw materials and supplies
$
339

 
$
224

Work in process
321

 
57

Finished goods
991

 
333

 
$
1,651

 
$
614


93

December 31,
2018
 
2017
Prepaid and Other Current Assets
 
 
 
Prepaid (e)
367

 
185

VAT Recoverable
250

 
94

Other
460

 
65

 
$
1,077

 
$
344

December 31,
2018
 
2017
Other Long-term Assets
 
 
 
Pension assets (Note 18)
$
140

 
$
17

Insurance contracts (f)
75

 
74

Long-term receivables, net (g)
135

 
54

Deposits
61

 
70

Investments carried at cost
76

 
12

Deferred charges
148

 
47

Deferred income taxes (Note 7)
510

 
198

Other
317

 
109

 
$
1,462

 
$
581


December 31,
2018
 
2017
Other Current Liabilities
 
 
 
Accrued expenses
$
1,187

 
$
319

Payroll
658

 
170

VAT Payable
235

 
50

Deferred Income
242

 
9

Pension and postretirement (Note 18)
117

 
30

Interest payable
137

 
81

Employee benefit accrual
104

 
23

Insurance reserves
36

 
12

Other
1,042

 
232

 
$
3,758

 
$
926

December 31,
2018
 
2017
Other Long-term Liabilities

 
 
Pension and postretirement (Note 18)
$
2,004

 
$
851

Tax liabilities for uncertain tax positions
191

 
35

Tax Act liabilities for deemed repatriation (Note 7)
265

 
388

Interest and penalties for uncertain tax positions (Note 7)
48

 
8

Insurance reserves
24

 
23

Other
903

 
283

 
$
3,435

 
$
1,588

 

94

December 31,
2018
 
2017
Deferred Credits
 
 
 
Deferred income taxes (Note 7)
$
7,432

 
$
1,167

Other
179

 
69

 
$
7,611

 
$
1,236

December 31,
2018
 
2017
Accumulated Other Comprehensive Income (Loss)
 
 
 
Cumulative translation adjustment - net of taxes:
 
 
 
North America (h)
$
(955
)
 
$
(885
)
South America (h)
(2,347
)
 
(2,004
)
Europe (h)
(185
)
 
(398
)
Asia (h)
(300
)
 
(151
)
Surface Technologies
(34
)
 
(17
)
Linde AG (h)
231

 
—

 
(3,590
)
 
(3,455
)
Derivatives – net of taxes
(2
)
 
(1
)
Unrealized gain (loss) on securities
(1
)
 
—

Pension/OPEB funded status obligation (net of $292 million and $347 million tax benefit in 2018 and 2017) (Note 18)
(863
)
 
(642
)
 
$
(4,456
)
 
$
(4,098
)
 

(a)
Capitalized software has been reclassified from property plant and equipment - net to other intangibles - net. The associated expense has been reclassified from depreciation expense to amortization expense. The impact of this reclassification was $40 million and $43 million in 2018 and 2017, respectively. 2018 depreciation and amortization expense include $225 million and $121 million , respectively, of Linde AG purchase accounting impacts.
(b)
In December 2018, Linde repaid $600 million of 4.50% notes due 2019 and €600 million of 1.50% notes due 2020 resulting in a $26 million interest charge ( $20 million after-tax, or $0.06 per diluted share). In February 2016, Linde redeemed $325 million of 5.20% notes due March 2017 resulting in a $16 million interest charge ( $10 million after-tax, or $0.04 per diluted share).
(c)
Noncontrolling interests from continuing operations includes a $35 million charge in 2018 related to the 8% of Linde AG Shares which were not tendered in the Exchange Offer (see Note 3).
(d)
Provisions to the allowance for doubtful accounts were $ 25 million , $ 33 million , and $ 41 million in 2018 , 2017 , and 2016 , respectively. The allowance activity in each period related primarily to write-offs of uncollectible amounts, net of recoveries and currency movements.
(e)
Includes estimated income tax payments of $172 million and $58 million in 2018 and 2017, respectively.
(f)
Consists primarily of insurance contracts and other investments to be utilized for non-qualified pension and OPEB obligations.
(g)
Long-term receivables are not material and are largely reserved. The balances at December 31, 2018 and 2017 are net of reserves of $ 46 million and $ 51 million , respectively. The amounts in both periods relate primarily to long-term notes receivable from customers and government receivables in Brazil. Collectability is reviewed regularly and uncollectible amounts are written-off as appropriate.
(h)
North America consists of currency translation adjustments in Canada and Mexico. South America relates primarily to Brazil and Argentina. Europe relates primarily to Spain, Russia and Germany. Asia relates primarily to China, India and Korea. Linde AG includes currency movements since the merger date and relates primarily to the Euro.

95

NOTE 10. PROPERTY, PLANT AND EQUIPMENT – NET
Significant classes of property, plant and equipment are as follows (2018 reflects the impact of the Linde AG merger on October 31, 2018 (see Notes 1 and 3) and the divestiture of Praxair's European industrial gases business on December 3, 2018 (see Notes 1, 3 and 4)):  
(Millions of dollars)
December 31,
 
Depreciable Lives (Yrs)
 
2018
 
2017
Production plants (primarily 15-year life) (a)
 
10-20
 
$
24,726

 
$
16,258

Storage tanks
 
15-20
 
4,061

 
2,620

Transportation equipment and other (b)
 
3-15
 
2,654

 
1,588

Cylinders
 
10-30
 
3,955

 
1,875

Buildings
 
25-40
 
3,083

 
1,202

Land and improvements (c)
 
0-20
 
1,162

 
589

Construction in progress
 
 
 
2,296

 
1,159

 
 
 
 
41,937

 
25,291

Less: accumulated depreciation
 
 
 
(12,220
)
 
(13,466
)
 
 
 
 
$
29,717

 
$
11,825

(a) - Depreciable lives of production plants related to long-term customer supply contracts are consistent with the contract lives.
(b) - Capitalized software was previously reported in the transportation equipment and other line. At December 31, 2018, capitalized software balances were reported within other intangibles - net (see Note 12). Prior period amounts have been reclassified to conform to current year presentation (see Note 2).
(c) - Land is not depreciated.

The gross amount of assets recorded under capital leases by major class are as follows:
(Millions of dollars)
December 31,
 
2018
 
2017
Production plants
 
$
1

 
$
2

Transportation equipment and other
 
49

 
1

Buildings
 
24

 
—

 
 
$
74

 
$
3


NOTE 11. GOODWILL
Changes in the carrying amount of goodwill for the years ended December 31, 2018 and 2017 were as follows (2018 reflects the impact of the Linde AG merger on October 31, 2018 (see Notes 1 and 3) and the divestiture of Praxair's European industrial gases business on December 3, 2018 (see Notes 1 and 4)):  


96

(Millions of dollars)
North
America
 
South
America
 
Europe
 
Asia
 
Surface
Technologies
 
Linde AG
 
Total
Balance, December 31, 2016
$
2,165

 
$
132

 
$
629

 
$
58

 
$
133

 
$
—

 
$
3,117

Acquisitions (Note 3)
24

 
—

 
—

 
—

 
—

 
—

 
24

Purchase adjustments & other
—

 
(1
)
 
1

 
—

 
—

 
—

 
—

Foreign currency translation
13

 
(2
)
 
68

 
3

 
10

 
—

 
92

Balance, December 31, 2017
$
2,202

 
$
129

 
$
698

 
$
61

 
$
143

 
$
—

 
$
3,233

Addition due to Merger (Note 3)
—

 
—

 
—

 
—

 
—

 
24,146

 
24,146

Acquisitions (Note 3)
5

 
—

 
—

 
—

 
—

 
—

 
5

Purchase adjustments & other
12

 
—

 
—

 
—

 
—

 
—

 
12

Foreign currency translation
(11
)
 
(23
)
 
(37
)
 
—

 
(5
)
 
174

 
98

Disposals (Note 4)
—

 
—

 
(620
)
 
—

 
—

 
—

 
(620
)
Balance, December 31, 2018
$
2,208

 
$
106

 
$
41

 
$
61

 
$
138

 
$
24,320

 
$
26,874

 
Linde has performed its goodwill impairment tests annually during the second quarter of each year, and historically has determined that the fair value of each of its reporting units was substantially in excess of its carrying value. For the 2018 test, Linde applied the FASB's accounting guidance which allows the company to first assess qualitative factors to determine the extent of additional quantitative analysis, if any, that may be required to test goodwill for impairment. Based on the qualitative assessments performed, Linde concluded that it was more likely than not that the fair value of each reporting unit substantially exceeded its carrying value and therefore, further quantitative analysis was not required. As a result, no impairment was recorded. There were no indicators of impairment through December 31, 2018 .


97

NOTE 12. OTHER INTANGIBLE ASSETS

The following is a summary of Linde’s other intangible assets at December 31, 2018 and 2017 (2018 reflects the impact of the Linde AG merger on October 31, 2018 (see Notes 1 and 3) and the divestiture of Praxair's European industrial gases business on December 3, 2018 (see Notes 1 and 4)):   
(Millions of dollars) For the year ended December 31, 2018
Customer Relationships
 
Brands/Tradenames
 
Other Intangible Assets
 
Total
Cost:
 
 
 
 
 
 
 
Balance, December 31, 2017
$
772

 
$
46

 
$
619

 
$
1,437

Additions due to merger (Note 3)
12,555

 
2,226

 
811

 
15,592

Additions (primarily acquisitions)
1

 
—

 
26

 
27

Foreign currency translation
121

 
24

 
(9
)
 
136

Disposals (Note 4)
(141
)
 
(8
)
 
(78
)
 
(227
)
Other *
(20
)
 
—

 
(3
)
 
(23
)
Balance, December 31, 2018
13,288

 
2,288

 
1,366

 
16,942

Less: accumulated amortization:
 
 
 
 
 
 
 
Balance, December 31, 2017
(260
)
 
(18
)
 
(374
)
 
(652
)
Amortization expense (Note 9)
(135
)
 
(9
)
 
(71
)
 
(215
)
Foreign currency translation
4

 
—

 
8

 
12

Disposals (Note 4)
55

 
5

 
52

 
112

Other *
19

 
—

 
5

 
24

Balance, December 31, 2018
(317
)
 
(22
)
 
(380
)
 
(719
)
Net intangible asset balance at December 31, 2018
$
12,971

 
$
2,266

 
$
986

 
$
16,223

 
 
 
 
 
 
 
 
(Millions of dollars) For the year ended December 31, 2017
Customer Relationships
 
Brands/Tradenames
 
Other Intangible Assets
 
Total
Cost:
 
 
 
 
 
 
 
Balance, December 31, 2016
$
751

 
$
45

 
$
586

 
$
1,382

Additions (primarily acquisitions)
1

 
 
 
40

 
41

Foreign currency translation
22

 
1

 
10

 
33

Other *
(2
)
 
 
 
(17
)
 
(19
)
Balance, December 31, 2017
772

 
46

 
619

 
1,437

Less: accumulated amortization:
 
 
 
 
 
 
 
Balance, December 31, 2016
(214
)
 
(15
)
 
(342
)
 
(571
)
Amortization expense (Note 9)
(40
)
 
(3
)
 
(48
)
 
(91
)
Foreign currency translation
(8
)
 
 
 
(6
)
 
(14
)
Other *
2

 
 
 
22

 
24

Balance, December 31, 2017
(260
)
 
(18
)
 
(374
)
 
(652
)
Net balance at December 31, 2017
$
512

 
$
28

 
$
245

 
$
785

 
________________________
*
Other primarily relates to the write-off of fully amortized assets, purchase accounting adjustments and reclassifications.
There are no expected residual values related to these intangible assets. Amortization expense for the years ended December 31, 2018 , 2017 and 2016 was $215 million , $91 million and $94 million , respectively. The remaining weighted-average amortization period for intangible assets is approximately 26 years.

98

Total estimated annual amortization expense related to finite lived intangibles is as follows:  
(Millions of dollars)
 

2019
$
848

2020
830

2021
790

2022
648

2023
605

Thereafter
10,833

Total amortization related to finite-lived intangible assets
14,554

Indefinite-lived intangible assets at December 31, 2018
1,669

Net intangible assets at December 31, 2018
$
16,223




99

NOTE 13. DEBT
The following is a summary of Linde’s outstanding debt at December 31, 2018 and 2017 (2018 reflects the impact of the Linde AG merger on October 31, 2018 (see Notes 1 and 3)).  


100

(Millions of dollars)
2018
 
2017
Short-term
 
 
 
Commercial paper and U.S. bank borrowings
$
829

 
$
202

Other bank borrowings (primarily international)
656

 
36

Total short-term debt
1,485

 
238

Long-term (a)
 
 
 
1.20% Notes due 2018 (b)
—

 
498

1.25% Notes due 2018 (c)
—

 
475

1.90% Notes due 2019 (f)
500

 
500

Variable rate notes due 2019
150

 
—

1.75% Euro denominated notes due 2019 (e)
578

 
—

4.25% AUD denominated notes due 2019
71

 
—

4.50% Notes due 2019 (d)
—

 
599

Variable rate notes due 2019
200

 
—

1.50% Euro denominated notes due 2020 (d)
—

 
717

2.25% Notes due 2020
299

 
299

1.75% Euro denominated notes due 2020 (e)
1,185

 
—

0.634% Euro denominated notes due 2020
58

 
—

4.05% Notes due 2021
499

 
498

3.875% Euro denominated notes due 2021 (e)
755

 
—

3.00% Notes due 2021
498

 
497

0.250% Euro denominated notes due 2022 (e)
1,156

 
—

2.45% Notes due 2022
598

 
598

2.20% Notes due 2022
498

 
498

2.70% Notes due 2023
498

 
498

2.00% Euro denominated notes due 2023 (e)
805

 
—

5.875% GBP denominated notes due 2023 (e)
454

 
—

1.20% Euro denominated notes due 2024
628

 
658

1.875% Euro denominated notes due 2024 (e)
373

 
—

2.65% Notes due 2025
398

 
397

1.625% Euro denominated notes due 2025
568

 
594

3.20% Notes due 2026
725

 
725

3.434% Notes due 2026
195

 
—

1.652% Euro denominated notes due 2027
96

 
—

1.00% Euro denominated notes due 2028 (e)
861

 
—

1.90% Euro denominated notes due 2030
121

 
—

3.55% Notes due 2042
662

 
662

Other
10

 
12

International bank borrowings
291

 
33

Obligations under capital lease
81

 
4

 
13,811

 
8,762

Less: current portion of long-term debt
(1,523
)
 
(979
)
Total long-term debt
12,288

 
7,783

Total debt
$
15,296

 
$
9,000

 
________________________
(a)
Amounts are net of unamortized discounts, premiums and/or debt issuance costs as applicable.

101

(b)
In March 2018, Linde repaid $500 million of 1.20% notes that became due.
(c)
In November 2018, Linde repaid $475 million of 1.25% notes that became due and the associated interest rate swap was settled. See Note 14 for additional information regarding interest rate swaps.
(d)
In December 2018, Linde repaid $600 million of 4.50% notes due 2019 and €600 million of 1.50% notes due 2020 resulting in a $26 million interest charge ( $20 million after-tax, or $0.06 per diluted share). Also during December Linde repaid €750 million of 3.125% notes acquired in the merger that became due in December 2018.
(e)
The fair value decrease in debt related to hedge accounting for the year ended December 31, 2018 was $14 million; the impact in 2017 was not significant. See Note 14 for additional information.
(f)
In February 2019, Linde repaid $500 million of 1.90% notes that became due.
Credit Facilities
At December 31, 2018 , the company has the following major credit facilities available for future borrowing:
Millions of dollars
Total
Facility
 
Borrowings
Outstanding
 
Available for
Borrowing
 
Expires
Praxair Senior Unsecured
$
2,500

 
$
—

 
$
2,500

 
Dec-19
Linde AG Revolving Credit Facility
€
2,500

 
$
—

 
€
2,500

 
Jul-20
In June 2017, Praxair entered into a $500 million 364-day revolving credit facility with a syndicate of banks which expired in June 2018 and was not renewed.
The $2.5 billion and €2.5 billion credit facilities are with major financial institutions and are non-cancelable by the issuing financial institutions until their respective maturities. There are no financial covenants contained in the agreement relating to the Linde AG €2.5 billion credit facility; the only financial covenant for the senior unsecured $2.5 billion credit facility requires the company not to exceed a maximum 70% leverage ratio. No borrowings were outstanding under the credit agreements as of December 31, 2018 .
Covenants
Linde’s $2.5 billion senior unsecured credit facility and long-term debt agreements contain various covenants which may, among other things, restrict certain types of mergers and changes in beneficial ownership of the company, and the ability of the company to incur or guarantee debt, sell or transfer certain assets, create liens against assets, enter into sale and leaseback agreements, or pay dividends and make other distributions beyond certain limits. These agreements also require Linde to not exceed a maximum 70% leverage ratio defined in the agreements as the ratio of consolidated total debt to the sum of consolidated total debt plus consolidated shareholders’ equity of the company. For purposes of the leverage ratio calculation, consolidated shareholders’ equity excludes changes in the cumulative foreign currency translation adjustments after June 30, 2011. At December 31, 2018 , the actual leverage ratio, as calculated according to the agreement, was 34% and the company is in compliance with all financial covenants. Also, there are no material adverse change clauses or other subjective conditions that would restrict the company’s ability to borrow under the agreement.
Other Debt Information
As of December 31, 2018 and 2017 , the weighted-average interest rate of short-term borrowings outstanding was 0.6% and 2.1% , respectively. The decrease in the rate year-over-year is related primarily to significant European commercial paper balances at negative interest rates, which offsets the impact of higher rates on other bank borrowings.
Expected maturities of long-term debt are as follows:
(Millions of dollars)
 
2019
$
1,523

2020
1,642

2021
1,864

2022
2,336

2023
1,788

Thereafter
4,658

 
$
13,811



102


As of December 31, 2018 , $74 million of Linde’s assets were pledged as collateral for $81 million of long-term debt, including the current portion of long-term debt. The carrying amounts of assets pledged as collateral for long-term debt are disclosed primarily under property, plant, and equipment and are included within buildings and transportation equipment and other.
In February 2016, Linde redeemed $325 million of 5.20% notes due March 2017 resulting in a $16 million interest charge ( $10 million after-tax, or $0.04 per diluted share).

See Note 15 for the fair value information related to debt.


NOTE 14. FINANCIAL INSTRUMENTS
In its normal operations, Linde is exposed to market risks relating to fluctuations in interest rates, foreign currency exchange rates, energy costs and to a lesser extent precious metal prices. The objective of financial risk management at Linde is to minimize the negative impact of such fluctuations on the company’s earnings and cash flows. To manage these risks, among other strategies, Linde routinely enters into various derivative financial instruments (“derivatives”) including interest-rate swap and treasury rate lock agreements, currency-swap agreements, forward contracts, currency options, and commodity-swap agreements. These instruments are not entered into for trading purposes and Linde only uses commonly traded and non-leveraged instruments.
There are three types of derivatives that the company enters into: (i) those relating to fair-value exposures, (ii) those relating to cash-flow exposures, and (iii) those relating to foreign currency net investment exposures. Fair-value exposures relate to changes in the fair value of recognized assets or liabilities, primarily financial assets and financial liabilities, and firm commitments. Cash-flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities, or forecasted transactions for which no underlying exposure is yet reported in the consolidated balance sheet. Net investment exposures relate to the impact of foreign currency exchange rate changes on the carrying value of net assets denominated in foreign currencies.
When a derivative is executed and hedge accounting is appropriate, it is designated as either a fair-value hedge, cash-flow hedge, or a net investment hedge. Currently, Linde designates the majority of interest-rate and treasury-rate locks as hedges for accounting purposes; however, currency contracts are generally not designated as hedges for accounting purposes unless they are related to forecasted transactions. Whether designated as hedges for accounting purposes or not, all derivatives are linked to an appropriate underlying exposure. On an ongoing basis, the company assesses the hedge effectiveness of all derivatives designated as hedges for accounting purposes to determine if they continue to be highly effective in offsetting changes in fair values or cash flows of the underlying hedged items. If it is determined that the hedge is not highly effective, then hedge accounting will be discontinued prospectively.
Counterparties to Linde’s derivatives are major banking institutions with credit ratings of investment grade or better. As of year-end, Linde AG had existing Credit Support Annexes ("CSAs") in place with their principal counterparties to minimize potential default risk and to mitigate counterparty risk. Under the CSAs, the fair values of derivatives for the purpose of interest rate and currency management are collateralized with cash on a regular basis. As of December 31, 2018, the impact of such collateral posting arrangements on the fair value of derivatives was insignificant. Management believes the risk of incurring losses on derivative contracts related to credit risk is remote and any resulting losses would be immaterial.
The following table is a summary of the notional amount and gross fair values of derivatives outstanding at December 31, 2018 and 2017 for consolidated subsidiaries:  

103

 
 
 
 
 
Fair Value
(Millions of dollars)
Notional Amounts
 
Assets (a)
 
Liabilities (a)
December 31,
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Derivatives Not Designated as Hedging Instruments:
 
 
 
 
 
 
 
 
 
 
 
Currency contracts:
 
 
 
 
 
 
 
 
 
 
 
Balance sheet items
$
6,357

 
$
2,693

 
$
24

 
$
16

 
$
42

 
$
16

        Forecasted transactions
945

 
—

 
15

 
—

 
17

 
—

        Interest rate / Cross-currency interest rate swaps
2,110

 
—

 
112

 
—

 
40

 
—

Commodity contracts
—

 
—

 
27

 
—

 
9

 
—

Derivatives Designated as Hedging Instruments:
 
 
 
 
 
 
 
 
 
 
 
Currency contracts:
 
 
 
 
 
 
 
 
 
 
 
Balance sheet items
$
—

 
$
38

 
$
—

 
$
—

 
$
—

 
$
2

Forecasted transactions
158

 
4

 
2

 
1

 
3

 
—

Interest rate contracts:
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
2,164

 
475

 
13

 
—

 
10

 
—

Total Hedges
$
2,322

 
$
517

 
$
15

 
$
1

 
$
13

 
$
2

Total Derivatives
$
11,734

 
$
3,210

 
$
193

 
$
17

 
$
121

 
$
18

 
(a) Current assets of $67 million are recorded in prepaid and other current assets; long-term assets of $126 million are recorded in other long-term assets; current liabilities of $78 million are recorded in other current liabilities; and long-term liabilities of $43 million are recorded in other long-term liabilities.
Balance Sheet Items
Foreign currency contracts related to balance sheet items consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on recorded balance sheet assets and liabilities denominated in currencies other than the functional currency of the related operating unit. Certain forward currency contracts are entered into to protect underlying monetary assets and liabilities denominated in foreign currencies from foreign exchange risk and are not designated as hedging instruments. For balance sheet items that are not designated as hedging instruments, the fair value adjustments on these contracts are offset by the fair value adjustments recorded on the underlying monetary assets and liabilities.
Linde also enters into forward currency contracts, which are designated as hedging instruments, to limit the cash flow exposure on certain foreign-currency denominated intercompany loans. The fair value adjustments on these contracts are recorded to AOCI, with the effective portion immediately reclassified to earnings to offset the fair value adjustments on the underlying debt instrument.
Forecasted Transactions
Foreign currency contracts related to forecasted transactions consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on (1) forecasted purchases of capital-related equipment and services, (2) forecasted sales, or (3) other forecasted cash flows denominated in currencies other than the functional currency of the related operating units. For forecasted transactions that are designated as cash flow hedges, fair value adjustments are recorded to AOCI with deferred amounts reclassified to earnings over the same time period as the income statement impact of the associated purchase. For forecasted transactions that do not qualify for cash flow hedging relationships, fair value adjustments are recorded directly to earnings.
Interest Rate/Cross-Currency Interest Rate Swaps
Cross-currency interest rate swaps are entered into to limit the foreign currency risk of future principal and interest cash flows associated with intercompany loans, and to a more limited extent bonds, denominated in non-functional currencies. The fair value adjustments on the cross-currency swaps are recorded to earnings, where they are offset by fair value adjustments on the underlying intercompany loan or bond.
Commodity Contracts

104

Commodity contracts are entered into to manage the exposure to fluctuations in commodity prices, which arise in the normal course of business from its procurement transactions. To reduce the extent of this risk, Linde enters into a limited number of electricity, natural gas, and propane gas derivatives. As of December 31, 2018 these commodity contracts were not designated as cash flow hedges. Therefore, the fair value adjustments on these contracts are recorded to earnings and are eventually offset by the income statement impact of the underlying commodity purchase.
Net investment hedges
In 2014, Praxair designated the €600 million 1.50% Euro-denominated notes due 2020 and the €500 million ( $568 million as of December 31, 2018 ) 1.625% Euro-denominated notes due 2025, as a hedge of the net investment position in its European operations. In 2016, Praxair designated an incremental €550 million ( $628 million as of December 31, 2018 ) 1.20% Euro-denominated notes due 2024 as an additional hedge of the net investment position in its European operations.
On October 31, 2018 Praxair and Linde AG combined their respective businesses through an all-stock transaction and became subsidiaries of the company. In December 2018, as a condition of the merger, Praxair completed the sale of the majority of its European operations to Taiyo Nippon Sanso Corporation. This significantly reduced the net investment position in Praxair's European operations. During the same month Praxair also repaid the €600 million 1.50% Euro-denominated notes due 2020, which significantly reduced the debt balance designated as a hedge. In response to the above transactions, Praxair de-designated €965 million of its Euro-denominated notes. At December 31, 2017 Praxair had de-designated €200 million of its Euro-denominated notes in response to the U.S. government-enacted Tax Cuts and Jobs Act and associated decrease in the tax rate.
These Euro-denominated debt instruments reduce the company's exposure to changes in the currency exchange rate on investments in foreign subsidiaries with Euro functional currencies. Since hedge inception, exchange rate movements have reduced long-term debt by $202 million (long-term debt decreased by $105 million during the year ended December 31, 2018), with the offsetting gain shown within the cumulative translation component of AOCI in the consolidated balance sheets and the consolidated statements of comprehensive income.
Interest Rate Swaps
Linde uses interest rate swaps to hedge the exposure to changes in the fair value of financial assets and financial liabilities as a result of interest rate changes. These interest rate swaps effectively convert fixed-rate interest exposures to variable rates; fair value adjustments are recognized in earnings along with an equally offsetting charge/benefit to earnings for the changes in the fair value of the underlying financial asset or financial liability. The following table summarizes the outstanding interest rate swaps for Linde as of December 31, 2018 :
 
2018
 
2017
(Millions of dollars)
US$ Derivative Notional
 
Change in Fair Value (b)
 
US$ Derivative Notional
 
Change in Fair Value
Underlying debt instrument:
 
 
 
 
 
 
 
1.00% Euro denominated notes due 2028
$
516

 
$
8

 
$
—

 
$
—

1.25% Notes due 2018 (a)
—

 
—

 
475

 
—

0.250% Euro denominated notes due 2022
344

 
2

 
—

 
—

2.00% Euro denominated notes due 2023
287

 
2

 
—

 
—

3.875% Euro denominated notes due 2021
287

 
1

 
—

 
—

5.875% GBP denominated notes due 2023
254

 
1

 
—

 
—

1.75% Euro denominated notes due 2019
229

 
(1
)
 
—

 
—

1.75% Euro denominated notes due 2020
132

 
—

 
—

 
—

1.875% Euro denominated notes due 2024
115

 
1

 
—

 
—

 
$
2,164

 
$
14

 
$
475

 
$
—

________________________
(a) At December 31, 2017 , Praxair had one outstanding interest rate swap agreement with a $475 million notional amount related to the $475 million 1.25% notes maturing in November 2018. The increase in the fair value of this note was less than $1 million . In November 2018 the notes were repaid and the associated fixed-to-variable interest rate swap was settled.
(b) In connection with the merger, Linde AG's assets and liabilities were measured at estimated fair value as of October 31, 2018.

105

Terminated Treasury Rate Locks
The following table summarizes the unrecognized gains (losses) related to terminated treasury rate lock contracts:
 
 
 
 
 
Unrecognized Gain / (Loss) (a)
(Millions of dollars)
Year
Terminated
 
Original
Gain / (Loss)
 
12/31/2018
 
12/31/2017
Treasury Rate Locks
 
 
 
 
 
 
 
Underlying debt instrument:
 
 
 
 
 
 
 
$500 million 2.20% fixed-rate notes that mature in 2022 (b)
2012
 
$
(2
)
 
$
—

 
$
(1
)
$500 million 3.00% fixed-rate notes that mature in 2021 (b)
2011
 
(11
)
 
(3
)
 
(4
)
$600 million 4.50% fixed-rate notes that mature in 2019 (b,c)
2009
 
16

 
—

 
3

Total – pre-tax
 
 
 
 
$
(3
)
 
$
(2
)
Less: income taxes
 
 
 
 
1

 
1

After- tax amounts
 
 
 
 
$
(2
)
 
$
(1
)
 
________________________
(a)
The unrecognized gains / (losses) for the treasury rate locks are shown in accumulated other comprehensive income ("AOCI") and are being recognized on a straight line basis to interest expense – net over the term of the underlying debt agreements. Refer to the table below summarizing the impact of the company’s consolidated statements of income and AOCI for current period gain (loss) recognition.
(b)
The notional amount of the treasury rate lock contracts are equal to the underlying debt instrument with the exception of the treasury rate lock contract entered into to hedge the $600 million 4.50% fixed-rate notes that mature in 2019. The notional amount of this contract was $500 million .
(c)
In December 2018, Linde repaid $600 million of 4.50% notes that mature in 2019. The unrecognized gain on the associated treasury rate lock was reclassified from other comprehensive income to interest expense.
Impact of derivative instruments on earnings and AOCI
The following table summarizes the impact of the company's derivatives not designated as hedging instruments on the consolidated statements of income:
(Millions of dollars)
    Amount of Pre-Tax Gain (Loss)    
Recognized in Earnings *
December 31,
2018
 
2017
 
2016
Derivatives Not Designated as Hedging Instruments
 
 
 
 
 
Currency contracts:
 
 
 
 
 
Balance sheet items:
 
 
 
 
 
Debt-related
$
(118
)
 
$
121

 
$
21

Other balance sheet items
3

 
—

 
4

Total
$
(115
)
 
$
121

 
$
25

* The gains (losses) on balance sheet items are offset by gains (losses) recorded on the underlying hedged assets and liabilities. Accordingly, the gains (losses) for the derivatives and the underlying hedged assets and liabilities related to debt items are recorded in the consolidated statements of income as interest expense-net. The gains (losses) on other balance sheet items are recorded in the consolidated statements of income as other income (expenses)-net.

106

The following table summarizes the impact of the company's derivatives designated as hedging instruments that impact AOCI:
(Millions of dollars)
Amount of Gain (Loss)
Recognized in AOCI
 
Amount of Gain (Loss) Reclassified from AOCI to the Consolidated Statement of Income
December 31,
2018
 
2017
 
2016
 
2018
2017
2016
Derivatives Designated as Hedging Instruments**
 
 
 
 
 
 
 
 
 
Currency contracts:
 
 
 
 
 
 
 
 
 
Net investment hedge
$
—

 
$
—

 
$
(4
)
 
$
—

$
—

$
—

Forecasted transactions
—

 
1

 
—

 
—

—

—

Balance sheet items
—

 
(1
)
 
1

 
—

—

—

Interest rate contracts:
 
 
 
 
 
 
 
 
 
Treasury rate locks
—

 
—

 
—

 
(1
)
—

(1
)
Total – Pre tax
$
—

 
$
—

 
$
(3
)
 
$
(1
)
$
—

$
(1
)
Less: income taxes
—

 
—

 
—

 
—

—

1

Total - Net of Taxes
$
—

 
$
—

 
$
(3
)
 
$
(1
)
$
—

$
—

 
** The gains (losses) on net investment hedges are recorded as a component of AOCI within foreign currency translation adjustments in the consolidated balance sheets and consolidated statements of comprehensive income. The gains (losses) on forecasted purchases, balance sheet items, and treasury rate locks are recorded as a component of AOCI within derivative instruments in the consolidated balance sheets and the consolidated statements of comprehensive income. There was no ineffectiveness for these instruments during 2018 or 2017 . The gains (losses) on net investment hedges are reclassified to earnings only when the related currency translation adjustments are required to be reclassified, usually upon sale or liquidation of the investment. The gains (losses) for interest rate contracts are reclassified to earnings as interest expense –net on a straight-line basis over the remaining maturity of the underlying debt. Net losses of less than $1 million are expected to be reclassified to earnings during 2019.

107

NOTE 15. FAIR VALUE DISCLOSURES
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:
Level 1 – quoted prices in active markets for identical assets or liabilities
Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2018 and 2017 :  
 
Fair Value Measurements Using
(Millions of dollars)
Level 1
 
Level 2
 
Level 3
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Assets
 
 
 
 
 
 
 
 
 
 
 
Derivative assets
$
—

 
$
—

 
$
193

 
$
17

 
$
—

 
$
—

Investments and securities *
22

 
—

 
—

 
—

 
30

 
—

Total
$
22

 
$
—

 
$
193

 
$
17

 
$
30

 
$
—

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
$
—

 
$
—

 
$
121

 
$
18

 
$
—

 
$
—

*
Investments and securities are recorded in prepaid and other current assets in the company's consolidated balance sheets.
The fair values of the derivative assets and liabilities are based on market prices obtained from independent brokers or determined using quantitative models that use as their basis readily observable market parameters that are actively quoted and can be validated through external sources, including third-party pricing services, brokers and market transactions. Level 1 investments and securities are marketable securities traded on an exchange. Level 3 investments and securities consist of a venture fund. For the valuation, Linde uses the net asset value received as part of the fund's quarterly reporting, which for the most part is not based on quoted prices in active markets. In order to reflect current market conditions, Linde proportionally adjusts these by observable market data (stock exchange prices) or current transaction prices.
The following table summarizes the changes in level 3 investments and securities for the years ended December 31, 2018 and December 31, 2017 . Gains (losses) recognized in earnings are recorded to interest expense - net in the company's consolidated statements of income.
(Millions of dollars)
2018
Balance at January 1
$
—

Merger impact
28

Gains (losses) recognized in earnings
2

Balance at December 31
$
30

The fair value of cash and cash equivalents, short-term debt, accounts receivables-net, and accounts payable approximate carrying value because of the short-term maturities of these instruments.
The fair value of long-term debt is estimated based on the quoted market prices for the same or similar issues. Long-term debt is categorized within either Level 1 or Level 2 of the fair value hierarchy depending on the trading volume of the issues and whether or not they are actively quoted in the market as opposed to traded through over-the-counter transactions. Linde AG's long-term debt is primarily categorized within Level 1 measurements as the majority of the Linde AG bond portfolio is publicly traded. At December 31, 2018 , the estimated fair value of Linde’s long-term debt portfolio was $13,725 million versus a carrying value of $13,811 million . As Linde AG's assets and liabilities were measured at estimated fair value as of the merger date, differences between the carrying value and the fair value are insignificant; remaining differences are attributable to interest rate increases subsequent to when the debt was issued and relative to stated coupon rates. At December 31, 2017 , the estimated fair value of Linde’s long-term debt portfolio was $8,969 million versus a carrying value of $8,762 million .

108

NOTE 16. EQUITY AND NONCONTROLLING INTERESTS
Linde plc Shareholders’ Equity
At December 31, 2018 , Linde has total authorized share capital of €1,825,000 divided into 1,750,000,000 ordinary shares of €0.001 each, 25,000 A ordinary shares of €1.00 each, 25,000 deferred shares of €1.00 each and 25,000,000 preferred shares of €0.001 each.
At December 31, 2018 there were 551,310,272 and 547,241,630 of Linde plc ordinary shares issued and outstanding, respectively. At December 31, 2018 there were no shares of A ordinary shares, deferred shares or preferred shares issued or outstanding.
At December 31, 2017 there were 800,000,000 shares of Praxair common stock authorized (par value $0.01 per share) of which shares 383,230,625 were issued and 286,776,991 were outstanding at December 31, 2017 . At December 31, 2017 , there were 25,000,000 shares of Praxair preferred stock (par value $0.01 per share) authorized, of which no shares were issued and outstanding.
Linde’s Board of Directors may from time to time authorize the issuance of one or more series of preferred stock and, in connection with the creation of such series, determine the characteristics of each such series including, without limitation, the preference and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions of the series.
Merger of Praxair and Linde AG
Following is a summary of the Linde plc shareholders' equity transactions related to the merger:
 
Ordinary Shares
Additional Paid in Capital
Treasury Stock
(Dollar amounts in millions, shares in thousands)
Shares
Amount
 
Shares
Amount
 
 
 
 
 
 
Merger with Linde AG (a)
263,148

$
—

$
43,288

—

$
—

Conversion of Praxair to Linde plc shares (b)
—

(3
)
3

—

—

Cancellation of Praxair Treasury stock (c)
(95,324
)
—

(7,113
)
(95,324
)
7,113

     Impact of Linde AG merger
167,824

$
(3
)
$
36,178

(95,324
)
$
7,113


(a) The total fair value of consideration transferred for the merger was $43,288 million , resulting in an increase to "Additional paid-in capital" in stockholders' equity (see Note 3 for additional information).
(b) On October 31, 2018, the conversion of Praxair common stock and Linde AG common stock into Linde ordinary shares resulted in a $3 million decrease to "Ordinary Shares" with a corresponding increase to "Additional paid-in capital" in stockholders' equity.
(c) Each share of Praxair common stock held in treasury immediately prior to the merger was canceled. The elimination of Praxair's historical treasury stock at cost resulted in a $7,113 million decrease in "Treasury stock" and "Additional paid-in capital" in stockholders' equity.

As indicated above, in connection with the merger, Praxair and Linde AG common stock was converted into shares of Linde plc ordinary shares. The following table provides a summary of the share activity resulting from the merger:

(in thousands, except Linde AG exchange ratio)
Linde plc shares exchanged for Linde AG shares
 
Linde AG common stock tendered as of October 31, 2018 (i)
170,875

Business combination agreement exchange ratio (ii)
1.54

Linde plc ordinary shares issued in exchange for Linde AG
263,148

Linde plc shares issued to Praxair shareholders upon conversion
 
Praxair shares outstanding at merger date
287,907

Total Linde plc shares issued at merger date
551,055


109

(i)
Number of Linde AG shares tendered in the 2017 Exchange Offer.
(ii)
Exchange ratio for Linde AG shares as set forth in the business combination agreement.

Other Linde plc Ordinary Share and Treasury Stock Transactions
Linde may issue new ordinary shares shares for dividend reinvestment and stock purchase plans and employee savings and incentive plans. The number of new Linde ordinary shares shares issued from merger date through December 31, 2018 was approximately 255 thousand shares. Prior to the merger, Praxair issued shares related to such activity out of treasury stock.
On December 10, 2018 the Linde board of directors approved the repurchase of $1.0 billion of its common stock under which Linde had repurchased 4,068,642 shares through December 31, 2018. Subsequently, on January 22, 2019 the company’s board of directors approved the additional repurchase of $6.0 billion of its common stock.
Noncontrolling Interests
Noncontrolling interest ownership changes are presented within the consolidated statements of equity. The $186 million decrease during 2018 primarily relates to the sale of Praxair's industrial gases business in Europe (see Notes 1 and 4). The "Impact of Merger" line item of the consolidated statements of equity includes the fair value of the noncontrolling interests acquired from Linde AG, including the 8% of Linde AG shares which were not tendered in the Exchange Offer and are intended to be the subject of a cash-merger squeeze-out. See Note 3.
The $15 million increase during 2017 relates to additional funding provided to PG Technologies, LLC ("PGT") by the joint venture partner.
The $20 million increase during 2016 relates to the sale of an ownership interest in a majority-owned joint venture in India during the third quarter offset by the formation of PGT, a majority-owned joint venture with GE Aviation. The 2016 "Additions (Reductions)" line item of the consolidated statements of equity also includes an increase to Additional Paid-In Capital resulting from the sale of the noncontrolling interest to the PGT joint venture partner.
Redeemable Noncontrolling Interests
Noncontrolling interests with redemption features, such as put/sell options, that are not solely within the company’s control (“redeemable noncontrolling interests”) are reported separately in the consolidated balance sheets at the greater of carrying value or redemption value. For redeemable noncontrolling interests that are not yet exercisable, Linde calculates the redemption value by accreting the carrying value to the redemption value over the period until exercisable. If the redemption value is greater than the carrying value, any increase is adjusted directly to retained earnings and does not impact net income. At December 31, 2018 , the redeemable noncontrolling interest balance includes one packaged gas distributor in the United States where the noncontrolling shareholder has a put option.
The following is a summary of redeemable noncontrolling interests for the years ended December 31, 2018 , 2017 and 2016 :

(Millions of dollars)
2018
 
2017
 
2016
Beginning Balance
$
11

 
$
11

 
$
113

Net income
3

 
2

 
3

Distributions to noncontrolling interest
(1
)
 
(3
)
 
(2
)
Redemption value adjustment/accretion
3

 
1

 
(6
)
Foreign currency translation and other
—

 
—

 
7

Purchase/divestiture of noncontrolling interest *
—

 
—

 
(104
)
Ending Balance
$
16

 
$
11

 
$
11

* In June 2016, Linde acquired the remaining  34%  stake in a Scandinavian joint venture for  $104 million . The cash payment related to this acquisition is shown in the financing section of the consolidated statements of cash flows under the caption "Noncontrolling interest transactions and other" as there was no change in control.

110

NOTE 17. SHARE-BASED COMPENSATION
Share-based compensation expense was $62 million in 2018 ( $59 million and $39 million in 2017 and 2016 , respectively). The related income tax benefit recognized was $30 million in 2018 ( $53 million and $32 million in 2017 and 2016 , respectively). The expense was primarily recorded in selling, general and administrative expenses and no share-based compensation expense was capitalized.
Summary of Plans
The 2009 Praxair, Inc. Long-Term Incentive Plan was initially adopted by the board of directors and shareholders of Praxair, Inc. on April 28, 2009 and has been amended since its initial adoption ("the 2009 Plan"). Upon completion of the business combination of Praxair, Inc. with Linde AG on October 31, 2018, the 2009 Plan was assumed by the company. Prior to April 28, 2009, Praxair, Inc. granted equity awards under the 2002 Praxair, Inc. Long-Term Incentive Plan , (“the 2002 Plan”) which was also assumed by the company upon completion of the business combination. The 2009 Plan permits awards of stock options, stock appreciation rights, restricted stock and restricted stock units, performance-based stock units and other equity awards to eligible officer and non-officer employees and non-employee directors of the company and its affiliates. As of December 31, 2018 , 8,009,603 shares remained available for equity grants under the 2009 Plan, of which 2,600,000 shares may be granted as awards other than options or stock appreciation rights.

In 2005, the board of directors and shareholders of Praxair, Inc. adopted the 2005 Equity Compensation Plan for Non-Employee Directors of Praxair, Inc. ("the 2005 Plan"). Upon completion of the business combination in October 2018, the 2005 Plan was also assumed by the company. Under the 2005 Plan, the aggregate number of shares available for option and other equity grants was limited to a total of 500,000 shares. The 2005 Plan expired on April 30, 2010, by its own terms, and no shares were available for grant thereafter.
Upon the completion of the business combination, all options outstanding under the 2009 Plan, the 2002 Plan and the 2005 Plan were converted into options to acquire the same number of shares of the company and at the same exercise price per share that applied prior to the business combination.
Exercise prices for options granted under the 2009 Plan may not be less than the closing market price of the company’s ordinary shares on the date of grant and granted options may not be re-priced or exchanged without shareholder approval. Options granted under the 2009 Plan subject only to time vesting requirements may become partially exercisable after a minimum of one year after the date of grant but may not become fully exercisable until at least three years have elapsed from the date of grant, and all options have a maximum duration of ten years. Options granted under predecessor plans had similar terms.
In connection with the business combination, on October 31, 2018 the company's Board of Directors adopted the Long Term Incentive Plan of Linde plc (“the LTIP 2018”), the purpose of which is to replace certain outstanding Linde AG equity based awards that were terminated. Under the LTIP 2018, the aggregate number of shares available for replacement option rights and replacement restricted share units was set at 473,128 . As of December 31, 2018, all shares remained available for grant, as the Company is not obligated to make these replacement awards until 2019.
Exercise prices for the replacement option rights to be granted in 2019 under the LTIP 2018 will be equal to EUR 1.67 as prescribed in the business combination agreement. Each replacement option right granted under the LTIP 2018 will be subject to vesting based on continued service until the end of the four -year waiting period applicable to the relevant Linde AG award that had been granted before the business combination. After vesting, each option right will be exercisable for one year .
In order to satisfy option exercises and other equity grants, the Company may issue authorized but previously unissued shares or it may issue treasury shares.
Stock Option Fair Value
The company utilizes the Black-Scholes Options-Pricing Model to determine the fair value of stock options consistent with that used in prior years. Management is required to make certain assumptions with respect to selected model inputs, including anticipated changes in the underlying stock price (i.e., expected volatility) and option exercise activity (i.e., expected life). Expected volatility is based on the historical volatility of the company’s stock over the most recent period commensurate with the estimated expected life of the company’s stock options and other factors. The expected life of options granted, which represents the period of time that the options are expected to be outstanding, is based primarily on historical exercise experience. The expected dividend yield is based on the company’s most recent history and expectation of dividend payouts. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period commensurate with the estimated expected life. If factors change and result in different assumptions in future periods, the stock option expense that the company records for future grants may differ significantly from what the company has recorded in the current period.

111

The weighted-average fair value of options granted during 2018 was $19.29 ( $12.40 in 2017 and $8.91 in 2016 ) based on the Black-Scholes Options-Pricing model. The increase in grant date fair value year-over-year is primarily attributable to an increase in the company's stock price.
The following weighted-average assumptions were used to value the grants in 2018 , 2017 and 2016 :  
Year Ended December 31,
2018
 
2017
 
2016
Dividend yield
2.1
%
 
2.7
%
 
2.9
%
Volatility
14.4
%
 
14.0
%
 
14.4
%
Risk-free interest rate
2.67
%
 
2.13
%
 
1.41
%
Expected term years
5

 
6

 
6

The following table summarizes option activity under the plans as of December 31, 2018 and changes during the period then ended (averages are calculated on a weighted basis; life in years; intrinsic value expressed in millions):  
Activity
Number  of
Options
(000’s)
 
Average
Exercise
Price
 
Average
Remaining
Life
 
Aggregate
Intrinsic
Value
Outstanding at January 1, 2018
10,787

 
$
108.70

 
 
 
 
Granted
1,625

 
154.00

 
 
 
 
Exercised
(1,714
)
 
95.25

 
 
 
 
Cancelled or expired
(74
)
 
131.91

 
 
 
 
Outstanding at December 31, 2018
10,624

 
$
117.65

 
5.9
 
$
408

Exercisable at December 31, 2018
7,065

 
$
111.16

 
4.7
 
$
317

The aggregate intrinsic value represents the difference between the company’s closing stock price of $156.04 as of December 31, 2018 and the exercise price multiplied by the number of in the money options outstanding as of that date. The total intrinsic value of stock options exercised during 2018 was $113 million ( $137 million and $82 million in 2017 and 2016 , respectively).
Cash received from option exercises under all share-based payment arrangements for 2018 was $66 million ( $107 million and $128 million in 2017 and 2016, respectively). The cash tax benefit realized from share-based compensation totaled $30 million for 2018 ( $51 million and $32 million cash tax benefit in 2017 and 2016, respectively).
As of December 31, 2018 , $19 million of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of approximately 1 year.
Performance-Based and Restricted Stock Awards
No performance-based stock awards were granted in 2018 as restricted stock units were granted in place of performance-based stock awards. In years prior to 2018, the company granted performance-based stock awards under the 2009 Plan to senior management that vest, subject to the attainment of pre-established minimum performance criteria, principally on the third anniversary of their date of grant. These awards were tied to either return on capital ("ROC") performance or relative total shareholder return ("TSR") performance versus that of the S&P 500. The actual number of shares issued in settlement of a vested award can range from zero to 200 percent of the target number of shares granted based upon the company’s attainment of specified performance targets at the end of a three -year period. Compensation expense related to these awards is recognized over the three-year performance period based on the fair value of the closing market price of the company’s ordinary shares on the date of the grant and the estimated performance that will be achieved. Compensation expense for ROC awards were adjusted during the three-year performance period based upon the estimated performance levels that will be achieved. TSR awards were measured at their grant date fair value and not subsequently re-measured.
The weighted-average fair value of ROC performance-based stock awards granting during 2017 and 2016 was $109.68 and $93.46 , respectively. These fair values are based on the closing market price of Linde's ordinary shares on the grant date adjusted for dividends that will not be paid during the vesting period.
The weighted-average fair value of performance-based stock tied to relative TSR performance granted during 2017 was $124.12 ( $124.18 in 2016 ), and was estimated using a Monte Carlo simulation performed as of the grant date.


112

Upon completion of the merger, each outstanding ROC and TSR performance-based award was converted into a Linde RSU based on performance achieved as of immediately prior to the closing of the merger, and became subject to service-vesting conditions only. This resulted in the conversion of 435,000 performance-based shares into 704,000 restricted stock units. Compensation expense related to these awards will continue to be recognized over the remainder of the respective three-year service period.
There were 278,907 restricted stock units granted to employees by Praxair during 2018 . The weighted-average fair value of restricted stock units granted during 2018 was $144.86 ( $111.95 in 2017 and $98.18 in 2016 ). These fair values are based on the closing market price of Linde's ordinary shares on the grant date adjusted for dividends that will not be paid during the vesting period. Compensation expense related to the restricted stock units is recognized over the vesting period. These awards were converted into equivalent Linde restricted stock units at the time of the business combination.
The following table summarizes non-vested performance-based and restricted stock award activity as of December 31, 2018 and changes during the period then ended (shares based on target amounts, averages are calculated on a weighted basis):  
   
Performance-Based
 
Restricted Stock
 
Number of
Shares
(000’s)
 
Average
Grant Date
Fair Value
 
Number of
Shares
(000’s)
 
Average
Grant Date
Fair Value
Non-vested at January 1, 2018
665

 
$
113.40

 
264

 
$
107.56

Granted
—

 
—

 
279

 
144.86

Vested
(79
)
 
119.98

 
(153
)
 
117.67

Award conversions
(435
)
 
—

 
704

 
—

Cancelled and Forfeited
(151
)
 
110.29

 
(23
)
 
111.41

Non-vested at December 31, 2018
—

 
$
—

 
1,071

 
$
118.84

There are approximately 12 thousand restricted stock shares that are non-vested at December 31, 2018 which will be settled in cash due to foreign regulatory limitations. The liability related to these grants reflects the current estimate of performance that will be achieved and the current ordinary shares price.
As of December 31, 2018 , $30 million of unrecognized compensation cost related to the restricted stock awards is expected to be recognized primarily through the first quarter of 2021 .
NOTE 18. RETIREMENT PROGRAMS
Defined Benefit Pension Plans - U.S.
Linde has two main U.S. retirement programs which are non-contributory defined benefit plans: the Linde Pension Plan and the CBI Pension Plan. The latter program benefits primarily former employees of CBI Industries, Inc. which Linde acquired in 1996. Effective July 1, 2002, the Linde Pension Plan was amended to give participating employees a one-time choice to remain covered by the old formula or to elect coverage under a new formula. The old formula is based predominantly on years of service, age and compensation levels prior to retirement, while the new formula provides for an annual contribution to an individual account which grows with interest each year at a predetermined rate. Also, this new formula applies to all new employees hired after April 30, 2002 into businesses adopting this plan. The U.S. and international pension plan assets are comprised of a diversified mix of investments, including domestic and international corporate equities, government securities and corporate debt securities. Linde has several plans that provide supplementary retirement benefits primarily to higher level employees that are unfunded and are nonqualified for federal tax purposes. Pension coverage for employees of certain of Linde’s international subsidiaries generally is provided by those companies through separate plans. Obligations under such plans are primarily provided for through diversified investment portfolios, with some smaller plans provided for under insurance policies or by book reserves.
Defined Benefit Pension Plans - International
Linde has international, defined benefit commitments primarily in Germany and the United Kingdom (U.K.). The defined benefit commitments in Germany relate to old age pensions, invalidity pensions and surviving dependents pensions. These commitments also take into account vested rights for periods of service prior to January 1, 2002 based on earlier final-salary pension plan rules. In addition, there are direct commitments in respect of the salary conversion scheme for the form of cash balance plans. The resulting pension payments are calculated on the basis of an interest guarantee and the performance of the corresponding investment. There are no minimum funding requirements. The pension obligations in Germany are partly funded by a Contractual Trust Agreement (CTA). Defined benefit commitments in the U.K. prior to July 1, 2003 are earnings-related and dependent on the period of service. Such commitments relate to old age pensions,

113

invalidity pensions and surviving dependents pensions. Beginning in April 1, 2011, the amount of future increases in inflation-linked pensions and of increases in pensionable emoluments was restricted.
Multi-employer Pension Plans
In the United States Linde participates in six multi-employer defined benefit pension plans ("MEPs"), pursuant to the terms of collective bargaining agreements, covering approximately 200 union-represented employees. The collective bargaining agreements expire on different dates through 2021. In connection with such agreements, the company is required to make periodic contributions to the MEPs in accordance with the terms of the respective collective bargaining agreements. Linde’s participation in these plans is not material either at the plan level or in the aggregate. Linde’s contributions to these plans were $2 million in 2018 , 2017 , and 2016 (these costs are not included in the tables that follow). For all MEPs, Linde’s contributions were significantly less than 1% of the total contributions to each plan for 2017 and 2016 . Total 2018 contributions were not yet available from the MEPs.
Linde has obtained the most recently available Pension Protection Act ("PPA") annual funding notices from the Trustees of the MEPs. The PPA classifies MEPs as either Red, Yellow or Green zone plans. Among other factors, plans in the Red zone are generally less than 65 percent funded with a projected insolvency date within the next twenty years ; plans in the Yellow zone are generally 65 to 80 percent funded; and plans in the Green zone are generally at least 80 percent funded. According to the most current data available, three of the MEPs that the company participates in are in a Red zone status and three are in a Green zone status. As of December 31, 2018 , the three Red Zone plans have pending or have implemented financial improvement or rehabilitation plans. Linde does not currently anticipate significant future obligations due to the funding status of these plans. If Linde determined it was probable that it would withdraw from an MEP, the company would record a liability for its portion of the MEP’s unfunded pension obligations, as calculated at that time. Historically, such withdrawal payments have not been significant.
Defined Contribution Plans
Linde’s U.S. business employees are eligible to participate in the Linde defined contribution savings plan. Employees may contribute up to 40% of their compensation, subject to the maximum allowable by IRS regulations. For the U.S. packaged gases business, company contributions to this plan are calculated as a percentage of salary based on age plus service. U.S. employees other than those in the packaged gases business have company contributions to this plan calculated on a graduated scale based on employee contributions to the plan. The cost for these defined contribution plans was $33 million in 2018 , $29 million in 2017 and $28 million in 2016 (these costs are not included in the tables that follow).
The defined contribution plans include a non-leveraged employee stock ownership plan ("ESOP") which covers all employees participating in this plan. The collective number of shares of Linde ordinary shares in the ESOP totaled 2,381,714 at December 31, 2018 .
Certain international subsidiaries of the company also sponsor defined contribution plans where contributions are determined under various formulas. The expense for these plans was $32 million in 2018 , $21 million in 2017 and $18 million in 2016 (these expenses are not included in the tables that follow).
Postretirement Benefits Other Than Pensions (OPEB)
Linde provides health care and life insurance benefits to certain eligible retired employees. These benefits are provided through various insurance companies and healthcare providers. Linde is also obligated to make payments for a portion of postretirement benefits related to retirees of Linde’s former parent. Additionally, as part of the CBI acquisition in 1996, Linde assumed responsibility for healthcare and life insurance benefit obligations for CBI’s retired employees. All postretirement healthcare programs have cost caps that limit the company’s exposure to future cost increases. In addition, as part of the retirement elections made for July 1, 2002, eligible employees were given the choice of maintaining coverage in the current retiree medical design (as may be amended from time to time), or to move to a design whereby coverage would be provided, but with no Linde subsidy whatsoever. Also, all new employees hired after April 30, 2002 into a business adopting these plans will not receive a company subsidy. Linde does not currently fund its postretirement benefits obligations. Linde’s retiree plans may be changed or terminated by Linde at any time for any reason with no liability to current or future retirees.
Linde uses a measurement date of December 31 for its pension and other post-retirement benefit plans.
Pension and Postretirement Benefit Costs
The components of net pension and postretirement benefits other than pension ("OPEB") costs for 2018 , 2017 and 2016 are shown in the table below (2018 reflects the impact of the Linde AG merger on October 31, 2018 (see Notes 1 and 3) and the divestiture of Praxair's European industrial gases business on December 3, 2018 (see Notes 1 and 4)):  

114

(Millions of dollars)
Year Ended December 31,
Pensions
 
OPEB
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Amount recognized in Operating Profit
 
 
 
 
 
 
 
 
 
 
 
     Service cost
$
74

 
$
46

 
$
45

 
$
2

 
$
3

 
$
2

Amount recognized in Net pension and OPEB cost (benefit), excluding service cost
 
 
 
 
 
 
 
 
 
 
 
     Interest cost
128

 
103

 
100

 
5

 
5

 
6

     Expected return on plan assets
(219
)
 
(161
)
 
(157
)
 
—

 
—

 
—

     Net amortization and deferral
71

 
68

 
59

 
(3
)
 
(3
)
 
(3
)
     Curtailment gain (a)
—

 
—

 
—

 
—

 
(18
)
 
—

     Settlement charges (b)
14

 
2

 
4

 
—

 
—

 
—

 
$
(6
)
 
$
12

 
$
6

 
$
2

 
$
(16
)
 
$
3

Amount recognized in Net gain on sale of businesses
 
 
 
 
 
 
 
 
 
 
 
     Settlement gains from divestitures (c)
(44
)
 
—

 
—

 
—

 
—

 
—

Net periodic benefit cost (benefit)
$
24

 
$
58

 
$
51

 
$
4

 
$
(13
)
 
$
5

(a) The curtailment gain recorded during the year ended December 31, 2017 resulted from the termination of an OPEB plan in South America in the first quarter.
(b) 2018 includes the impacts of a $4 million charge and a $10 million charge recorded in the third and fourth quarters, respectively. In the third quarter, a series of lump sum benefit payments made from the U.S. supplemental pension plan triggered a settlement of the related pension obligation. In the fourth quarter, a change in control provision triggered the settlement of a U.S. non-qualified plan. 2017 includes the impact of a $2 million charge related to a series of lump sum benefit payments for employees under an international pension plan. 2016 includes a charge of $4 million related primarily to the retirement of senior managers in the United States (see Note 2).
(c) In connection with Praxair merger-related divestitures, primarily the European industrial gases business, certain European pension plan obligations were settled. This resulted in the recognition of associated pension benefit obligations and deferred losses in accumulated other comprehensive income (loss) within operating profit in the "Net gain on sale of businesses" line item.
Funded Status
The changes in benefit obligation and plan assets for Linde’s pension and OPEB programs, including reconciliation of the funded status of the plans to amounts recorded in the consolidated balance sheet, as of December 31, 2018 and 2017 are shown below (2018 reflects the impact of the Linde AG merger on October 31, 2018 (see Notes 1 and 3) and the divestiture of Praxair's European industrial gases business on December 3, 2018 (see Notes 1 and 4)):  

115

(Millions of dollars)
Year Ended December 31,
Pensions
 
 
2018
 
2017
 
OPEB
U.S.
 
International
 
U.S.
 
International
 
2018
 
2017
Change in Benefit Obligation ("PBO")
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation, January 1
$
2,215

 
$
725

 
$
2,066

 
$
666

 
$
146

 
$
156

Merger impact (a)
415

 
6,920

 
—

 
—

 
53

 
—

Service cost
42

 
32

 
32

 
14

 
2

 
3

Interest cost
74

 
54

 
70

 
33

 
5

 
5

Divestitures (b)
—

 
(106
)
 
—

 
—

 
—

 
—

Participant contributions
—

 
4

 
—

 
—

 
9

 
6

Plan amendment
—

 
1

 
—

 
—

 
—

 
—

Actuarial loss (gain)
(100
)
 
7

 
153

 
8

 
(11
)
 
(6
)
Benefits paid
(138
)
 
(84
)
 
(106
)
 
(43
)
 
(19
)
 
(13
)
Plan curtailment
—

 
—

 
—

 
—

 
—

 
(6
)
Foreign currency translation and other changes
—

 
(20
)
 
—

 
47

 
(1
)
 
1

Benefit obligation, December 31
$
2,508

 
$
7,533

 
$
2,215

 
$
725

 
$
184

 
$
146

Accumulated benefit obligation ("ABO")
$
2,428

 
$
7,385

 
$
2,113

 
$
691

 
 
 
 
Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets, January 1
$
1,655

 
$
567

 
$
1,507

 
$
507

 
$
—

 
$
—

Merger impact (a)
475

 
5,880

 
—

 
—

 
—

 
—

Actual return on plan assets
(72
)
 
(88
)
 
243

 
44

 
—

 
—

Company contributions
—

 
75

 
4

 
15

 
—

 
—

Benefits paid from plan assets
(106
)
 
(69
)
 
(99
)
 
(32
)
 
—

 
—

Divestitures (b)
—

 
(49
)
 
—

 
—

 
—

 
—

Foreign currency translation and other changes
—

 
(24
)
 
—

 
33

 
—

 
—

Fair value of plan assets, December 31
$
1,952

 
$
6,292

 
$
1,655

 
$
567

 
$
—

 
$
—

Funded Status, End of Year
$
(556
)
 
$
(1,241
)
 
$
(560
)
 
$
(158
)
 
$
(184
)
 
$
(146
)
Recorded in the Balance Sheet (Note 9)
 
 
 
 
 
 
 
 
 
 
 
Other long-term assets
$
47

 
$
93

 
$
—

 
$
17

 
$
—

 
$
—

Other current liabilities
(94
)
 
(10
)
 
(13
)
 
(7
)
 
(13
)
 
(10
)
Other long-term liabilities
(509
)
 
(1,324
)
 
(547
)
 
(168
)
 
(171
)
 
(136
)
Net amount recognized, December 31
$
(556
)
 
$
(1,241
)
 
$
(560
)
 
$
(158
)
 
$
(184
)
 
$
(146
)
Amounts recognized in accumulated other comprehensive income (loss) consist of:
 
 
 
 
 
 
 
 
 
 
 
Net actuarial loss (gain)
$
834

 
$
339

 
$
807

 
$
192

 
$
(23
)
 
$
(15
)
Prior service cost (credit)
—

 
10

 
—

 
11

 
(5
)
 
(6
)
Deferred tax benefit (Note 7)
(212
)
 
(87
)
 
(309
)
 
(47
)
 
7

 
9

Amount recognized in accumulated other comprehensive income (loss) (Note 9)
$
622

 
$
262

 
$
498

 
$
156

 
$
(21
)
 
$
(12
)

116

(a) Represents Linde AG plan assets and benefit obligations assumed as part of the merger. Such plan assets and benefit obligations were remeasured as of the merger date and all subsequent activity through December 31, 2018 is presented within the respective captions above.
Funded status information as of December 31, 2018 for select international pension plans is presented in the table below as the benefit obligations of these plans are considered to be significant relative to the total benefit obligation:
 
United Kingdom
 
Germany
 
Other International
 
Total International
(Millions of dollars)
2018
 
2018
 
2018
 
2018
Benefit obligation, December 31
$
4,444

 
$
1,916

 
$
1,173

 
$
7,533

Fair value of plan assets, December 31
4,339

 
1,043

 
910

 
6,292

Funded Status, End of Year
$
(105
)
 
$
(873
)
 
$
(263
)
 
$
(1,241
)
(b) Represents plan assets and benefit obligations associated with the divestiture of the majority of the Praxair industrial gases business in Europe.
The changes in plan assets and benefit obligations recognized in other comprehensive income in 2018 and 2017 are as follows:
 
Pensions
 
OPEB
(Millions of dollars)
2018
 
2017
 
2018
 
2017
Current year net actuarial losses (gains)*
$
286

 
$
34

 
$
(11
)
 
$
(6
)
Amortization of net actuarial gains (losses)
(70
)
 
(67
)
 
2

 
1

Divestitures
(12
)
 
—

 
—

 
—

Amortization of prior service credits (costs)
(1
)
 
(1
)
 
1

 
2

Pension settlements (Note 5)
(14
)
 
(2
)
 
—

 
—

Curtailments
—

 
—

 
—

 
12

Foreign currency translation and other changes
(16
)
 
13

 
1

 
(2
)
Total recognized in other comprehensive income
$
173

 
$
(23
)
 
$
(7
)
 
$
7

________________________
 *
Pension net actuarial losses in 2018 are primarily driven by a lower actual return on plan assets, which more than offset the benefit derived from favorable liability experience. Pension net actuarial losses in 2017 are driven by lower U.S. discount rates, which more than offset favorable plan asset experience. OPEB net actuarial gains in 2018 relate to the benefits from higher U.S. discount rates and favorable actual participant experience and net actuarial gains in 2017 relate primarily to favorable liability experience.
The amounts in accumulated other comprehensive income (loss) that are expected to be recognized as components of net periodic benefit cost during 2019 are as follows:
(Millions of dollars)
Pension
 
OPEB
Net actuarial loss (gain)
$
54

 
$
(3
)
Prior service cost (credit)
2

 
(1
)
 
$
56

 
$
(4
)
The following table provides information for pension plans where the accumulated benefit obligation exceeds the fair value of the plan assets:
(Millions of dollars)
Year Ended December 31,
Pensions
2018
 
2017
U.S.
 
International
 
U.S.
 
International
Projected benefit obligation ("PBO")
$
2,139

 
$
6,681

 
$
2,215

 
$
391

Accumulated benefit obligation ("ABO")
$
2,060

 
$
6,586

 
$
2,113

 
$
383

Fair value of plan assets
$
1,482

 
$
5,307

 
$
1,655

 
$
215


117

Assumptions
The assumptions used to determine benefit obligations are as of the respective balance sheet dates and the assumptions used to determine net benefit cost are as of the previous year-end, as shown below:
 
Pensions
 
 
 
 
 
U.S.
 
International
 
OPEB
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Weighted average assumptions used to determine benefit obligations at December 31,
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.20
%
 
3.61
%
 
2.72
%
 
4.46
%
 
4.16
%
 
3.58
%
Rate of increase in compensation levels
3.25
%
 
3.25
%
 
2.38
%
 
3.35
%
 
N/A

 
N/A

Weighted average assumptions used to determine net periodic benefit cost for years ended December 31,
 
 
 
 
 
 
 
 
 
 
 
Discount rate
3.73
%
 
4.05
%
 
2.73
%
 
5.09
%
 
3.81
%
 
4.21
%
Rate of increase in compensation levels
3.25
%
 
3.25
%
 
2.45
%
 
3.73
%
 
N/A

 
N/A

Expected long-term rate of return on plan assets (1)
7.62
%
 
8.00
%
 
5.13
%
 
7.91
%
 
N/A

 
N/A

________________________
(1)
The expected long term rate of return on the U.S. and international plan assets is estimated based on the plans' investment strategy and asset allocation, historical capital market performance and, to a lesser extent, historical plan performance. For the U.S. plans, the expected rate of return of 7.62% was derived based on the target asset allocation of 40%-60% equity securities (approximately 9.5% expected return), 30%-50% fixed income securities (approximately 5.5% expected return) and 5%-15% alternative investments (approximately 7% expected return). For the international plans, the expected rate of return was derived based on the weighted average target asset allocation of 15%-25% equity securities (approximately 10% expected return), 30%-50% fixed income securities (approximately 7.5% expected return), and 30%-40% alternative investments (approximately 7.5% expected return). For the U.S. plan assets, the actual annualized total return for the most recent 10-year period ended December 31, 2018 was approximately 8.44% . For the international plan assets, the actual annualized total return for the same period was approximately 6.26% . Changes to plan asset allocations and investment strategy over this time period limit the value of historical plan performance as factor in estimating the expected long term rate of return. For 2019, the expected long-term rate of return on plan assets will be 7.50% for the U.S. plans. Expected weighted average returns for international plans will vary.
 
OPEB
Assumed healthcare cost trend rates
2018
 
2017
Praxair, Inc.
 
 
 
Healthcare cost trend assumed
6.25
%
 
6.50
%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
5.00
%
 
5.00
%
Year that the rate reaches the ultimate trend rate
2023

 
2023

Linde AG
 
 
 
Healthcare cost trend assumed
5.49
%
 
 
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
4.50
%
 
 
Year that the rate reaches the ultimate trend rate
2038

 
 
These healthcare cost trend rate assumptions have an impact on the amounts reported. However, cost caps limit the impact on the net OPEB benefit cost in the U.S. To illustrate the effect, a one-percentage point change in assumed

118

healthcare cost trend rates would have the following effects:
 
One-Percentage Point
(Millions of dollars)
Increase
 
Decrease
Effect on the total of service and interest cost components of net OPEB benefit cost
$
—

 
$
—

Effect on OPEB benefit obligation
$
7

 
$
(6
)
Pension Plan Assets
The investments of the U.S. pension plan are managed to meet the future expected benefit liabilities of the plan over the long term by investing in diversified portfolios consistent with prudent diversification and historical and expected capital market returns. When Linde became an independent, publicly traded company in 1992, its former parent retained all liabilities for its term-vested and retired employees. Linde’s plan received assets and retained pension liabilities for its own active employee base. Therefore, the liabilities under the Linde U.S. pension plan mature at a later date compared to pension funds of other similar companies. Investment strategies are reviewed by management and investment performance is tracked against appropriate benchmarks. There are no concentrations of risk as it relates to the assets within the plans.
The international pension plans are managed individually based on diversified investment portfolios, with different target asset allocations that vary for each plan. Linde’s U.S. and international pension plans’ weighted-average asset allocations at December 31, 2018 and 2017 , and the target asset allocation range for 2018 , by major asset category, are as follows:  
 
U.S.
 
International
Asset Category
Target 2018 **
 
Target 2017
 
2018
 
2017
 
Target 2018 **
 
Target 2017
 
2018
 
2017
Equity securities
40%-60%
 
50%-70%
 
48
%
 
61
%
 
15%-25%
 
30%-50%
 
20
%
 
38
%
Fixed income securities
30%-50%
 
20%-40%
 
40
%
 
30
%
 
30%-50%
 
40%-60%
 
46
%
 
53
%
Other
5%-15%
 
2%-10%
 
13
%
 
9
%
 
30%-40%
 
0%-10%
 
34
%
 
9
%
** Target asset allocations provided above for fiscal year 2018 are calculated based on weighting the individual Praxair and Linde AG pension plan target allocations by their respective portions of the total asset portfolio.


















119


The following table summarizes pension assets measured at fair value by asset category at December 31, 2018 and 2017 . During the years presented, there has been no transfer of assets between Levels 1, 2 and 3 (see Note 13 for definition of the levels):
 
Fair Value Measurements Using
 
 
 
 
 
Level 1
 
Level 2
 
Level 3 **
 
Total
(Millions of dollars)
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Cash and cash equivalents
$
348

 
$
7

 
$
—

 
$
—

 
$
—

 
$
—

 
$
348

 
$
7

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global equities
1,131

 
302

 
—

 
—

 
—

 
—

 
1,131

 
302

Mutual funds
74

 
—

 
43

 
—

 
—

 
—

 
117

 
—

Fixed income securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government bonds
—

 
—

 
1,772

 
246

 
—

 
—

 
1,772

 
246

Emerging market debt
—

 
—

 
522

 
—

 
—

 
—

 
522

 
—

Mutual funds
109

 
118

 
21

 
—

 
—

 
—

 
130

 
118

Corporate bonds
—

 
—

 
382

 
181

 
—

 
—

 
382

 
181

Bank loans
—

 
—

 
313

 
—

 
—

 
—

 
313

 
—

Alternative investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance contracts
—

 
—

 
—

 
—

 
—

 
50

 
—

 
50

Real estate funds
—

 
—

 
—

 
—

 
298

 
158

 
298

 
158

Private debt
—

 
—

 
—

 
—

 
671

 
—

 
671

 
—

Other investments
—

 
—

 
33

 
—

 
—

 
—

 
33

 
—

Liquid alternative
—

 
—

 
1,192

 
—

 
—

 
—

 
1,192

 
—

Total plan assets at fair value,
December 31,
$
1,662

 
$
427

 
$
4,278

 
$
427

 
$
969

 
$
208

 
$
6,909

 
$
1,062

Pooled funds *
 
 
 
 
 
 
 
 
 
 
 
 
1,335

 
1,160

Total fair value plan assets
December 31,
 
 
 
 
 
 
 
 
 
 
 
 
$
8,244

 
$
2,222

* Pooled funds are measured using the net asset value ("NAV") as a practical expedient for fair value as permissible under the accounting standard for fair value measurements and have not been categorized in the fair value hierarchy.
** The following table summarizes changes in fair value of the pension plan assets classified as level 3 for the periods ended December 31, 2018 and 2017 :  
(Millions of dollars)
Insurance
Contracts
 
Real Estate Funds
 
Private Debt
 
Total
Balance, December 31, 2016
$
45

 
$
135

 
$
—

 
$
180

Gain/(Loss) for the period
(1
)
 
12

 
—

 
11

Acquisitions
—

 
11

 
—

 
11

Foreign currency translation
6

 
—

 
—

 
6

Balance, December 31, 2017
50

 
158

 
—

 
208

Assumed in Linde AG merger
—

 
148

 
667

 
815

Gain/(Loss) for the period
—

 
9

 
4

 
13

Acquisitions
—

 
—

 
—

 
—

Merger-related divestitures
(49
)
 
—

 
—

 
(49
)
Other divestitures
—

 
(17
)
 
—

 
(17
)
Foreign currency translation
(1
)
 
—

 
—

 
(1
)
Balance, December 31, 2018
$
—

 
$
298

 
$
671

 
$
969

The descriptions and fair value methodologies for the U.S. and international pension plan assets are as follows:

120

Cash and Cash Equivalents – This category includes cash and short-term interest bearing investments with maturities of three months or less. Investments are valued at cost plus accrued interest. Cash and cash equivalents are classified within level 1 of the valuation hierarchy.
Equity Securities – This category is comprised of shares of common stock in U.S. and international companies from a diverse set of industries and size. Common stock is valued at the closing market price reported on a U.S. or international exchange where the security is actively traded. Equity securities are classified within level 1 of the valuation hierarchy.
Mutual Funds – These categories consist of publicly and privately managed funds that invest primarily in marketable equity and fixed income securities. The fair value of these investments is determined by reference to the net asset value of the underlying securities of the fund. Shares of publicly traded mutual funds are valued at the net asset value quoted on the exchange where the fund is traded and are primarily classified as level 1 within the valuation hierarchy.
U.S. and International Government Bonds – This category includes U.S. treasuries, U.S. federal agency obligations and international government debt. The majority of these investments do not have quoted market prices available for a specific government security and so the fair value is determined using quoted prices of similar securities in active markets and is classified as level 2 within the valuation hierarchy.
Corporate Bonds – This category is comprised of corporate bonds of U.S. and international companies from a diverse set of industries and size. The fair values for U.S. and international corporate bonds are determined using quoted prices of similar securities in active markets and observable data or broker or dealer quotations. The fair values for these investments are classified as level 2 within the valuation hierarchy.
Pooled Funds - Pooled fund NAVs are provided by the trustee and are determined by reference to the fair value of the underlying securities of the trust, less its liabilities, which are valued primarily through the use of directly or indirectly observable inputs. Depending on the pooled fund, underlying securities may include marketable equity securities or fixed income securities.
Bank Loans - This category is comprised of traded syndicated loans of larger corporate borrowers. Such loans are issued by sub-investment grade rated companies both in the U.S. and internationally and are syndicated by investment banks to institutional investors. They are regularly traded in an active dealer market comprised of large investment banks, which supply bid and offer quotes and are therefore classified within level 2 of the valuation hierarchy.
Liquid Alternative Investments - This category is comprised of investments in alternative mutual funds whose holdings include liquid securities, cash, and derivatives. Such funds focus on diversification and employ a variety of investing strategies including long/short equity, multi-strategy, and global macro. The fair value of these investments is determined by reference to the net asset value of the underlying holdings of the fund, which can be determined using observable data (e.g., indices, yield curves, quoted prices of similar securities), and is classified within level 2 of the valuation hierarchy.
Insurance Contracts – The fair value of insurance contracts is determined based on the cash surrender value of the insurance contract, which is determined based on such factors as the fair value of the underlying assets and discounted cash flows. These contracts are with highly rated insurance companies. Insurance contracts are classified within level 3 of the valuation hierarchy.
Real Estate Funds – This category includes real estate properties, partnership equities and investments in operating companies. The fair value of the assets is determined using discounted cash flows by estimating an income stream for the property plus a reversion into a present value at a risk adjusted rate. Yield rates and growth assumptions utilized are derived from market transactions as well as other financial and industry data. The fair value for these investments are classified within level 3 of the valuation hierarchy.
Private Debt - This category includes non-traded, privately-arranged loans between one or a small group of private debt investment managers and corporate borrowers, which are typically too small to access the syndicated market and have no credit rating. This category also includes similar loans to real estate companies or individual properties. Loans included in this category are valued at par value, are held to maturity or to call, and are classified within level 3 of the valuation hierarchy.
Contributions
At a minimum, Linde contributes to its pension plans to comply with local regulatory requirements (e.g., ERISA in the United States). Discretionary contributions in excess of the local minimum requirements are made based on many factors, including long-term projections of the plans' funded status, the economic environment, potential risk of overfunding, pension insurance costs and alternative uses of the cash. Changes to these factors can impact the timing of discretionary contributions from year to year. Pension contributions were $87 million in 2018 , $19 million in 2017 and $11

121

million in 2016 . Estimated required contributions for 2019 are currently expected to be in the range of $95 million to $160 million .
Estimated Future Benefit Payments
The following table presents estimated future benefit payments, net of participants contributions:  
(Millions of dollars)
Pensions
 
 
Year Ended December 31,
U.S.    
 
International
 
OPEB    
2019 (a)
$
353

 
$
322

 
$
14

2020
150

 
333

 
15

2021
146

 
344

 
15

2022
168

 
352

 
15

2023
149

 
364

 
14

2024-2028
767

 
1,018

 
59

(a) In January 2019, benefits of $91 million were paid related to the settlement of a U.S. non-qualified plan that was triggered due to a change in control provision. This resulted in a $51 million charge.

122

NOTE 19. COMMITMENTS AND CONTINGENCIES
The company accrues non income-tax liabilities for contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. In the event any losses are sustained in excess of accruals, they will be charged against income at that time. Attorney fees are recorded as incurred. Commitments represent obligations, such as those for future purchases of goods or services, that are not yet recorded on the company’s balance sheet as liabilities. The company records liabilities for commitments when incurred (i.e., when the goods or services are received).
Contingent Liabilities
Linde is subject to various lawsuits and government investigations that arise from time to time in the ordinary course of business. These actions are based upon alleged environmental, tax, antitrust and personal injury claims, among others. Linde has strong defenses in these cases and intends to defend itself vigorously. It is possible that the company may incur losses in connection with some of these actions in excess of accrued liabilities. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a significant impact on the company’s reported results of operations in any given period.
Significant matters are:
•
During May 2009, the Brazilian government published Law 11941/2009 instituting a new voluntary amnesty program (“Refis Program”) which allowed Brazilian companies to settle certain federal tax disputes at reduced amounts. During the 2009 third quarter, Praxair decided that it was economically beneficial to settle many of its outstanding federal tax disputes and such disputes were enrolled in the Refis Program, subject to final calculation and review by the Brazilian federal government. The company recorded estimated liabilities based on the terms of the Refis Program. Since 2009, Praxair has been unable to reach final agreement on the calculations and initiated litigation against the government in an attempt to resolve certain items. Open issues relate to the following matters: (i) application of cash deposits and net operating loss carryforwards to satisfy obligations and (ii) the amount of tax reductions available under the Refis Program. It is difficult to estimate the timing of resolution of legal matters in Brazil.
•
At December 31, 2018 the most significant non-income and income tax claims in Brazil, after enrollment in the Refis Program, relate to state VAT tax matters and a federal income tax matter where the taxing authorities are challenging the tax rate that should be applied to income generated by a subsidiary company. The total estimated exposure relating to such claims, including interest and penalties, as appropriate, is approximately $205 million . Linde has not recorded any liabilities related to such claims based on management judgments, after considering judgments and opinions of outside counsel. Because litigation in Brazil historically takes many years to resolve, it is very difficult to estimate the timing of resolution of these matters; however, it is possible that certain of these matters may be resolved within the near term. The company is vigorously defending against the proceedings.
•
On September 1, 2010, CADE ("Brazilian Administrative Council for Economic Defense") announced alleged anticompetitive activity on the part of five industrial gas companies in Brazil and imposed fines on all five companies. Originally, CADE imposed a civil fine of R $2.2 billion Brazilian reais (US$ 568 million ) against White Martins, the Brazil-based subsidiary of Praxair. In response to a motion for clarification, the fine was reduced to R $1.7 billion Brazilian reais (US$ 439 million ) due to a calculation error made by CADE. The amount of the fine is subject to indexation using SELIC. On September 2, 2010, Praxair issued a press release and filed a report on Form 8-K rejecting all claims and stating that the fine represents a gross and arbitrary disregard of Brazilian law.
On October 19, 2010, White Martins filed an annulment petition (“appeal”) with the Federal Court in Brasilia seeking to have the fine against White Martins entirely overturned. In order to suspend payment of the fine pending the completion of the appeal process, Brazilian law required that the company tender a form of guarantee in the amount of the fine as security. Initially, 50% of the guarantee was satisfied by letters of credit with a financial institution and 50% by equity of a Brazilian subsidiary. On April 15, 2016, the Ninth Federal Court in Brasilia allowed White Martins to withdraw and cancel the letters of credit. Accordingly, the guarantee is currently satisfied solely by equity of a Brazilian subsidiary.
On September 14, 2015, the Ninth Federal Court of Brasilia overturned the fine against White Martins and declared the original CADE administrative proceeding to be null and void. On June 30, 2016, CADE filed an appeal against this decision with the Federal Circuit Court in Brasilia.

123

Praxair strongly believes that the allegations are without merit and that the fine will be entirely overturned during the appeal process. The company further believes that it has strong defenses and will vigorously defend against the allegations and related fine up to such levels of the Federal Courts in Brazil as may be necessary. Because appeals in Brazil historically take many years to resolve, it is very difficult to estimate when the appeal will be finally decided. Based on management judgments, after considering judgments and opinions of outside counsel, no reserve has been recorded for this proceeding as management does not believe that a loss is probable.
•
As stated above, in 2010, the Brazilian competition authority CADE imposed fines on a number of gases companies, including Linde AG’s Brazilian subsidiary, on the grounds of alleged anti-competitive business conduct. CADE imposed a fine of approximately R$188 million Brazilian reais (US $ 49 million) on Linde AG’s Brazilian subsidiary. Based on the fact that the fine has been overturned by a federal court in the first instance and on a subsequent appeal by CADE, Linde believes that this decision will not stand up to judicial review in the third instance either, and deems the possibility of cash outflows to be extremely unlikely. As a result, no reserve has been recorded for this proceeding as management does not believe that a loss is probable.

Commitments
At December 31, 2018 , Linde had undrawn outstanding letters of credit, bank guarantees and surety bonds valued at approximately $2,961 million from financial institutions. These relate primarily to customer contract performance guarantees (including plant construction in connection with certain on-site contracts), self-insurance claims and other commercial and governmental requirements, including foreign litigation matters.
Other commitments related to leases, tax liabilities for uncertain tax positions, long-term debt, other post retirement and pension obligations are summarized elsewhere in the financial statements (see Notes 6, 7, 13, and 18).

124

NOTE 20. SEGMENT INFORMATION
Effective October 31, 2018, Praxair and Linde AG completed the previously announced merger of equals transaction pursuant to the business combination agreement, resulting in a newly formed corporation named Linde plc. See Notes 1,3 and 4 for additional information on the merger. Although it is the company’s intention to create new operating segments that will be used by management to allocate company resources and assess performance, due to the hold separate order with the U.S. Federal Trade Commission (see Note 1) it was not possible to implement this new management organization structure in calendar 2018. Therefore, the company has added Linde AG as a separate segment for 2018 reporting purposes effective with the merger date, which is consistent with the way the company was managed and results reviewed by the Chief Operating Decision Maker. As the restrictions under the hold separate order was lifted effective March 1, 2019, the company implemented a new operating segment structure effective for 2019 reporting periods, as follows: Americas; EMEA (Europe/Middle East/Africa); APAC (Asia/Pacific), Engineering and Other.
Accordingly, during 2018 the company’s operations were organized into five reportable segments, four of which have been determined on a geographic basis of segmentation: North America, Europe, South America and Asia. The company’s worldwide surface technologies business represents the fifth reportable segment. As discussed above, Linde AG became a sixth reportable segment effective with the merger on October 31, 2018.
Linde’s operations consist of two major product lines: industrial gases and surface technologies. The industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). Many of these products are co-products of the same manufacturing process. Linde manufactures and distributes nearly all of its products and manages its customer relationships on a regional basis. Linde’s industrial gases are distributed to various end-markets within a regional segment through one of three basic distribution methods: on-site or tonnage; merchant or bulk; and packaged or cylinder gases. The distribution methods are generally integrated in order to best meet the customer’s needs and very few of its products can be economically transported outside of a region. Therefore, the distribution economics are specific to the various geographies in which the company operates and are consistent with how management assesses performance.
Linde evaluates the performance of its reportable segments based primarily on operating profit, excluding purchase accounting impacts of Linde AG, inter-company royalties and items not indicative of ongoing business trends. Corporate and globally managed expenses, and research and development costs relating to Praxair’s global industrial gases business, are allocated to operating segments based on sales.

The table below presents information about reportable segments for the years ended December 31, 2018 , 2017 and 2016 .  
(Millions of dollars)
2018
 
2017
 
2016
Sales (a)
 
 
 
 
 
North America
$
6,420

 
$
6,023

 
$
5,592

Europe
1,592

 
1,558

 
1,392

South America
1,369

 
1,501

 
1,399

Asia
1,964

 
1,738

 
1,555

Surface Technologies
682

 
617

 
596

Linde AG
2,873

 
$
—

 
$
—

 
$
14,900

 
$
11,437

 
$
10,534

 

125

 
2018
 
2017
 
2016
Operating Profit
 
 
 
 
 
North America
$
1,648

 
$
1,517

 
$
1,431

Europe
316

 
301

 
274

South America
215

 
239

 
263

Asia
427

 
333

 
276

Surface Technologies
118

 
106

 
99

Linde AG
252

 
—

 
—

Segment operating profit
2,976

 
2,496

 
2,343

Transaction costs and other charges
(309
)
 
(52
)
 
(96
)
Net gain on sale of business
3,294

 
—

 
—

Purchase accounting impacts - Linde AG
(714
)
 
—

 
—

Total operating profit
$
5,247

 
$
2,444

 
$
2,247

 
2018
 
2017
 
2016
Total Assets (b)
 
 
 
 
 
North America
$
11,643

 
$
10,419

 
$
10,019

Europe
769

 
3,282

 
2,928

South America
2,675

 
2,738

 
2,748

Asia
3,518

 
3,252

 
2,984

Surface Technologies
940

 
745

 
653

Linde AG
73,841

 
—

 
—

 
$
93,386

 
$
20,436

 
$
19,332

 
2018
 
2017
 
2016
Depreciation and Amortization
 
 
 
 
 
North America
$
660

 
$
631

 
$
614

Europe
146

 
169

 
155

South America
148

 
159

 
133

Asia
204

 
185

 
179

Surface Technologies
44

 
40

 
41

Linde AG
282

 
—

 
—

Segment depreciation and amortization
1,484

 
1,184

 
1,122

Purchase accounting impacts - Linde AG
346

 
—

 
—

Total depreciation and amortization
$
1,830

 
$
1,184

 
$
1,122

 
2018
 
2017
 
2016
Capital Expenditures and Acquisitions
 
 
 
 
 
North America
$
916

 
$
779

 
$
989

Europe
157

 
141

 
402

South America
97

 
129

 
232

Asia
248

 
209

 
165

Surface Technologies
93

 
86

 
40

Linde AG
397

 
—

 
—

 
$
1,908

 
$
1,344

 
$
1,828


126

 
2018
 
2017
 
2016
Sales by Product Group
 
 
 
 
 
Atmospheric gases and related
$
8,375

 
$
7,938

 
$
7,329

Process gases and other
2,970

 
2,882

 
2,609

Surface technologies
682

 
617

 
596

Linde AG
2,873

 
—

 
—

 
$
14,900

 
$
11,437

 
$
10,534

 
2018
 
2017
 
2016
Sales by Major Country
 
 
 
 
 
United States
$
5,942

 
$
4,973

 
$
4,623

Europe, excluding Germany
2,435

 
1,372

 
1,240

Brazil
1,067

 
1,179

 
1,091

China
1,032

 
735

 
613

Germany
868

 
401

 
373

Other – foreign
3,556

 
2,777

 
2,594

 
$
14,900

 
$
11,437

 
$
10,534

 
2018
 
2017
 
2016
Long-lived Assets by Major Country (c)
 
 
 
 
 
United States
$
7,189

 
$
4,979

 
$
4,779

Europe, excluding Germany
7,754

 
1,318

 
1,170

Germany
2,411

 
413

 
379

China
2,237

 
1,060

 
975

Brazil
1,012

 
1,204

 
1,240

Other – foreign
9,114

 
2,851

 
2,706

Total long-lived assets
$
29,717

 
$
11,825

 
$
11,249

________________________
(a)
Sales reflect external sales only and include two months of Linde AG sales from the merger date of October 31, 2018 to year end. Intersegment sales, primarily from North America to other segments, were not material.
(b)
Includes equity investments as of December 31, as follows:
(Millions of dollars)
2018
 
2017
 
2016
North America
$
118

 
$
115

 
$
121

Europe (i)
34

 
287

 
243

Asia
306

 
325

 
353

Linde AG (ii)
1,380

 
—

 
—

 
$
1,838

 
$
727

 
$
717

(i) The reduction in European equity investments relates primarily to the sale of Praxair's 34% non-controlling interest participation in its Italian joint venture - refer to Note 4, Divestitures, for additional information. Other fluctuations relate to equity investment earnings, dividends, and foreign currency impacts.
(ii) Linde AG equity investments relate primarily to Asia.
(c)
Long-lived assets include property, plant and equipment – net and reflect the impact of the merger with Linde AG (refer to Note 3).


127

NOTE 21. REVENUE RECOGNITION
Effective January 1, 2018, Linde adopted the FASB's Accounting Standards Update No. 2014-09 ("ASC 606") relating to Revenue Recognition using the modified retrospective transition method. The new accounting standard requires revenue to be recognized as control of goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled to receive in exchange for the goods or services. No material differences in revenue recognition were identified as compared to the company's historical revenue recognition accounting; accordingly, there is no adjustment to opening retained earnings at January 1, 2018 and therefore no need to present comparable revenue in accordance with the prior accounting policy. The following sections include Linde's revenue recognition accounting policies and disclosures in accordance with ASC 606.
Contracts with Customers
Approximately 76% of Linde’s consolidated sales are generated from industrial gases and related products in four geographic segments (North America, Europe, South America and Asia), Linde AG represents approximately 19% of 2018 sales and the remaining 5% is related to the global surface technologies segment. Linde serves a diverse group of industries including healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment.
Industrial Gases
Within each of the company’s geographic segments for industrial gases, there are three basic distribution methods: (i) on-site or tonnage; (ii) merchant or bulk liquid; and (iii) packaged or cylinder gases. The distribution method used by Linde to supply a customer is determined by many factors, including the customer’s volume requirements and location. The distribution method generally determines the contract terms with the customer and, accordingly, the revenue recognition accounting practices. Linde’s primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). These products are generally sold through one of the three distribution methods.
Following is a description of each of the three industrial gases distribution methods and the respective revenue recognition policies:
On-site. Customers that require the largest volumes of product and that have a relatively constant demand pattern are supplied by cryogenic and process gas on-site plants. Linde constructs plants on or adjacent to these customers’ sites and supplies the product directly to customers by pipeline. Where there are large concentrations of customers, a single pipeline may be connected to several plants and customers. On-site product supply contracts generally are total requirement contracts with terms typically ranging from 10 - 20 years and contain minimum purchase requirements and price escalation provisions. Many of the cryogenic on-site plants also produce liquid products for the merchant market. Therefore, plants are typically not dedicated to a single customer. Additionally, Linde is responsible for the design, construction, operations and maintenance of the plants and customers typically have no involvement in these activities. Advanced air separation processes also allow on-site delivery to customers with smaller volume requirements.
The company’s performance obligations related to on-site customers are satisfied over time as customers receive and obtain control of the product. Linde has elected to apply the practical expedient for measuring progress towards the completion of a performance obligation and recognizes revenue as the company has the right to invoice each customer, which generally corresponds with product delivery. Accordingly, revenue is recognized when product is delivered to the customer and the company has the right to invoice the customer in accordance with the contract terms. Consideration in these contracts is generally based on pricing which fluctuates with various price indices. Variable components of consideration exist within on-site contracts but are considered constrained.
Merchant. Merchant deliveries generally are made from Linde’s plants by tanker trucks to storage containers at the customer's site. Due to the relatively high distribution cost, merchant oxygen and nitrogen generally have a relatively small distribution radius from the plants at which they are produced. Merchant argon, hydrogen and helium can be shipped much longer distances. The customer agreements used in the merchant business are usually three-to seven-year supply agreements based on the requirements of the customer. These contracts generally do not contain minimum purchase requirements or volume commitments.
The company’s performance obligations related to merchant customers are generally satisfied at a point in time as the customers receive and obtain control of the product. Revenue is recognized when product is delivered to the customer and the company has the right to invoice the customer in accordance with the contract terms. Any variable components of consideration within merchant contracts are constrained however this consideration is not significant.
Packaged Gases. Customers requiring small volumes are supplied products in containers called cylinders, under medium to high pressure. Linde distributes merchant gases from its production plants to company-owned cylinder filling plants where

128

cylinders are then filled for distribution to customers. Cylinders may be delivered to the customer’s site or picked up by the customer at a packaging facility or retail store. Linde invoices the customer for the industrial gases and the use of the cylinder container(s). The company also sells hardgoods and welding equipment purchased from independent manufacturers. Packaged gases are generally sold under one to three-year supply contracts and purchase orders and do not contain minimum purchase requirements or volume commitments.
The company’s performance obligations related to packaged gases are satisfied at a point in time. Accordingly, revenue is recognized when product is delivered to the customer or when the customer picks up product from a packaged gas facility or retail store, and the company has the right to payment from the customer in accordance with the contract terms. Any variable consideration is constrained and will be recognized when the uncertainty related to the consideration is resolved.
Surface Technologies
The company’s surface technologies segment, operated through Praxair Surface Technologies, Inc., supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders. Praxair Surface Technologies is a leading global supplier of coatings services and thermal spray consumables to customers in the aircraft, energy, printing, primary metals, petrochemical, textile, and other industries. Its coatings are used to provide wear resistance, corrosion protection, thermal insulation, and many other surface-enhancing functions which serve to extend component life, enable optimal performance, and reduce operating costs. It also manufactures a complete line of electric arc, plasma and wire spray, and high-velocity oxy-fuel ("HVOF") equipment.
The company’s performance obligation related to surface technologies customers are generally satisfied at a point in time when the customer receives and takes control of product. Accordingly, revenue is recognized when product is delivered to the customer or when the customer picks up the product from the company’s facility, and the company has the right to invoice the customer in accordance with the contract terms.
Linde Engineering
The company designs and manufactures equipment for air separation and other industrial gas applications manufactured specifically for end customers. Sale of equipment contracts are generally comprised of a single performance obligation. Revenue from sale of equipment is generally recognized over time as Linde has an enforceable right to payment for performance completed to date and performance does not create an asset with alternative use. For contracts recognized over time, revenue is recognized primarily using a cost incurred input method. Costs incurred to date relative to total estimated costs at completion are used to measure progress toward satisfying performance obligations. Costs incurred include material, labor, and overhead costs and represent work contributing and proportionate to the transfer of control to the customer. Contract modifications are typically accounted for as part of the existing contract and are recognized as a cumulative adjustment for the inception-to-date effect of such change.
Contract Assets and Liabilities
Contract assets and liabilities result from differences in timing of revenue recognition and customer invoicing. Contract assets primarily relate to sale of equipment contracts for which revenue is recognized over time. The balance represents unbilled revenue which occurs when revenue recognized under the measure of progress exceeds amounts invoiced to customers. Customer invoices may be based on the passage of time, the achievement of certain contractual milestones or a combination of both criteria.
Contract liabilities include advance payments or right to consideration prior to performance under the contract. Contract liabilities are recognized as revenue as performance obligations are satisfied under contract terms. 
Linde has contract assets of $283 million and contract liabilities of $1,546 million at December 31, 2018. Contract assets and liabilities primarily relate to the Linde Engineering business acquired in the merger. The Industrial Gases Businesses and Surface Technologies do not have material contract assets or liabilities.
Payment Terms and Other
Linde generally receives payment after performance obligations are satisfied, and customer prepayments are not typical for the Industrial Gases Businesses and Surface Technologies. Payment terms vary based on the country where sales originate and local customary payment practices. Linde does not offer extended financing outside of customary payment terms. Amounts billed for sales and use taxes, value-added taxes, and certain excise and other specific transactional taxes imposed on revenue producing transactions are presented on a net basis and are not included in sales within the consolidated statement of income. Additionally, sales returns and allowances are not a normal practice in the industry and are not significant.


129

Disaggregated Revenue Information
The company manages its industrial gases business on a geographic basis, while the surface technologies business is managed on a global basis. Linde AG had been managed as a separate segment due to the restrictions under the hold separate order, which were lifted on March 1, 2019. Further, the company believes that reporting sales by distribution method by reportable geographic segment best illustrates the nature, timing, type of customer, and contract terms for its revenues, including terms and pricing.
The following table shows sales by distribution method for each reportable segment and at the consolidated level for the year ended December 31, 2018.
(Dollars in Millions)
 
 
 
 
Sales
North America
Europe
South America
Asia
Surface Technologies
Linde AG
Total
%
 
 
 
 
 
 
 
 
 
Merchant
$
2,364

$
548

$
520

$
624

$
—

$
524

$
4,580

31
%
On-Site
1,901

291

454

984

—

501

4,131

28
%
Packaged Gas
1,995

685

361

221

—

1,257

4,519

30
%
Other
160

68

34

135

682

591

1,670

11
%
 
$
6,420

$
1,592

$
1,369

$
1,964

$
682

$
2,873

$
14,900

100
%
Remaining Performance Obligations
As described above, Linde’s contracts with on-site customers are under long-term supply arrangements which generally require the customer to purchase their requirements from Linde and also have minimum purchase requirements. The company estimates the consideration related to minimum purchase requirements is approximately $45 billion . This amount excludes all sales above minimum purchase requirements, which can be significant depending on customer needs. In the future, actual amounts will be different due to impacts from several factors, many of which are beyond the company’s control including, but not limited to, timing of newly signed, terminated and renewed contracts, inflationary price escalations, currency exchange rates, and pass-through costs related to natural gas and electricity. The actual duration of long-term supply contracts ranges up to twenty years. The company estimates that approximately half of the revenue related to minimum purchase requirements are estimated to be earned in the next five years and the remaining thereafter.



130


NOTE 22. QUARTERLY DATA (UNAUDITED)
(Dollar amounts in millions, except per share data)  
2018
1Q (a)
 
2Q (a)
 
3Q (a)
 
4Q (a)
 
YEAR (a)
Sales
$
2,999

 
$
3,061

 
$
3,024

 
$
5,816

 
$
14,900

Cost of sales, exclusive of depreciation and amortization
$
1,677

 
$
1,723

 
$
1,714

 
$
3,970

 
$
9,084

Depreciation and amortization
$
311

 
$
311

 
$
306

 
$
902

 
$
1,830

Operating profit
$
653

 
$
689

 
$
669

 
$
3,236

 
$
5,247

Net income – Linde plc
$
462

 
$
480

 
$
461

 
$
2,978

 
$
4,381

Income from continuing operations
$
462

 
$
480

 
$
461

 
$
2,870

 
$
4,273

Income from discontinued operations
$
—

 
$
—

 
$
—

 
$
108

 
$
108

Basic Per Share Data
 
 
 
 
 
 
 
 
 
Income from continuing operations *
$
1.61

 
$
1.67

 
$
1.60

 
$
6.27

 
$
12.93

Income from discontinued operations *
—

 
—

 
—

 
0.24

 
0.33

Weighted average shares (000’s)
287,504

 
287,803

 
288,093

 
457,518

 
330,401

Diluted Per Share Data
 
 
 
 
 
 
 
 
 
Income from continuing operations *
$
1.59

 
$
1.65

 
$
1.58

 
$
6.22

 
$
12.79

Income from discontinued operations *
—

 
—

 
—

 
0.23

 
0.32

Weighted average shares (000’s)
290,809

 
290,908

 
291,513

 
461,150

 
$
334,127


2017
1Q (a)
 
2Q (a)
 
3Q (a)
 
4Q (a)
 
YEAR (a)
Sales
$
2,728

 
$
2,834

 
$
2,922

 
$
2,953

 
$
11,437

Cost of sales, exclusive of depreciation and amortization
$
1,549

 
$
1,599

 
$
1,652

 
$
1,661

 
$
6,461

Depreciation and amortization
$
287

 
$
292

 
$
298

 
$
307

 
$
1,184

Operating profit
$
567

 
$
606

 
$
632

 
$
639

 
$
2,444

Net income – Linde plc
$
389

 
$
406

 
$
419

 
$
33

 
$
1,247

Basic Per Share Data
 
 
 
 
 
 
 
 
 
Net income
$
1.36

 
$
1.42

 
$
1.46

 
$
0.11

 
$
4.36

Weighted average shares (000’s)
285,509

 
286,090

 
286,467

 
286,976

 
286,261

Diluted Per Share Data
 
 
 
 
 
 
 
 
 
Net income
$
1.35

 
$
1.41

 
$
1.45

 
$
0.11

 
$
4.32

Weighted average shares (000’s)
287,384

 
288,535

 
289,216

 
290,456

 
289,114

 
*
Due to quarterly changes in the share count as a result of the merger the sum of the four quarters does not equal the earnings per share amount calculated for the year.
(a)
2018 and 2017 include the impact of the following matters (see Notes 3, 4, 5, 7, 13 and 18):

131

(Millions of dollars)
Operating
Profit/
(Loss)
 
Income from Continuing Operations
Transaction costs and other charges - Q1
$
(19
)
 
$
(18
)
Transaction costs and other charges - Q2
(24
)
 
(21
)
Transaction costs and other charges - Q3
(31
)
 
(29
)
Pension settlement charge - Q3
—

 
(3
)
Transaction costs and other charges - Q4
(235
)
 
(238
)
Gain on sale of business - Q4
3,294

 
2,923

Bond redemption - Q4
—

 
(20
)
Pension settlement charge - Q4
—

 
(8
)
Tax Act and other tax charges - Q4
—

 
17

Purchase accounting impacts - Linde AG - Q4
(714
)
 
(451
)
Year 2018
$
2,271

 
$
2,152

 
 
 
 
Transaction costs and other charges - Q1
$
(6
)
 
$
(6
)
Transaction costs and other charges - Q2
(15
)
 
(15
)
Transaction costs and other charges - Q3
(14
)
 
(13
)
Pension settlement charge - Q3
—

 
(1
)
Transaction costs and other charges - Q4
(17
)
 
(14
)
Tax Act - Q4
—

 
(394
)
Year 2017
$
(52
)
 
$
(443
)

132

NOTE 23. SUBSEQUENT EVENTS

Divestitures
On March 1, 2019, Linde AG completed the sale of the majority of its industrial gases business in North America and certain industrial gases business activities in South America to a consortium comprising companies of the German industrial gases manufacturer Messer Group and CVC Capital Partners Fund VII, pursuant to a Sale and Purchase Agreement, dated July 16, 2018, as amended on September 22, 2018, October 19, 2018 and February 20, 2019, by and among the Company, Linde AG, Praxair, Inc., Messer Group and CVC Capital Partners Fund VII (the “SPA”). Messer Group and CVC Capital Partners Fund VII paid $2.97 billion in cash consideration after purchase price adjustments for certain items relating to assets and liabilities of the sold businesses. The SPA was entered into as part of the commitments in connection with the merger control review by the U.S. Federal Trade Commission (the “FTC”) of the previously completed combination of the businesses of Praxair, Inc. and Linde AG under the Company (the ”business combination” - see Note 1).
As part of the company’s, Praxair’s and Linde AG’s further commitments in connection with the merger control review by the FTC, Linde AG divested additional assets within the Americas for aggregate net proceeds of $531 million (i) to Matheson Tri-Gas, Inc., five of Linde AG’s HyCO facilities outside the Gulf Coast region, along with Linde AG’s hydrogen pipeline in the Gulf Coast, intellectual property, customer contracts, and other assets, (ii) to Celanese Corporation, Linde AG's Clear Lake, Texas plant, and (iii) to LyondellBasell Industries N.V., Linde AG’s La Porte, Texas plant.
Hold Separate Order
Additionally, concurrent with the sale of the required merger-related divestitures in the United States, on March 1, 2019, the hold separate order restrictions described in Note 1 were lifted and the Company was able to commence integration activities.


133


ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.     CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Based on an evaluation of the effectiveness of Linde’s disclosure controls and procedures, which was made under the supervision and with the participation of management, including Linde’s principal executive officer and principal financial officer, the principal executive officer and principal financial officer have each concluded that, as of the end of the annual period covered by this report, such disclosure controls and procedures are effective in ensuring that information required to be disclosed by Linde in reports that it files or submits under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and accumulated and communicated to management including Linde’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Refer to Item 8 for Management’s Report on Internal Control Over Financial Reporting as of December 31, 2018.
Changes in Internal Control over Financial Reporting
There were no changes in Linde’s internal control over financial reporting that occurred during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, Linde’s internal control over financial reporting.
ITEM 9B.     OTHER INFORMATION
None.

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Table of Contents

PART III

ITEM 10.     DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Certain information required by this item is incorporated herein by reference to the sections captioned “Corporate Governance and Board Matters - Director Nominees" and “Corporate Governance And Board Matters - Section 16(a) Beneficial Ownership Reporting Compliance” in Linde’s Proxy Statement to be filed by April 30, 2019 for the Annual General Meeting.
Identification of the Audit Committee
Linde has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”). The members of that audit committee are Prof. Dr. Clemens Börsig (chairman), Dr. Nance K. Dicciani, Dr. Thomas Enders, Edward G. Galante, Larry D. McVay and Dr. Victoria Ossadnik, and each member is independent within the meaning of the independence standards adopted by the Board of Directors and those of the New York Stock Exchange.

Audit Committee Financial Expert
The Linde Board of Directors has determined that Prof. Dr. Clemens Börsig is an “audit committee financial expert” as defined by Item 407(d)(5)(ii) of Regulation S-K of the Exchange Act and is independent within the meaning of the independence standards adopted by the Board of Directors and those of the New York Stock Exchange.

Code of Ethics
Linde has adopted a code of ethics that applies to the company’s directors and all employees, including its Chief Executive Officer, Chief Financial Officer, and Controller. This code of ethics, including specific standards for implementing certain provisions of the code, has been approved by the Linde Board of Directors and is named the “Code of Business Integrity”. This document is posted on the company’s public website, www.linde.com but is not incorporated herein.

ITEM 11.     EXECUTIVE COMPENSATION
Information required by this item is incorporated herein by reference to the sections captioned “Executive Compensation Matters” and “Corporate Governance and Board Matters - Director Compensation” in Linde’s Proxy Statement to be filed by April 30, 2019 for the Annual General Meeting.




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Table of Contents

ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Equity Compensation Plans Information - The table below provides information as of December 31, 2018 about company shares that may be issued upon the exercise of options, warrants and rights granted to employees or members of Linde’s Board of Directors under equity compensation plans that were assumed by Linde upon the completion of the business combination on October 31, 2018.

EQUITY COMPENSATION PLANS TABLE  
Plan Category
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights (a)
 
Weighted-average
exercise price of
outstanding options,
warrants and rights (b)
 
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a)) (c)
 
Equity compensation plans approved by shareholders
11,694,110

(1)
$
117.65

 
8,482,731

(2)
Equity compensation plans not approved by shareholders
—

  
—

 
—

 
Total
11,694,110

  
$
117.65

 
8,482,731

 
 
________________________
(1)
This amount includes 1,070,423 restricted shares.
(2)
This amount includes 8,009,603 shares available for future issuance pursuant to the Amended and Restated 2009 Praxair, Inc. Long Term Incentive Plan assumed by Linde, and 473,128 shares available for future issuance pursuant to the Linde plc Long Term Incentive Plan 2018.

Certain information required by this item regarding the beneficial ownership of the company’s ordinary shares is incorporated herein by reference to the section captioned “Information on Share Ownership” i n Linde’s Proxy Statement to be filed by April 30, 2019 for the Annual General Meeting.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Information required by this item is incorporated herein by reference to the sections captioned “Corporate Governance And Board Matters – Review, Approval or Ratification of Transactions with Related Persons,” “Corporate Governance And Board Matters – Certain Relationships and Transactions,” and “Corporate Governance And Board Matters – Director Independence” in Linde’s Proxy Statement to be filed by April 30, 2019 for the Annual General Meeting.


ITEM 14.     PRINCIPAL ACCOUNTING FEES AND SERVICES
Information required by this item is incorporated herein by reference to the section captioned “Audit Matters” in Linde’s Proxy Statement to be filed by April 30, 2019 for the Annual General Meeting.


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Table of Contents

PART IV
ITEM 15.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this report:
(1)
The company’s 2018 Consolidated Financial Statements and the Report of the Independent Registered Public Accounting Firm are included in Part II, Item 8. Financial Statements and Supplementary Data.
(2)
Financial Statement Schedules – All financial statement schedules have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
(3)
Exhibits – The exhibits filed as part of this Annual Report on Form 10-K are listed in the accompanying index.


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Table of Contents

INDEX TO EXHIBITS
Linde plc and Subsidiaries
Exhibit No.
 
Description
 
 
2.1
 

 
 
 
2.1a
 

 
 
 
**2.2
  
 
 
**2.3
 
 
 
**2.3a
 
 
 
**2.3b
 
 
 
 
**2.3c
 
 
 
3.01
 
 
 
4.01
  
 
 
 
4.02
 
 
 
4.03
  
Copies of the agreements relating to long-term debt which are not required to be filed as exhibits to this Annual Report on Form 10-K will be furnished to the Securities and Exchange Commission upon request.
 
 
10.01
 
 
 
10.01a
  
 
 

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Table of Contents

10.02
  

 
 
10.02a
  
 
 
*10.03
  
 
 
*10.04
  
 
 
 
*10.05
  
 
 
 
*10.05a
 

 
 
*10.05b
  
*10.05c
 
 
 
 
*10.05d
 
 
 
*10.05e
  
*10.06
  
 
 
*10.06a
  
 
 
 
*10.06b
 

 
 
 
*10.06c
  
 
 
 
*10.06d
  
 
 
 
*10.06e
 
 
 
 
*10.06f
  

 
 
 
*10.07
 
 
 
 
*10.07a
  
 
 
 
*10.07b
 


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Table of Contents

 
 
*10.07c
 
 
 
 
*10.07d
 

 
 
 
*10.07e
 
 
 
 
*10.07f
 
 
 
 
*10.07g
 
 
 
 
*10.07h
 

 
 
 
*10.08
  
 
 
*10.09
  

 
 
*10.09a
 

 
 
 
*10.10
  
 
 
*10.11
  

 
 
*10.11a
  
 
 
*10.11b
 
 
 
 
*10.11c
  
 
 

140
Table of Contents

*10.11d
 
 
 
*10.11e
 

 
 
*10.11f
 

 
 
*10.11g
 

 
 
 
*10.11h
 

 
 
 
*10.11i
 
 
 
 
*10.11j
 
 
 
 
*10.11k
 
 
 
 
*10.11l
 
 
 
 
*10.11m
 
 
 
 
*10.11n
 
 
 
 
*10.11o
 
 
 
 
*10.12
 
 
 
 
*10.13a
 
 
 
 
*10.13b
 
 
 
 
*10.13c
 
 
 
 
*10.13d
 
 
 
 
*10.13e
 
 
 
 
*10.13f
 
 
 
 
*10.14
 
 
 
 
*10.15
 
 
 
 
*10.15a
 
 
 
 
*10.16
 
 
 
 

141
Table of Contents

*10.17
 
 
 
 
21.01
  
 
 
23.01
  
 
 
31.01
  
 
 
 
31.02
 
 
 
32.01
  
 
 
 
32.02
  
 
 
101.INS
  
XBRL Instance Document
 
 
101.SCH
  
XBRL Taxonomy Extension Schema
 
 
101.CAL
  
XBRL Taxonomy Extension Calculation Linkbase
 
 
101.LAB
  
XBRL Taxonomy Extension Label Linkbase
 
 
101.PRE
  
XBRL Taxonomy Extension Presentation Linkbase
 
 
101.DEF
  
XBRL Taxonomy Extension Definition Linkbase
Copies of exhibits incorporated by reference can be obtained from the SEC and are located in SEC File No. 1-11037.
*
Indicates a management contract or compensatory plan or arrangement.
**
Certain schedules or similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplemental copies of any of the omitted schedules or attachments upon request by the SEC.




142
Table of Contents

ITEM 16.     FORM 10-K SUMMARY

None.

143
Table of Contents

SIGNATURES
Linde plc and Subsidiaries
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.  
 
 
Linde plc
 
 
(Registrant)
Date: March 18, 2019
By: 
  /s/      K ELCEY E . H OYT         
 
 
Kelcey E. Hoyt
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 18, 2019.  
/s/    PROF. DR. WOLFGANG REITZLE
  
/s/    STEPHEN F. ANGEL        
  
/s/ MATTHEW J. WHITE
Wolfgang Reitzle
Chairman
  
Stephen F. Angel
Chief Executive Officer and Director
  
Matthew J. White
Chief Financial Officer
 
 
 
/s/    PROF. DDR. ANN-KRISTIN ACHLIETNER
 
/s/    DR. CLEMENS BÖRSIG
 
/s/   DR. NANCE K. DICCIANI         
Ann-Kristin Achleitner
Director
  
Clemens B ö rsig
Director
  
Nance K. Dicciani
Director
 
 
 
/s/    DR. THOMAS ENDERS
 
/s/    FRANZ FEHRENBACH
 
/s/    EDWARD G. GALANTE    
Thomas Enders
Director
  
Franz Fehrenbach
Director
  
Edward G. Galante
Director
 
 
 
 
 
/s/    LARRY D. MCVAY  
 
/s/    DR. VICTORIA OSSADNIK
 
/s/   PROF. DR. MARTIN H. RICHENHAGEN
Larry D. McVay
Director
 
Victoria Ossadnik
Director
 
Martin Richenhagen
Director
 
 
 
 
 
/s/    ROBERT L. WOOD   
 
 
 
 
Robert L. Wood
Director
 
 
 
 


144



Conformed Copy



DATED 18 July 2013
EUR 2,500,000,000
FACILITY AGREEMENT
between
LINDE AG
and
LINDE FINANCE B.V.
as Original Borrowers
arranged by
BARCLAYS BANK PLC, BAYERISCHE LANDESBANK, BANC OF AMERICA SECURITIES LIMITED, BANK OF CHINA LIMITED ZWEIGNIEDERLASSUNG FRANKFURT AM MAIN FRANKFURT BRANCH, BNP PARIBAS FORTIS SA/NV, NIEDERLASSUNG DEUTSCHLAND, CITIGROUP GLOBAL MARKETS LIMITED, COMMERZBANK AKTIENGESELLSCHAFT, CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK DEUTSCHLAND, DEUTSCHE BANK AG, DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK, FRANKFURT AM MAIN, HSBC BANK PLC, ING BANK, A BRANCH OF ING-DIBA AG, LANDESBANK BADEN-WÜRTTEMBERG, LLOYDS TSB BANK PLC, MIZUHO BANK LTD., MORGAN STANLEY BANK INTERNATIONAL LIMITED, ROYAL BANK OF CANADA, SEB AG, STANDARD CHARTERED BANK, SUMITOMO MITSUI BANKING CORPORATION, THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., DÜSSELDORF BRANCH, TD BANK EUROPE LIMITED and UNICREDIT BANK AG
as Mandated Lead Arrangers
with
DEUTSCHE BANK LUXEMBOURG S.A.
acting as Agent and EUR Swingline Agent
and
DEUTSCHE BANK AG, NEW YORK Branch
acting as USD Swingline Agent
and
OTHERS
SYNDICATED MULTI-CURRENCY REVOLVING CREDIT FACILITY AGREEMENT INCORPORATING A DUAL-CURRENCY SWINGLINE FACILITY

CONTENTS
CLAUSE    PAGE
1. DEFINITIONS AND INTERPRETATION     4
2. THE FACILITY     21
3. EXTENSION OPTION     22
4. PURPOSE     23
5. CONDITIONS OF UTILISATION     23
6. UTILISATION – REVOLVING FACILITY LOANS     24
7. UTILISATION – LETTERS OF CREDIT     26
8. LETTERS OF CREDIT     30
9. UTILISATION - SWINGLINE LOANS     37
10. SWINGLINE LOANS     41
11. OPTIONAL CURRENCIES     43
12. ANCILLARY FACILITIES     44
13. REPAYMENT     48
14. PREPAYMENT AND CANCELLATION     48
15. INTEREST     50
16. INTEREST PERIODS     51
17. CHANGES TO THE CALCULATION OF INTEREST     52
18. FEES     53
19. TAX GROSS UP AND INDEMNITIES     54
20. INCREASED COSTS     62
21. OTHER INDEMNITIES     64
22. MITIGATION BY THE LENDERS     65
23. COSTS AND EXPENSES     65
24. GUARANTEE AND INDEMNITY     66
25. REPRESENTATIONS     68
26. INFORMATION UNDERTAKINGS     72
27. GENERAL UNDERTAKINGS     74
28. EVENTS OF DEFAULT     79
29. CHANGES TO THE LENDERS     81
30. CHANGES TO THE OBLIGORS     87
31. ROLE OF THE AGENT AND THE ARRANGERS     88
32. CONDUCT OF BUSINESS BY THE FINANCE PARTIES     93
33. SHARING AMONG THE FINANCE PARTIES     93
34. PAYMENT MECHANICS     94
35. SET-OFF     97
36. NOTICES     97
37. CALCULATIONS AND CERTIFICATES     99
38. PARTIAL INVALIDITY     99
39. REMEDIES AND WAIVERS     99
40. AMENDMENTS AND WAIVERS     99
41. USA PATRIOT ACT     100
42. GOVERNING LAW     100
43. GENERAL BUSINESS CONDITIONS     100
44. ENFORCEMENT     101
45. CONCLUSION OF THIS AGREEMENT ( VERTRAGSSCHLUSS )     101
SCHEDULE 1 THE ORIGINAL PARTIES 103
PART A THE ORIGINAL OBLIGORS 103
PART B THE ORIGINAL LENDERS 104
SCHEDULE 2 CONDITIONS PRECEDENT 107
PART A CONDITIONS PRECEDENT TO INITIAL UTILISATION 107
PART B CONDITIONS PRECEDENT REQUIRED TO BE DELIVERED BY AN ADDITIONAL BORROWER 109
SCHEDULE 3 REQUESTS 111
PART A UTILISATION REQUEST REVOLVING FACILITY LOANS 111
PART B UTILISATION REQUEST SWINGLINE LOANS 113
PART C UTILISATION REQUEST LETTERS OF CREDIT 115
SCHEDULE 4 FORM OF ASSIGNMENT CERTIFICATE 117
SCHEDULE 5 FORM OF TRANSFER CERTIFICATE 120
SCHEDULE 6 FORM OF ACCESSION LETTERS 123
PART A BORROWER ACCESSION LETTER 123
PART B FORM OF LENDER ACCESSION LETTER 124
PART C FORM OF LENDER AFFILIATE ACCESSION AGREEMENT 125
SCHEDULE 7 FORM OF RESIGNATION LETTER 126
SCHEDULE 8 RESERVATIONS 127
SCHEDULE 9 FORM OF CONFIDENTIALITY UNDERTAKING 130
SCHEDULE 10 TIMETABLES 134
PART A REVOLVING FACILITY LOANS 134
PART B SWINGLINE LOANS 135
PART C LETTERS OF CREDIT 136
FORM OF PROCESS AGENT APPOINTMENT LETTER
137
SCHEDULE 12 LIST OF EXCLUDED SUBSIDIARIES 138

THIS AGREEMENT is dated 18 July 2013 and made
BETWEEN:
(1)
LINDE AG as original borrower and guarantor ( Linde or the Company );
(2)
LINDE FINANCE B.V. as original borrower (together with the Company the Original Borrowers );
(3)
BARCLAYS BANK PLC, BAYERISCHE LANDESBANK, BANC OF AMERICA SECURITIES LIMITED, BANK OF CHINA LIMITED ZWEIGNIEDERLASSUNG FRANKFURT AM MAIN FRANKFURT BRANCH, BNP PARIBAS FORTIS SA/NV, NIEDERLASSUNG DEUTSCHLAND, CITIGROUP GLOBAL MARKETS LIMITED, COMMERZBANK AKTIENGESELLSCHAFT, CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK DEUTSCHLAND, DEUTSCHE BANK AG, DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK, FRANKFURT AM MAIN, HSBC BANK PLC, ING BANK, A BRANCH OF ING-DIBA AG, LANDESBANK BADEN-WÜRTTEMBERG, LLOYDS TSB BANK PLC, MIZUHO BANK LTD., MORGAN STANLEY BANK INTERNATIONAL LIMITED, ROYAL BANK OF CANADA, SEB AG, STANDARD CHARTERED BANK, SUMITOMO MITSUI BANKING CORPORATION, THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., DÜSSELDORF BRANCH, TD BANK EUROPE LIMITED and UNICREDIT BANK AG as mandated lead arrangers (the Arrangers );
(4)
THE FINANCIAL INSTITUTIONS listed in ‎Part B in ‎Schedule 1 as lenders (the Original Lenders );
(5)
DEUTSCHE BANK LUXEMBOURG S.A. (the EUR Swingline Agent ) and DEUTSCHE BANK AG, New York Branch (the USD Swingline Agent ) as swingline agents (each a Swingline Agent and together the Swingline Agents );
(6)
DEUTSCHE BANK LUXEMBOURG S.A. as agent of the other Finance Parties (the Agent ); and
(7)
BNP Paribas Fortis SA/NV, Niederlassung Deutschland and The Bank of Tokyo-Mitsubishi UFJ, Ltd., Düsseldorf Branch as issuing banks (each an Original Issuing Bank and together the Original Issuing Banks ).
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1
Definitions
In this Agreement:
Acceptable Bank means a bank or financial institution which has a rating for its long-term unsecured and non credit-enhanced debt obligations of BBB+ or higher by Standard & Poor’s Rating Services or Fitch Ratings Ltd or Baa1 or higher by Moody’s Investor Services Limited or a comparable rating from an internationally recognised credit rating agency.
Additional Borrower means a company which becomes an Additional Borrower in accordance with Clause ‎30 ( Changes to the Obligors ).
Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
Agent’s Spot Rate of Exchange means the Agent’s spot rate of exchange for the purchase of the relevant currency with the Base Currency in the European foreign exchange market at or about 12:00 noon on a particular day.
Ancillary Commencement Dat e means, in relation to an Ancillary Facility, the date on which that Ancillary Facility is first made available, which date shall be a Business Day within the Availability Period for the Facility.
Ancillary Commitment means, in relation to an Ancillary Lender and an Ancillary Facility, the maximum Base Currency Amount which that Ancillary Lender has agreed (whether or not subject to satisfaction of conditions precedent) to make available from time to time under an Ancillary Facility and which has been authorised as such under Clause ‎12 ( Ancillary Facilities ), to the extent that the amount is not cancelled or reduced under this Agreement or the Ancillary Documents relating to that Ancillary Facility.
Ancillary Document means each document relating to or evidencing the terms of an Ancillary Facility.
Ancillary Facility means any ancillary facility made available by an Ancillary Lender in accordance with Clause ‎12 ( Ancillary Facilities ).
Ancillary Lender means each Lender (or Affiliate of a Lender) which makes available an Ancillary Facility in accordance with Clause ‎12 ( Ancillary Facilities ).
Ancillary Outstandings means, at any time, in relation to an Ancillary Lender and an Ancillary Facility then in force the aggregate of the equivalents (as calculated by that Ancillary Lender) in EUR of the following amounts outstanding under that Ancillary Facility:
(a)
the principal amount under each overdraft facility and on-demand short term loan facility;
(b)
the face amount of each guarantee, bond and letter of credit under that Ancillary Facility; and
(c)
the amount fairly representing the aggregate exposure (excluding interest and similar charges) of that Ancillary Lender under each other type of accommodation provided under that Ancillary Facility,
in each case net of any credit balances on any account of any Borrower of an Ancillary Facility with the Ancillary Lender making available that Ancillary Facility to the extent that the credit balances are freely available to be set off by that Ancillary Lender against liabilities owed to it by that Borrower under that Ancillary Facility and as determined by such Ancillary Lender, acting reasonably in accordance with its normal banking practice and in accordance with the relevant Ancillary Document.
Anti Terrorism Law means each of:
(a)
Executive Order No. 13224 of September 23, 2001 – Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the Executive Order );
(b)
the Uniting and Strengthening America by Providing Appropriate Tools Required to intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (commonly known as USA Patriot Act);
(c)
the Money Laundering Control Act of 1986, Public Law 99-570; and
(d)
any similar law enacted in the United States of America subsequent to the date of this Agreement.
Assignment Certificate means a certificate substantially in the form set out in ‎Schedule 4 ( Form of Assignment Certificate ) or any other form satisfactory to the Agent.
Assignment Date means, in relation to an assignment pursuant to Clause ‎29.2(b) ( Conditions of assignment or assignment and transfer by assumption of contract (Vertragsübernahme )), the later of:
(a)
the proposed Assignment Date specified in the Assignment Certificate; and
(b)
the date on which the Agent accepts the Assignment Certificate.
Authorisation means an authorisation, consent, approval, resolution, licence, exemption, filing or registration.
Availability Period means in relation to a Lender's Commitment the period from and including the date of this Agreement to and including the date falling one Month prior to
(a)
the Initial Termination Date if the Initial Termination Date has not been extended in accordance with paragraph (a) and/or paragraph (b) of Clause 3 ( Extension Opinion );
(b)
the First Extended Termination Date if the Initial Termination Date has been extended until the First Extended Termination Date but not until the Second Extended Termination Date in accordance with paragraph (a) and/or paragraph (b) of Clause 3 ( Extension Opinion ); or
(c)
the Second Extended Termination Date if the Initial Termination Date has been extended until the Second Extended Termination Date in accordance with paragraph (b) of Clause 3 ( Extension Opinion ).
Available Commitment means a Lender’s Commitment under the Facility minus:
(a)
the Base Currency Amount of its (and its Lender Affiliates') participation in any outstanding Utilisations under the Facility and the aggregate of its Ancillary Commitments; and
(b)
in relation to any proposed Utilisation, the Base Currency Amount of its (and its Lender Affiliates') participation in any Utilisations that are due to be made under the Facility on or before the proposed Utilisation Date and the amount of its Ancillary Commitment in relation to any new Ancillary Facility that is due to be made available on or before the proposed Utilisation Date,
other than that Lender’s (and its Lender Affiliates') participation in any Utilisations that are due to be repaid or prepaid on or before the proposed Utilisation Date and that Lender’s Ancillary Commitments to the extent that they are due to be reduced or cancelled on or before the proposed Utilisation Date.
Available Facility means, in relation to the Facility, the aggregate for the time being of each Lender’s Available Commitment in respect of the Facility.
Base Currency means euro.
Base Currency Amount means, in relation to a Utilisation, the amount specified in the Utilisation Request delivered by a Borrower for that Utilisation (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent’s Spot Rate of Exchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the Agent receives the Utilisation Request and, in the case of a Letter of Credit, as adjusted under Clause ‎7.8. ( Revaluation of Letters of Credit )) adjusted to reflect any repayment, prepayment, consolidation or division of the Utilisation.
Borrower means an Original Borrower or an Additional Borrower unless it has ceased to be a Borrower in accordance with Clause ‎30 ( Changes to the Obligors ).
Borrower Accession Letter means a document substantially in the form set out in ‎Schedule 6 ( Borrower Accession Letter ).
Borrowings shall mean
(i)      moneys borrowed and debit balances at banks;
(ii)      any debenture, bond, note or other security;
(iii)
any guarantee, indemnity or similar assurance against financial loss of any person in respect of any indebtedness referred to in (i) and (ii),
Break Costs means the amount (if any) by which:
(a)
the interest which a Lender should have received (excluding the Margin) for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;
exceeds:
(b)
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in Luxembourg, London and Munich and:
(a)
(in relation to any date for payment or purchase of a currency other than euro) the principal financial center of the country of that currency; or
(b)    (in relation to any date for payment or purchase of euro) any TARGET Day.
Change of Control Event means the acquisition of more than 50 percent of the voting rights in Linde by any single person or group of persons acting in concert. For the purposes of this definition acting in concert shall have the meaning of " Verhalten abstimmen" within the meanings of Sec. 30 (2) of the German Securities Acquisition and Takeover Act ( Wertpapiererwerbs - und Übernahmegesetz ).
Change of Control Termination Notice means a notice of termination delivered by the Agent to the Company pursuant to the terms of Clause ‎14.2(a) ( Change of Control ).
Code means , at any date, the US Internal Revenue Code of 1986 and the regulations promulgated and the judicial and administrative decisions rendered under it, all as the same may be in effect at such date.
Commitment means:
(a)
in relation to an Original Lender, the amount set opposite its name under the heading "Commitment" in Section 1 of ‎Part B of ‎Schedule 1 ( The Original Parties ) and the amount of any other Commitment transferred to it under this Agreement; and
(b)
in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
Confidentiality Undertaking means a confidentiality undertaking substantially in the form as set out in ‎Schedule 9 ( Form of Confidentiality Undertaking ) or in any other form agreed between the Company and the Agent.
Default means an Event of Default or any event or circumstance specified in Clause ‎28 ( Events of Default ) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
Designated Gross Amount has the meaning given to that term in Clause ‎‎12.2 ( Availability ).
Designated Net Amount has the meaning given to that term in Clause ‎‎12.2 ( Availability ).
Designated Party means any person listed:
(a)
in the Annex to the Executive Order;
(b)
on the "Specially Designated Nationals and Blocked Persons" list maintained by the Office of Foreign Assets Control of the United States Department of the Treasury; or
(c)
in any successor list to either of the foregoing.
Disposal (including with correlative meanings; the terms Dispose , Disposing and Disposition ) means a sale, lease, transfer or other disposal by a person of any asset, undertaking or business (whether voluntary or involuntary or by a single transaction or series of transactions).
EURIBOR means, in relation to any Loan in euro:
(a)
the applicable Screen Rate; or
(b)
(if no Screen Rate is available for the Interest Period of that Loan) the Interpolated Screen Rate for that Loan; or
(c)
If:
(i)
no Screen Rate is available for the Interest Period of that Loan; and
(ii)
it is not possible to calculate an Interpolated Screen Rate for that Loan,
the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the European interbank market,
as of, in the case of paragraphs (a) and (c) above, the Specified Time on the Quotation Day for the offering of deposits in euro for a period equal in length to the Interest Period of the relevant Loan and if any such rate is below zero EURIBOR will be deemed to be zero.
Euro or € or EUR means the lawful currency of the Participating Member States.
Event of Default means any event or circumstance specified as such in Clause ‎28 ( Events of Default ).
Excluded Subsidiary means any member of the Group other than the Company,
(a)
the shares of which are on the date of this Agreement listed on a stock exchange and which are set out in ‎Schedule 12 ( List of Excluded Subsidiaries );
(b)
which, with the consent of the Majority Lenders, will be added by the Company to the List of Excluded Subsidiaries at any time after the date of this Agreement; or
(c)
which is a Subsidiary of an Excluded Subsidiary pursuant to (a) and (b) above.
Existing Facility Agreement means the existing multi-currency revolving credit facility agreement dated 10 May 2010.
Existing Financial Indebtedness means any Financial Indebtedness of any member of the Group outstanding as at the date of this Agreement.
Existing Revolving Facility means the revolving facility made available under the Existing Facility Agreement.
External Guarantee means a guarantee, bond, letter of credit, indemnity, hard comfort letter or similar assurance of a member of the Group in respect of Financial Indebtedness of a person that is not a member of the Group.
Facility means the Revolving Facility or the Swingline Facility.
Facility Office means:
(a)
in relation to a Lender (other than a Swingline Lender) the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days written notice) as the office or offices through which it will perform its obligations under this Agreement; and
(b)
in relation to a Swingline Lender the office or offices notified by a Lender to the Agent in writing before the date it becomes a Swingline Lender (or, following that date, by not less than five Business Days written notice) as the office or offices through which it will perform its obligations under this Agreement as a Swingline Lender.
FATCA means:
(a)
sections 1471 to 1474 of the Code or any associated regulations or other official guidance;
(b)
any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or
(c)
any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.
FATCA Application Date means:
(a)
in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 January 2014;
(b)
in relation to a "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or
(c)
in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2017,
or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.
FATCA Deduction means a deduction or withholding from a payment under a Finance Document required by FATCA.
FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction.
FATCA FFI means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if any Finance Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction.

Federal Funds Rate means, in relation to any day, the rate per annum equal to:
(a)
the weighted average of the rates on overnight Federal funds transactions with members of the US Federal Reserve System arranged by Federal funds brokers, as published for that day (or, if that day is not a New York Business Day, for the immediately preceding New York Business Day) by the Federal Reserve Bank of New York; or
(b)
if a rate is not so published for any day which is a New York Business Day, the average of the quotations for that day on such transactions received by the USD Swingline Agent from three Federal funds brokers of recognised standing selected by the USD Swingline Agent.
Fee Letter means any letter or letters dated on or about the date of this Agreement between the Arrangers and the Company (or the Agent and the Company) setting out any of the fees referred to in Clause ‎18 ( Fees ).
Finance Document means this Agreement, the Mandate Letter any Fee Letter, any Borrower Accession Letter, any Resignation Letter, any extension request according to Clause ‎3 ( Extension option ), any Utilisation Request and any other document designated as such by the Agent and the Company.
Finance Party means the Agent, any Swingline Agent, an Arranger, an Ancillary Lender or a Lender.
Finance Subsidiary shall mean a Subsidiary of the Company which is incorporated in a member state of the Organisation for Economic Co-operation and Development (OECD) or a member state of the European Union and whose main purpose is to raise finance for the Group and to provide financial services to members of the Group.
Financial Indebtedness means any obligation for the payment or repayment of money, whether present or future, of any person for or in respect of:
(a)    moneys borrowed and debit balances at banks;
(b)    any debenture, bond, note or other security;
(c)    any acceptance credit;
(d)    receivables sold or discounted (otherwise than on a non-recourse basis);
(e)
leases entered into primarily as a method of raising finance or financing the acquisition of the asset leased;
(f)
currency swap or interest rate swap, cap or collar arrangements or other form of interest or currency hedging transaction ( provided that, when calculating the value of any such derivative transaction, only the mark to market value shall be taken into account); or
(g)
any guarantee, indemnity or similar assurance against financial loss of any person in respect of any indebtedness referred to in (a) through (f) above.
First Extended Termination Date means the date which falls on the sixth anniversary of the date of this Agreement.
GBP or £ or Sterling means the lawful currency from time to time of the United Kingdom.
Group means the Company and its consolidated Subsidiaries from time to time.
Guarantor means the Company.
Holding Company means, in relation to a company or corporation any other company or corporation in respect of which it is a Subsidiary.
IFRS means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
Initial Termination Date means the date which falls on the fifth anniversary of the date of this Agreement.
Interest Period means, in relation to a Loan, each period determined in accordance with Clause ‎16 ( Interest Periods ) and, in relation to an Unpaid Sum, each period determined in accordance with Clause ‎15.3 ( Default interest and lump sum damages ).
Interpolated Screen Rate means, in relation to EURIBOR or LIBOR for any Loan, the rate which results from interpolating on a linear basis between:
(a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of that Loan; and
(b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of that Loan
each as of the Specified Time on the Quotation Day for the currency of that Loan.
Issuing Bank means any of the Original Issuing Banks or another Lender determined as such by the Company (with the consent of such Lender ) or an Affiliate of a Lender which has become an issuing bank in accordance with Clause ‎8.11 ( Affiliates of Lenders as Issuing Bank ) provided that, in respect of a Letter of Credit issued or to be issued pursuant to the terms of this Agreement, the Issuing Bank shall be the Issuing Bank which has issued or agreed to issue such Letter of Credit.
ITA means the Income Tax Act 2007 (as applicable in the United Kingdom).
Joint Venture means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.
Lender means:
(a)
any Original Lender listed in Section 1 of ‎Part B of ‎Schedule 1 ( The Original Parties ) as a Lender in respect of the Revolving Facility; or
(b)
any bank, financial institution, trust, fund or other entity which has become a Lender in respect of the Revolving Facility in accordance with Clause ‎29 ( Changes to the Lenders ) (except for Clause ‎29.6 ( Additional Lender Affiliates )),
which in each case has not ceased to be a Party in accordance with the terms of this Agreement, provided that subject to Clause ‎6.7 ( Affiliate Facility Offices – Revolving Facility Loans ) a Lender Affiliate will be treated as a Lender for all purposes under this Agreement and further provided that Lender includes a Swingline Lender, unless the context otherwise requires.
Lender Accession Letter means a document substantially in the form set out in ‎Part B of ‎Schedule 6 ( Form of Accession Letters ).
Lender Affiliate means any Affiliate of a Lender through whom such Lender may fulfil its obligations to participate in or make any Loan to a certain Borrower, certain Borrowers or, as the case may be, all Borrowers in a particular jurisdiction or particular jurisdictions and:
(a)
who is a Party to this Agreement on the date of this Agreement and is designated as such on the signature pages;
(b)
who has become a Party to this Agreement as a Lender Affiliate after the date of this Agreement in accordance with Clause ‎‎29.6 ( Additional Lender Affiliates ); or
(c)
who has become a Party to this Agreement for any of the purposes specified above with the consent of the Lender of which it is an Affiliate by means of executing a Transfer Certificate providing for the transfer in whole or in part of the rights and obligations of an existing Lender Affiliate,
which in each case has not ceased to be a Party in accordance with the terms of this Agreement.
Lender Affiliate Accession Agreement means a letter, substantially in the form of ‎Part C of‎Schedule 6 ( Form of Accession Letters ) with such amendments as the Agent and the Company may agree.
Letter of Credit means a letter of credit, a guarantee or indemnity in a form requested by a Borrower and agreed by the relevant Issuing Bank in accordance with customary banking practice.
LIBOR means, in relation to any Loan in a currency other than EUR:
(a)
the applicable Screen Rate;
(b)
(if no Screen Rate is available for the Interest Period of that Loan) ) the Interpolated Screen Rate for that Loan; or
(c)
if:
(i)
no Screen Rate is available for the currency of that Loan; or
(ii)
no Screen Rate is available for the Interest Period of that Loan and it is not possible to calculate an Interpolated Screen Rate for that Loan,
the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the London interbank market,
as of, in the case of paragraphs (a) and (c) above, the Specified Time on the Quotation Day for the offering of deposits in the currency of that Loan and for a period equal in length to the Interest Period for that Loan and if any such rate is below zero LIBOR will be deemed to be zero.
Loan means a Revolving Facility Loan or a Swingline Loan.
Loan Note means each floating rate loan note issued by a member of the Group in the context of the acquisition of The BOC Group plc.
Majority Lenders means a Lender or Lenders whose Commitments aggregate more than 66 2 / 3 % of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66 2 / 3 % of the Total Commitments immediately prior to the reduction).
Mandate Letter means the letter dated 27 June 2013 between Citigroup Global Markets Limited, UniCredit Bank AG and the Company.
Margin means the rate per annum determined by reference to the Ratings from time to time assigned by Standard & Poor’s and Moody’s (or by one of Standard & Poor’s and Moody’s and by one other Rating Agency) to the Company’s long-term senior unsecured and unsubordinated debt obligations and last published as set out in the table below next to the respective (or, in case of such other Rating Agency, equivalent) Rating:
Rating
Margin
A+/A1 (or higher)
0.225 % p.a.
A/A2
0.250 % p.a.
A-/A3
0.275 % p.a.
BBB+/Baa1
0.350 % p.a.
BBB/Baa2
0.450 % p.a.
BBB-/Baa3 (or lower)
0.650 % p.a.
An increase or decrease of the Margin shall take effect on the date on which a new Rating is published.
If an Event of Default is outstanding or there is no Rating available at any time, the Margin will be the highest Margin specified in the above table.
In case of split Ratings, the Margin shall be the arithmetic mean of the percentages per annum (rounded upwards to four decimal places) set out next to the respective Ratings. If there is only one Rating, the Margin will be determined on the basis of that Rating. Based on the Rating of the Company on the date of this Agreement of A by Standard and Poor's and A3 by Moody's, the initial Margin will be 0.2625% p.a.
Material Adverse Effect means a material adverse effect on the business, assets or financial condition of the Company or the Group taken as a whole which in each case is reasonably likely to adversely affect the ability of the Company to perform its payment obligations under any Finance Document.
Material Subsidiary means from time to time any member of the Group other than (i) the Company and (ii) any Excluded Subsidiary, and:
(a)
which contributed at least five per cent. to the total net sales of the Group as shown in the consolidated financial statements of the Company last delivered pursuant to Clause ‎26.1(a)(ii) or Clause ‎26.1(b); or
(b)
which contributed at least five per cent. to the total assets of the Group as shown in the consolidated financial statements of the Company last delivered pursuant to Clause ‎26.1(a)(ii) or Clause ‎26.1(b);
provided that a certificate executed by one of the Company’s management board members ( Vorstand ) together with one other member of the Company's senior management that a Subsidiary is or is not or was or was not at a specified date a Material Subsidiary shall, in the absence of manifest error, be conclusive and binding on all Parties.
Maximum Ancillary Commitments means EUR 500,000,000.
Month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:
(a)
(subject to paragraph ‎(c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;
(b)
if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and
(c)
if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.
The above rules will only apply to the last Month of any period.
Moody's means Moody’s Investor Service, Inc. or any successor to its rating agency business.
New York Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in New York City.
Non-Acceptable L/C Lender means a Lender which:
(a)
is not an Acceptable Bank (other than a Lender which the Issuing Banks have agreed is acceptable to them notwithstanding that fact); or
(b)
is a Non-funding Lender; or
(c)
has failed to make (or has notified the Agent that it will not make) a payment to be made by it under Clause ‎8.4 ( Indemnities ) or Clause ‎31.10 ( Lenders’ indemnity to the Agent ) or any other payment to be made by it under the Finance Documents to or for the account of any other Finance Party in its capacity as Lender by the due date for payment,
provided that if a Lender is a Non-Acceptable L/C Lender any other Lender which is an Affiliate of such Lender (if any) shall be deemed to also be a Non-Acceptable L/C Lender for all purposes of this Agreement.
Non-funding Lender means any Lender which has failed to make or participate in any Utilisation when required to do so under this Agreement, has declared its general inability to make payments to its creditors, has given notice to the Company and the Agent that it does not intend to make or participate in any Utilisation when required to do so in accordance with the terms of this Agreement or has, upon request by either the Company (with a copy to the Agent) or the Agent, failed to confirm its willingness and ability to make or participate in any Utilisation when required to do so in accordance with the terms of this Agreement within a period of 10 (ten) Business Days from the date of the respective request provided that if a Lender is a Non-funding Lender any other Lender which is an Affiliate of such Lender (if any) shall be deemed to also be a Non-funding Lender for all purposes of this Agreement.
Obligor means a Borrower or the Company.
Optional Currency means a currency (other than the Base Currency) which complies with the conditions set out in Clause ‎5.3 ( Conditions relating to Optional Currencies ).
Original Financial Statements means:
(a)
in relation to the Company, its audited unconsolidated financial statements and the audited consolidated financial statements of the Group for the financial year ended 31 December 2012;
(b)
in relation to Linde Finance B.V., its audited unconsolidated financial statements for the financial year ended 31 December 2012; and
(c)
in relation to an Additional Borrower acceding to this Agreement after the date hereof its most recent annual unconsolidated (and, if available, consolidated) (audited, if available) financial statements available at the date of such accession or its opening balance sheet if at the date of accession no financial statement are available.
Original Obligor means an Original Borrower or the Company.
Participating Member State means any member state of the European Communities that has the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.
Party means a party to this Agreement.
Project Company means, at any time, a limited purpose entity organised and operated solely for the purpose of the financing, construction and subsequent operation and exploitation of a building, factory or other project that is intended at such time to operate, with effect substantially from and after the build-out period for such project, without the benefit of any of the following from the Company or any of its Subsidiaries that are not Project Companies: any credit support for, guarantee of, or Security on any assets (other than the shares of the limited purpose entity and the claims under any shareholder loan granted to the limited purpose entity) of the Company or any of its Subsidiaries that are not Project Companies securing any Financial Indebtedness of such limited purpose entity (including any undertaking, agreement or instrument evidencing such Financial Indebtedness) ( Projektgesellschaft ).
Qualifying Lender has the meaning given to it in Clause ‎19 ( Tax gross-up and indemnities ).
Quotation Day means, in relation to any period for which an interest rate is to be determined:
(a)
(if the currency is euro) two TARGET Days before the first day of that period; or
(b)
(if the currency is Sterling) the first day of that period; or
(c)
(for any other currency) two Business Days before the first day of that period,
unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).
Rating means the rating of the Company’s long term senior unsecured and unsubordinated debt obligations by a Rating Agency from time to time; provided that a reference to a Rating or Ratings in this Agreement shall always refer to the Rating by at least one of Moody's or Standard & Poor's.
Rating Agency means Moody’s, Standard and Poor’s or any other rating agency of international reputation agreed between the Company and the Majority Lenders.
Reference Banks means Deutsche Bank Luxembourg S.A., the principal office in London of Citibank, N.A., Commerzbank Aktiengesellschaft, HSBC Bank plc, UniCredit Luxembourg S.A. or such other banks as may be appointed by the Agent in consultation with the Company.
Relevant Interbank Market means, in relation to euro, the European interbank market and, in relation to any other currency, the London interbank market.
Relevant Jurisdiction means in relation to any Obligor the jurisdiction in which it is incorporated.
Relevant Swingline Agent means the EUR Swingline Agent in relation to Swingline Loans denominated in euro and the USD Swingline Agent in relation to Swingline Loans denominated in US Dollars.
Repeated Representations means each of the representations set out in Clauses ‎25.1 ( Status ), ‎25.2 ( Binding Obligations ), ‎25.3 ( Non-conflict with other obligations ), ‎25.4 ( Power and authority ), ‎25.5 ( Validity and admissibility in evidence ), ‎25.6 ( Governing law and enforcement ), ‎25.8 ( No Event of Default ), ‎25.10 ( Financial Statements ), ‎25.12 ( Pari passu ranking ), ‎25.13 ( No Insolvency ) and ‎25.15 ( Ownership ).
Reservations has the meaning given to it in ‎Schedule 8 ( Reservations ).
Resignation Letter means a letter substantially in the form set out in ‎Schedule 7 ( Form of Resignation Letter ).
Revolving Facility means the revolving credit facility made available under this Agreement as described in Clause ‎2 ( The Facility ).
Revolving Facility Loan means a loan made or to be made under the Revolving Facility or the principal amount outstanding for the time being of that loan.
Rollover Loan means one or more Revolving Facility Loans:
(a)
made or to be made on the same day that (i) a maturing Revolving Facility Loan is due to be repaid; or (ii) a Borrower is obliged to pay to the Agent for the account of an Issuing Bank the amount of any claim under a Letter of Credit;
(b)
the aggregate amount of which is equal to or less than (i) the maturing Revolving Facility Loan; or (ii) the amount of the relevant claim under that Letter of Credit;
(c)
in the same currency as (i) the maturing Revolving Facility Loan (unless it arose as a result of the operation of Clause ‎11.2 ( Unavailability of a currency )); or (ii) the relevant claim under that Letter of Credit; and
(d)
made or to be made to the same Borrower for the purpose of (i) refinancing a maturing Revolving Facility Loan or (ii) satisfying the obligation of the Borrower to pay to the Agent for the account of the relevant Issuing Bank the amount of the relevant claim under that Letter of Credit.
Screen Rate means:
(a)
in relation to EURIBOR, the euro interbank offered rate administered by the Banking Federation of the European Union (or any other person which takes over the administration of that rate) for the relevant period displayed on page EURIBOR01 of the Reuters screen (or the replacement Reuters page which displays that rate); and
(b)
in relation to LIBOR, the London interbank offered rate administered by the British Bankers Association (or any other person which takes over the administration of that rate) for the relevant period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or the replacement Reuters page which displays that rate)
or, in each case, on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Company.
Second Extended Termination Date means the date which falls on the seventh anniversary of the date of this Agreement.
Security means a mortgage, land charge, charge, pledge, lien, assignment or transfer for security purposes, retention of title arrangement or other security interest ( dingliche Sicherheit ) securing any obligation of any person or any other agreement or arrangement having a similar effect.
Solicited Rating shall mean:
(a)
in the case of a merger where the Company is the surviving entity, the Rating; or
(b)
the rating from Standard & Poor’s or Moody’s of the long term senior unsecured and unsubordinated debt obligations of the entity into which the Company merges,
which in each case has been assigned on the basis of a rating agreement concluded between the relevant party and such rating agency provided that such rating will cease to be a Solicited Rating at the time when the term of the respective rating agreement has come to an end.
Specified Time means a time determined in accordance with ‎Schedule 10 ( Timetables ).
Standard & Poor's means Standard & Poor’s Corporation Rating Service, a division of McGraw & Hill, Inc, or any successor to its rating agency business.
Subsidiary means a subsidiary within the meaning of sections 15 - 17 Stock Corporation Act ( Aktiengesetz ).
Swingline Commitment means:
(a)
in relation to a Swingline Lender who is also an Original Lender, the amount in euro set opposite its name under the heading "Swingline Commitment" in Section 2 of ‎Part B of ‎Schedule 1 ( The Original Parties ) and the amount of any other Swingline Commitment transferred to it under this Agreement; and
(b)
in relation to any other Swingline Lender, the amount of any Swingline Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
Swingline Facility means the dual-currency swingline loan facility made available under this Agreement as described in Clause ‎10 ( Swingline Loans ).
(c)      Swingline Lender means
(d)
any Original Lender listed in Section 2 of ‎Part B of ‎Schedule 1 ( The Original Parties ) with a Swingline Commitment; or
(e)
any other person that becomes a Swingline Lender after the date of this Agreement in accordance with Clause ‎29 ( Changes to the Lenders ) (except for Clause ‎29.6 ( Additional Lender Affiliates ));
which in each case has not ceased to be a Party in accordance with the terms of this Agreement, provided that subject to Clause ‎9.5 ( Affiliate Facility Offices – Swingline Loans ) a Lender Affiliate will be treated as a Lender for all purposes under this Agreement.
Swingline Loan means a loan made or to be made under the Swingline Facility or the principal amount outstanding for the time being of that loan.
TARGET2 means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which uses a single shared platform and which was launched on 19 November 2007.
TARGET Day means any day on which TARGET2 is open for the settlement of payments in euro.
Tax means any tax, levy, impost, duty or other related charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same) imposed by any taxing authority in any jurisdiction.
Termination Date means, as applicable, the Initial Termination Date, the First Extended Termination Date or the Second Extended Termination Date.
Total Commitments means the aggregate of the Commitments, being EUR 2,500,000,000 at the date of this Agreement.
Total Swingline Commitments means the aggregate of the Swingline Commitments, being EUR 500,000,000 at the date of this Agreement.
Transfer Certificate means a certificate substantially in the form set out in ‎Schedule 5 ( Form of Transfer Certificate ) or any other form agreed between the Agent and the Company.
Transfer Date means, in relation to an assignment and transfer by way of assumption of contract ( Vertragsübernahme ) pursuant to Clause ‎29.5 ( Procedure for assignment and transfer by assumption of contract ( Vertragsübernahme )), the later of:
(a)
the proposed Transfer Date specified in the Transfer Certificate; and
(b)
the date on which the Agent accepts the Transfer Certificate.
Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents.
US Dollar or $ or USD means the lawful currency from time to time of the United States of America.
US Tax Obligor means a Borrower which is resident for tax purposes in the United States of America.
Utilisation means a Loan or a Letter of Credit.
Utilisation Date means the date on which a Utilisation is made.
Utilisation Request means
(a)
in the case of a Utilisation of the Revolving Facility by way of a Revolving Facility Loan a notice substantially in the form set out in ‎Part A of ‎Schedule 3 ( Requests );
(b)
in the case of a Utilisation of the Swingline Facility a notice substantially in the form set out in ‎Part B of ‎Schedule 3 ( Requests ); and
(c)
in the case of a Utilisation of the Revolving Facility by way of a Letter of Credit a notice substantially in the form set out in ‎Part C of ‎Schedule 3 ( Requests ).
VAT means value added tax as provided for in the Value Added Tax Act ( Umsatzsteuergesetz ) and any other tax of a similar nature.
1.2
Construction
(a)
Unless a contrary indication appears, any reference in this Agreement to:
(i)
the Agent , any Arranger , any Finance Party , any Lender , any Obligor , any Swingline Agent or any Party shall be construed so as to include its successors in title, permitted assigns and permitted transferees;
(ii)
assets includes present and future properties, revenues and rights of every description;
(iii)
director shall be construed as any statutory legal representative(s) ( organschaftlicher Vertreter ) of a person pursuant to the laws of its jurisdiction of incorporation, including but not limited to, in relation to a person incorporated or established in Germany, a managing director ( Geschäftsführer ) or member of the board of directors ( Vorstand );
(iv)
a Finance Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended or restated;
(v)
gross negligence means grobe Fahrlässigkeit and wilful misconduct means Vorsatz ;
(vi)
indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(vii)
majority-owned Subsidiary of a person means a Subsidiary of such person whose voting equity shares are (directly or indirectly) more than 50% owned by such person;
(viii)
a person includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality);
(ix)
promptly is to be construed as unverzüglich (without undue delay) as contemplated in the first paragraph of section 121 of the German Civil Code ( Bürgerliches Gesetzbuch );
(x)
a regulation means any regulation, rule, official directive, obligation imposed by an order, permit or public law agreement, request or guideline of or made with any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation, whether or not having the force of law but, if not, where compliance is customary;
(xi)
wholly-owned Subsidiary of a person means a Subsidiary of such person whose voting and non-voting equity shares are (directly or indirectly) 100% owned by such person provided that in making this determination any shares of such a Subsidiary (or any other intermediate Subsidiary that directly or indirectly owns shares in such Subsidiary) that are held by:
(A)
a director of such Subsidiary for the sole purpose of satisfying a legal requirement that such director be a shareholder of such Subsidiary, provided such director is required by law or pursuant to contract (to the extent permitted by applicable law) to transfer such shares to or at the direction of the person who transferred the relevant share or shares to such director forthwith (or if not forthwith, then on demand) upon such director's ceasing to be a director of such company; or
(B)
any other person for the sole purpose of satisfying a legal requirement that such Subsidiary have a minimum number of shareholders,
shall be disregarded;

(xii)
a provision of law is a reference to that provision as amended or re-enacted;
(xiii)
a time of day is a reference to Central European Time (CET) unless otherwise specified; and
(xiv)
know your customer requirements are identification checks that a Finance Party (acting for itself or on behalf of a prospective new Lender) requests in order to meet its obligations under any anti-money laundering laws and regulations to identify a person who is (or is to become) its customer.
(b)
Section, Clause and Schedule headings are for ease of reference only.
(c)
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
(d)
A Default (or an Event of Default) is continuing if it has not been remedied or waived.
1.3
This Agreement is made in the English language. For the avoidance of doubt, the English language version of this Agreement shall prevail over any translation of this Agreement. However, where a German translation of a word or phrase appears in the text of this Agreement, the German translation of such word or phrase shall prevail.
2.      THE FACILITY
2.1
The Revolving Facility
(a)
Subject to the terms of this Agreement, the Lenders make available to the Borrowers a multicurrency revolving credit facility in an aggregate amount equal to the Total Commitments.
(b)
Subject to the terms of this Agreement and the Ancillary Documents, an Ancillary Lender may make available an Ancillary Facility to any of the Borrowers in place of all or part of its Available Commitment under the Facility.
2.2
Finance Parties' rights and obligations
(a)
The obligations of each Finance Party under the Finance Documents are several and do not constitute a joint obligation ( Ausschluß der gesamtschuldnerischen Haftung ). Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
(b)
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and do not constitute a joint creditorship ( Ausschluß der Gesamtgläubigerschaft ) and any debt arising under the Finance Documents to a Finance Party from an Obligor shall, except as otherwise set out in this Agreement or any other Finance Document, be a separate and independent debt ( Ausschluß der gesamtschuldnerischen Haftung ).
(c)
A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.
2.3
Borrowers' obligations
The obligations of each Borrower (in its capacity as borrower) under the Finance Documents are several and do not constitute a joint obligation ( Gesamtschuld ). Failure by a Borrower to perform in its capacity as borrower obligations under the Finance Documents does not affect the obligations of any other Borrower in such Borrower's capacity as borrower under the Finance Documents.
2.4
Company as Obligors' Agent
(a)
Each Obligor (other than the Company and any Borrower incorporated in The Netherlands) irrevocably appoints the Company to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:
(i)
the Company on its behalf to supply all information concerning itself, its financial condition and otherwise to the relevant persons contemplated under this Agreement, to give all notices and instructions (including, in the case of a Borrower, Utilisation Requests), to execute on its behalf any Finance Document and to enter into any agreement in connection with the Finance Documents (notwithstanding that the same may affect such Obligor), without further reference to or the consent of that Obligor; and
(ii)
each Finance Party to give any notice, demand or other communication to be given to or served on that Obligor pursuant to the Finance Documents to the Company on its behalf,
and in each case the Obligor shall be bound thereby as though such Obligor itself had supplied such information, given such notices and instructions, executed such Finance Document or agreement or received any such notice, demand or other communication. The Company shall be released from the restrictions set out in section 181 of the German Civil Code ( Bürgerliches Gesetzbuch ) or restrictions having a similar effect under any other applicable law.
(b)
In the event of any conflict between any notices or other communications of the Company and any other Obligor, those of the Company shall prevail.
3.      EXTENSION OPTION
(a)
By giving the Agent notice not more than sixty days and not less than thirty days prior to the first anniversary of the date of this Agreement, the Company may request that the Initial Termination Date be extended for one year until the First Extended Termination Date.
(b)
Without prejudice to paragraph (a) above, by giving the Agent notice not more than sixty days and not less than thirty days prior to the second anniversary of the date of this Agreement, the Company may request that
(i)
the Initial Termination Date be extended for one year until the First Extended Termination Date or for two years until the Second Extended Termination Date if the Company has not served a request pursuant to paragraph ‎(a) above;
(ii)
Lenders, that have not agreed to a request pursuant to paragraph ‎(a) above, agree that the Initial Termination Date be extended for one year until the First Extended Termination Date or for two years until the Second Extended Termination Date; and/or
(iii)
Lenders, that have already agreed that the Initial Termination Date be extended until the First Extended Termination Date, agree that the Initial Termination Date is further extended until the Second Extended Termination Date.
(c)
The Agent shall promptly notify each Lender of any such extension request pursuant to paragraph ‎(a) and ‎(b) above. Each Lender, in its sole discretion, has the option to extend its Commitment for the respective requested period and shall notify the Agent of its decision within twenty (20) days after the submission of the relevant request. If no notice is received by the Agent from a Lender within twenty (20) days after the submission of the relevant request, the Termination Date in respect of that Lender will not be extended. If a Lender agrees to extend its Commitment, the Initial Termination Date or the First Extended Termination Date (as the case may be) shall be postponed and the Facility shall continue to be available in an amount equal to the aggregate Commitments of such Lenders beyond the Initial Termination Date or the First Extended Termination Date (as the case may be), in each case with effect as of the first and/or second anniversary of the date of this Agreement, as applicable. The participations and Available Commitments of those Lenders which have not agreed to the extension request pursuant to paragraph ‎(a) and/or paragraph ‎(b) above shall be repaid and cancelled in full (in relation to Lenders that have not agreed to any postponement of the Initial Termination Date) on the Initial Termination Date or (in relation to Lenders that have agreed to a postponement until the First Extended Termination Date) on the First Extended Termination Date.
(d)
If a Lender has not agreed to the extension request pursuant to paragraph ‎(a) and/or paragraph ‎(b) above (as the case may be), the Company has the right to, prior to the first or second anniversary of the date of this Agreement (as the case may be) require each Lender which is not willing to extend its Commitment to transfer its Commitment (at par) to a Lender or Lenders and/or other bank(s), credit institution(s) or financial institution(s), which is/are willing to extend or increase its/their respective Commitment or to acquire a commitment under the Facility as "Lenders" (subject to compliance with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the transfer to such other bank, credit institution or financial institution).
(e)
As soon as reasonably practicable, the Agent shall confirm to the Company and the Lenders the aggregate amount of the Commitments extended until the First Extended Termination Date and the Second Extended Termination Date, as applicable.
(f)
In relation to any Utilisation requested prior to the Initial Termination Date with an Interest Period extending beyond the Initial Termination Date the Available Commitment or Available Swingline Commitment (as the case may be) of any Lender or, as the case may be, Swingline Lender (or in the case of a Lender Affiliate, the Lender, or, as the case may be, Swingline Lender of which it is an Affiliate) in relation to which the Termination Date is not extended in accordance with the above shall not be taken into account when calculating the Lenders' or Swingline Lenders' participations for that Utilisation and the relevant Lender or Swingline Lender shall not participate in such Utilisation.
(g)
In relation to any Utilisation requested prior to the First Extended Termination Date with an Interest Period extending beyond the First Extended Termination Date the Available Commitment or Available Swingline Commitment (as the case may be) of any Lender or, as the case may be, Swingline Lender (or in the case of a Lender Affiliate, the Lender, or, as the case may be, Swingline Lender of which it is an Affiliate) in relation to which the Termination Date is not extended in accordance with the above shall not be taken into account when calculating the Lenders' or Swingline Lenders' participations for that Utilisation and the relevant Lender or Swingline Lender shall not participate in such Utilisation.
4.      PURPOSE
4.1
Purpose
Each Borrower shall apply all amounts borrowed by it under the Revolving Facility towards general corporate purposes.
4.2
Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
5.      CONDITIONS OF UTILISATION
5.1
Initial conditions precedent
No Borrower (or the Company on its behalf) may deliver a Utilisation Request unless the Agent has received all of the documents and other evidence listed in ‎Part A of ‎Schedule 2 ( Conditions precedent ) in form and substance satisfactory to the Agent. The Agent shall notify the Company, the Swingline Agents, the Issuing Bank and the Lenders promptly upon being so satisfied.
5.2
Further conditions precedent
The Lenders will only be obliged to comply with Clause ‎6.4 ( Lenders’ participation ) if on the date of the Utilisation Request and on the proposed Utilisation Date:
(a)
in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan and, in the case of any other Loan, no Default is continuing or would result from the proposed Loan; and
(b)
the Repeated Representations made by each Obligor are true in all material respects.
5.3
Conditions relating to Optional Currencies
(a)
A currency (other than GBP or USD, which are committed Optional Currencies) will constitute an Optional Currency in relation to a Utilisation if:
(i)
it is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Utilisation Date for that Utilisation; and
(ii)
it has been approved by the Agent (acting on the instructions of all the Lenders) on or prior to receipt by the Agent of the relevant Utilisation Request for that Utilisation.
(b)
If the Agent has received a written request from the Company by the Specified Time for a currency to be approved under paragraph ‎(a)‎(ii) above, the Agent will confirm to the Company by the Specified Time:
(i)
whether or not the Lenders have granted their approval; and
(ii)
if approval has been granted, the minimum amount (and, if required, integral multiples) for any Utilisation in that currency.
5.4
Maximum number of Utilisations
(a)
A Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation more than twenty-five (25) Loans or more than twenty-five (25) Letters of Credit would be outstanding.
(b)
Any Loan made by a single Lender under Clause ‎11.2 ( Unavailability of a currency ) shall not be taken into account in this Clause ‎5.4.
6.      UTILISATION – REVOLVING FACILITY LOANS
6.1
Delivery of a Utilisation Request
A Borrower (or the Company on its behalf) may utilise the Revolving Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.
6.2
Completion of a Utilisation Request
(a)
Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:
(i)
it identifies the Borrower;
(ii)
the proposed Utilisation Date is a Business Day within the Availability Period applicable to that Facility;
(iii)
the currency and amount of the Utilisation comply with Clause ‎6.3 ( Currency and amount );
(iv)
the proposed Interest Period complies with Clause ‎16 ( Interest Periods );
(v)
it specifies the account bank details to which the proceeds of the Loan are to be credited; and
(vi)
it is duly signed by authorised signatories of the relevant Borrower.
(b)
Only one Revolving Facility Loan may be requested in each subsequent Utilisation Request.
6.3
Currency and amount
(a)
The currency specified in a Utilisation Request must be the Base Currency or an Optional Currency.
(b)
The amount of the proposed Revolving Facility Loan must be:
(i)
if the currency selected is the Base Currency, a minimum of EUR 20,000,000 or greater multiples of EUR 5,000,000 or, if less, the Available Facility; or
(ii)
if the currency selected is GBP, a minimum of GBP 10,000,000 or greater multiples of GBP 1,000,000 or , if less, the Available Facility;
(iii)
if the currency selected is USD, a minimum of USD 20,000,000 or greater multiples of USD 5,000,000 or, if less, the Available Facility;
(iv)
if the currency selected is an Optional Currency other than GBP or USD, the minimum amount (and, if required, integral multiple) specified by the Agent pursuant to paragraph ‎(b)‎(ii) of Clause ‎5.3 ( Conditions relating to Optional Currencies ) or, if less, the Available Facility; and
(v)
in any event such that its Base Currency Amount is less than or equal to the Available Facility.
6.4
Lenders’ participation
(a)
If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Revolving Facility Loan available by the Utilisation Date through its Facility Office.
(b)
The amount of each Lender’s participation in each Revolving Facility Loan will be equal to the proportion borne by the Available Commitment of such Lender (or, in the case of a Lender Affiliate, the Lender of which it is a Lender Affiliate) to the Available Facility immediately prior to making the Revolving Facility Loan.
(c)
The Agent shall determine the Base Currency Amount of each Revolving Facility Loan which is to be made in an Optional Currency and shall notify each Lender of the amount, currency and the Base Currency Amount of each Revolving Facility Loan and the amount of its participation in that Revolving Facility Loan, in each case by the Specified Time.
6.5
Limitation of Ancillary Facility
The maximum aggregate amount of the Ancillary Commitments of all Ancillary Lenders shall not at any time exceed the Maximum Ancillary Commitments.
6.6
Cancellation of Commitment
The Total Commitments shall be immediately cancelled at the end of the Availability Period.
6.7
Affiliate Facility Offices – Revolving Facility Loans
(a)
A Lender may fulfil its obligations to participate in or make any Revolving Facility Loan to a certain Borrower, certain Borrowers or, as the case may be, all Borrowers in a particular jurisdiction or particular jurisdictions through a Lender Affiliate.
(b)
A Lender Affiliate shall not have any Commitment, but the Available Commitment of the relevant Lender shall be reduced by the amount of the Base Currency Amount of the Revolving Facility Loans made available by its Lender Affiliate. The Lender and the relevant Lender Affiliate shall be treated as having a single vote which is exercised by the Lender (and not the Lender Affiliate).
(c)
A Lender which has a Lender Affiliate will remain liable for the relevant obligations under the Finance Documents in the event that the Lender Affiliate fails to perform them.
7.      UTILISATION – LETTERS OF CREDIT
7.1
General
(a)
In this Clause ‎7 and Clause ‎8 ( Letters of Credit ):
(i)
Expiry Date means, for a Letter of Credit, the last day of its Term;
(ii)
L/C Proportion means, in relation to a Lender in respect of any Letter of Credit, the proportion (expressed as a percentage) borne by that Lender's Available Commitment to the Available Facility immediately prior to the issue of that Letter of Credit, adjusted to reflect any assignment or transfer under this Agreement to or by that Lender;
(iii)
Renewal Request means a written notice delivered to the Agent in accordance with Clause ‎7.7 ( Renewal of a Letter of Credit ); and
(iv)
Term means each period determined under this Agreement for which the relevant Issuing Bank is under a liability under a Letter of Credit.
(b)
Any reference in this Agreement to:
(i)
a Finance Party includes any Issuing Bank;
(ii)
the Interest Period of a Letter of Credit will be construed as a reference to the Term of that Letter of Credit;
(iii)
an amount borrowed includes any amount utilised by way of Letter of Credit;
(iv)
a Utilisation made or to be made to a Borrower includes a Letter of Credit issued on its behalf;
(v)
a Lender funding its participation in a Utilisation includes a Lender participating in a Letter of Credit;
(vi)
amounts outstanding under this Agreement include amounts outstanding under or in respect of any Letter of Credit;
(vii)
an outstanding amount of a Letter of Credit at any time is the maximum amount that is or may be payable by the Borrower in respect of that Letter of Credit at that time;
(viii)
a Borrower repaying or prepaying a Letter of Credit means:
(A)
that Borrower providing cash cover for that Letter of Credit;
(B)
the maximum amount payable under the Letter of Credit being reduced or cancelled in accordance with its terms;
(C)
the relevant Issuing Bank being satisfied that it has no further liability under that Letter of Credit; or
(D)
the relevant Issuing Bank and the Borrower agreeing for the benefit of the Finance Parties in form and substance acceptable to the Agent, that such Letter of Credit continues on a bilateral basis outside the scope of the Facility and no longer constitutes a Utilisation hereunder,
and the amount by which a Letter of Credit is repaid or prepaid under sub-paragraphs ‎(viii)‎(A) and ‎(viii)‎(B) above is the amount of the relevant cash cover or reduction; and
(ix)
a Borrower providing cash cover for a Letter of Credit means a Borrower paying an amount in the currency of the Letter of Credit to an interest-bearing account in the name of the Borrower and the following conditions are met:
(A)
the account is with the Agent or the relevant Issuing Bank or with the Lender for which that cash cover is to be provided;
(B)
subject to paragraph ‎(b) of Clause ‎8.6 ( Cash Cover by Borrower ), withdrawals from the account may only be made to pay a Finance Party amounts due and payable under this Agreement in respect of that Letter of Credit until no amount is or may be outstanding under that Letter of Credit; and
(C)
the Borrower has executed a security document, in form and substance satisfactory to the Agent or the Finance Party with which that account is held, creating a first ranking security interest over that account.
(c)
Clause ‎6 ( Utilisation - Revolving Facility Loans ) does not apply to a Utilisation by way of Letter of Credit.
(d)
In determining the amount of the Available Facility and a Lender's L/C Proportion of a proposed Letter of Credit for the purposes of this Agreement the Available Commitment of a Lender will be calculated ignoring any cash cover provided for outstanding Letters of Credit unless the relevant Issuing Bank and the Borrower have agreed for the benefit of the Finance Parties in form and substance acceptable to the Agent, that such Letter of Credit continues on a bilateral basis outside the scope of the Facility and no longer constitutes a Utilisation hereunder.
7.2
Facility
The Revolving Facility may be utilised by way of Letters of Credit.
7.3
Delivery of a Utilisation Request for Letters of Credit
A Borrower may request a Letter of Credit to be issued by delivery to the Agent and the relevant Issuing Bank of a duly completed Utilisation Request substantially in the form of ‎Part C of ‎Schedule 3 ( Utilisation Request – Letters of Credit ) not later than the Specified Time.
7.4
Completion of a Utilisation Request for Letters of Credit
Each Utilisation Request for a Letter of Credit is irrevocable and will not be regarded as having been duly completed unless:
(a)
it specifies that it is for a Letter of Credit;
(b)
it identifies the Borrower and the Issuing Bank;
(c)
the proposed Utilisation Date is a Business Day within the Availability Period;
(d)
the currency and amount of the Letter of Credit comply with Clause ‎7.5 ( Currency and amount );
(e)
the form of Letter of Credit is attached;
(f)
the Expiry Date of the Letter of Credit falls on or before the applicable Termination Date;
(g)
the delivery instructions for the Letter of Credit are specified; and
(h)
it identifies the beneficiary.
7.5
Currency and amount
(a)
The currency specified in a Utilisation Request must be the Base Currency or an Optional Currency.
(b)
The aggregate Base Currency Amount of all outstanding Letters of Credit shall at no time exceed EUR 250,000,000 per Issuing Bank and EUR 500,000,000 in aggregate (in each case calculated ignoring any cash cover provided for outstanding Letters of Credit).
(c)
The amount of the proposed Letter of Credit must be an amount whose Base Currency Amount is not more than the Available Facility and which is:
(i)
if the currency selected is the Base Currency, a minimum of EUR 5,000,000 or, if less, the Available Facility; or
(ii)
if the currency selected is GBP, a minimum of GBP 3,000,000 or, if less, the Available Facility; or
(iii)
if the currency selected is USD, a minimum of USD 5,000,000 or, if less, the Available Facility; or
(iv)
if the currency selected is an Optional Currency other than GBP or USD, the minimum amount (and if required, integral multiple) specified by the Agent pursuant to paragraph (b)(ii) of Clause ‎5.3 ( Conditions relating to Optional Currencies ) or, if less, the Available Facility.
7.6
Issue of Letters of Credit
(a)
If the conditions set out in this Agreement have been met, the relevant Issuing Bank shall issue the Letter of Credit on the Utilisation Date, provided that an Issuing Bank may refuse to issue the requested Letter of Credit because of the identity of the beneficiary or due to legal or regulatory restrictions or its acceptability under legal, commercial (other than in relation to the agreed pricing pursuant to the terms of this Agreement) and internal policy implications. The relevant Issuing Bank will inform the Agent and the relevant Borrower at the Specified Time whether it intends to issue the requested Letter of Credit on the Utilisation Date or whether it intends to refuse to issue the requested Letter of Credit.
(b)
The relevant Issuing Bank will only be obliged to comply with paragraph (a) above if on the date of the Utilisation Request or Renewal Request and on the proposed Utilisation Date:
(i)
in the case of a Letter of Credit renewed in accordance with Clause ‎7.7 ( Renewal of Letter of Credit ), no Event of Default is continuing or would result from the proposed Utilisation and, in the case of any other Utilisation, no Default is continuing or would result from the proposed Utilisation; and
(ii)
the Repeating Representations to be made by each Obligor are true in all material respects.
(c)
The amount of each Lender's participation in each Letter of Credit will be equal to the proportion borne by that Lender's Available Commitment to the Available Facility immediately prior to the issue of the Letter of Credit.
(d)
The Agent shall determine the Base Currency Amount of each Letter of Credit which is to be issued in an Optional Currency and shall notify the relevant Issuing Bank and each Lender of the details of the requested Letter of Credit and its participation in that Letter of Credit by the Specified Time.
7.7
Renewal of a Letter of Credit
(a)
A Borrower may request any Letter of Credit issued on its behalf be renewed by delivery to the Agent of a Renewal Request by the Specified Time.
(b)
The Finance Parties shall treat any Renewal Request in the same way as a Utilisation Request for a Letter of Credit except that the conditions set out in paragraphs (e) and (g) of Clause ‎7.4 ( Completion of a Utilisation Request for Letters of Credit ) shall not apply.
(c)
The terms of each renewed Letter of Credit shall be the same as those of the relevant Letter of Credit immediately prior to its renewal, except that:
(i)
its amount may be less than the amount of the Letter of Credit immediately prior to its renewal; and
(ii)
its Term shall start on the date which was the Expiry Date of the Letter of Credit immediately prior to its renewal, and shall end on the proposed Expiry Date specified in the Renewal Request.
(d)
If the conditions set out in this Agreement have been met, the relevant Issuing Bank shall amend and re-issue any Letter of Credit pursuant to a Renewal Request.
7.8
Reduction of a Letter of Credit
(a)
If, on the proposed Utilisation Date of a Letter of Credit, any of the Lenders is a Non-Acceptable L/C Lender and:
(i)
that Lender has failed to provide cash collateral to the Issuing Bank in accordance with Clause ‎8.5 ( Cash collateral by Non-Acceptable L/C Lender ); and
(ii)
either:
(A)
the Issuing Bank has not required the relevant Borrower to provide cash cover pursuant to Clause ‎8.6 ( Cash cover by Borrower ); or
(B)
the relevant Borrower has failed to provide cash cover to the Issuing Bank in accordance with Clause ‎8.6 ( Cash cover by Borrower ),
the Issuing Bank may reduce the amount of that Letter of Credit by an amount equal to the amount that is or may be payable by that Non-Acceptable L/C Lender in respect of that Letter of Credit and that Non-Acceptable L/C Lender shall be deemed not to have any participation (or obligation to indemnify the Issuing Bank) in respect of that Letter of Credit for the purposes of the Finance Documents.
(b)
The Issuing Bank shall notify the Agent of each reduction made pursuant to this Clause ‎7.8.
(c)
This Clause ‎7.8 shall not affect the participation of each other Lender in that Letter of Credit.
7.9
Revaluation of Letters of Credit
(a)
If any Letter of Credit is denominated in an Optional Currency, the Agent shall on the last Business Day of each calendar quarter falling after the date of the Letter of Credit recalculate the Base Currency Amount of that Letter of Credit by notionally converting into the Base Currency the outstanding amount of that Letter of Credit on the basis of the Agent's Spot Rate of Exchange on the date of calculation.
(b)
A Borrower shall, if requested by the Agent within three Business Days of any calculation under paragraph (a) above, ensure that within three Business Days sufficient Utilisations are prepaid to prevent the Base Currency Amount
(i)
of all Utilisations exceeding the Total Commitments (after deducting the total Ancillary Commitments); and
(ii)
of all outstanding Letters of Credit exceeding EUR 250,000,000 per Issuing Bank or EUR 500,000,000 in aggregate
following any adjustment to a Base Currency Amount under paragraph (a) above.
8.      LETTERS OF CREDIT
8.1
Immediately payable
If a Letter of Credit or any amount outstanding under a Letter of Credit is expressed to be immediately payable, the Borrower that requested the issue of that Letter of Credit shall repay or prepay that amount immediately.
8.2
Fee payable in respect of Letters of Credit
(a)
Each Borrower shall pay to the relevant Issuing Bank a fronting fee in respect of each Letter of Credit requested by it in the amount and at the time agreed in a letter between the relevant Issuing Bank and the Company and calculated on the outstanding amount which is counter-indemnified by the other Lenders (excluding, for the avoidance of doubt any Affiliate of the relevant Issuing Bank) for the period from the issue of that Letter of Credit until its Expiry Date. A reference in this Agreement to a Fee Letter shall include the letter referred to in this paragraph.
(b)
Each Borrower shall pay to the Agent (for the account of each Lender) a letter of credit fee in the Base Currency computed at a rate equal to 80 % of the applicable Margin on the outstanding amount of each Letter of Credit requested by it for the period from the issue of that Letter of Credit until its Expiry Date. This fee shall be distributed according to each Lender's L/C Proportion of that Letter of Credit.
(c)
The accrued fronting fee and letter of credit fee on a Letter of Credit shall be payable on the last day of each successive period of three Months (or such shorter period as shall end on the Expiry Date for that Letter of Credit) starting on the date of issue of that Letter of Credit.
(d)
If and for as long as a Borrower cash covers any part of a Letter of Credit then
(i)
the fronting fee payable to the relevant Issuing Bank (subject to paragraph ‎(e) below) and (other than in relation to a Letter of Credit in respect of which paragraph ‎(c) of Clause ‎8.6 ( Cash cover by Borrower ) applies) the letter of credit fee payable for the account of each Lender shall continue to be payable until the expiry of the Letter of Credit;
(ii)
the Borrower will be entitled to withdraw the interest accrued on the cash cover to pay those fees.
(e)
If and for as long as a Borrower or a Lender cash covers any part of a Letter of Credit then the fronting fee payable to the relevant Issuing Bank in respect of the cash covered part of that Letter of Credit shall be reduced to 50 per cent of the fronting fee otherwise payable to the relevant Issuing Bank.
8.3
Claims under a Letter of Credit
(a)
Each Borrower irrevocably and unconditionally authorises the relevant Issuing Bank (acting in good faith) to pay any claim made or purported to be made under a Letter of Credit requested by it and which appears on its face to be in order (a claim ).
(b)
Each Borrower which requested a Letter of Credit shall immediately on demand pay to the Agent for the relevant Issuing Bank an amount equal to the amount of any claim under that Letter of Credit or direct the Agent to apply any cash cover therefor in payment of such claim.
(c)
Each Borrower acknowledges that an Issuing Bank:
(i)
is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and
(ii)
deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person;
provided that the relevant claim is not obviously abusive or conclusive evidence thereof is presented to the relevant Issuing Bank.
(d)
The obligations of a Borrower under this Clause will not be affected by:
(i)
the sufficiency, accuracy or genuineness of any claim or any other document; or
(ii)
any incapacity of, or limitation on the powers of, any person signing a claim or other document.
8.4
Indemnities
(a)
Each Borrower shall immediately on demand indemnify an Issuing Bank against any cost, loss or liability (other than Tax or amounts in respect of Tax) incurred by that Issuing Bank (otherwise than by reason of that Issuing Bank's gross negligence or wilful misconduct) in acting as an Issuing Bank under any Letter of Credit requested by that Borrower.
(b)
Each Lender shall (according to its L/C Proportion) immediately on demand indemnify the relevant Issuing Bank against any cost, loss or liability incurred by such Issuing Bank (otherwise than by reason of such Issuing Bank's gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit (unless the relevant Issuing Bank has been reimbursed by an Obligor pursuant to a Finance Document).
(c)
If any Lender is not permitted (by its constitutional documents or any applicable law) to comply with paragraph (b) above, then that Lender will not be obliged to comply with paragraph (b) and shall instead be deemed to have taken, on the date the Letter of Credit is issued (or if later, on the date the Lender's participation in the Letter of Credit is transferred or assigned to the Lender in accordance with the terms of this Agreement), an undivided interest and participation in the Letter of Credit in an amount equal to its L/C Proportion of that Letter of Credit. On receipt of demand from the Agent, that Lender shall pay to the Agent (for the account of the relevant Issuing Bank) an amount equal to its L/C Proportion of the amount demanded under paragraph (b) above.
(d)
The Borrower which requested a Letter of Credit shall immediately on demand reimburse any Lender for any payment it makes to an Issuing Bank under this Clause ‎8.4 ( Indemnities ) in respect of that Letter of Credit.
(e)
The obligations of each Lender or Borrower under this Clause are continuing obligations and will extend to the ultimate balance of sums payable by that Lender or Borrower in respect of any Letter of Credit, regardless of any intermediate payment or discharge in whole or in part.
(f)
The obligations of any Lender under this Clause will not be affected by any act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause (without limitation and whether or not known to it or any other person) including:
(i)
any time, waiver or consent granted to, or composition with, any Obligor, any beneficiary under a Letter of Credit or other person;
(ii)
the release of any other Obligor or any other person under the terms of any composition or arrangement;
(iii)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor, any beneficiary under a Letter of Credit or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(iv)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor, any beneficiary under a Letter of Credit or any other person;
(v)
any amendment (however fundamental) or replacement of a Finance Document, any Letter of Credit or any other document or security;
(vi)
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, any Letter of Credit or any other document or security; or
(vii)
any insolvency or similar proceedings.
(g)
Neither the Company nor any Borrower nor any Lender shall be entitled to reject payment otherwise due by it pursuant to this Agreement on the basis of the argument that a Letter of Credit with respect to which an Issuing Bank claims payment should not have been issued or should not have been issued under its terms by that Issuing Bank pursuant to the terms of this Agreement or applicable law or regulations.
(h)
Each relevant Borrower who requested a Letter of Credit and the Company undertakes with regard to Clause ‎‎27.10 ( Letter of Credit upon first demand ) that if
(i)
a Borrower has requested the issuance of a surety or guarantee payable upon first demand ( auf erstes Anfordern ) with respect to an obligation in the underlying contract (governed by German law) which provides for warranty and/or performance obligations to be secured by means of a Letter of Credit; and
(ii)
the classification of such obligation to provide for such a surety or guarantee payable upon first demand as an individual agreement ( Individualabrede ) between the relevant counterparties is disputed
(‎(i) and ‎(ii) together, the Invalid First Demand Feature ),
any invalidity of the underlying contract, the instruction to issue such Letter of Credit or of the Letter of Credit itself resulting from the Invalid First Demand Feature shall be disregarded for all purposes under and in connection with this Agreement, in particular in connection with the indemnity provided for in this Clause ‎‎8.4; and that it will refrain from:
(A)
taking any steps of whatever kind which are based on the Invalid First Demand Feature and which may hinder the relevant Issuing Bank in fulfilling its obligations under and in connection with such a Letter of Credit in compliance with its terms; and
(B)
disputing any reimbursement claims based on the Invalid First Demand Feature.
(i)
If and to the extent a Lender does not reimburse and indemnify an Issuing Bank with respect to any claims notified to it in accordance with paragraph (b) above (such Lender a Defaulting Lender and each such amount a Final Loss Amount ), the relevant Issuing Bank shall inform the Agent of the Final Loss Amount and each other Issuing Bank (each an Indemnifying Issuing Bank ) shall equally ( ohne Rangverhältnis ) indemnify like a guarantor ( garantiegleiche Freistellungsverpflichtung ) that Issuing Bank on demand in an amount equal to the percentage of each Final Loss Amount which is equal to the ratio of the aggregate Base Currency Amount of all outstanding Letters of Credit issued by the relevant Indemnifying Issuing Bank to the aggregate Base Currency Amount of all outstanding Letters of Credit issued under this Agreement on the date it is notified by the Agent of the Base Currency Amount of the Final Loss Amount.
(j)
The Agent shall inform the Indemnifying Issuing Banks as soon as practically possible of the Base Currency Amount of any Final Loss Amount and each Indemnifying Issuing Bank shall within three Business Days following such notice make payment to the relevant Issuing Bank as instructed by the Agent of an amount equal to its proportion of the Base Currency Amount of the Final Loss Amount calculated as set out in paragraph (i) above.
(k)
The Borrower which requested a Letter of Credit and the Defaulting Lender shall jointly and severally ( gesamtschuldnerisch ) immediately on demand reimburse any Indemnifying Issuing Bank for any payment it makes to an Issuing Bank under paragraphs (i) and (j) above in respect of a Letter of Credit.
8.5
Cash collateral by Non-Acceptable L/C Lender
(a)
If, at any time, a Lender is a Non-Acceptable L/C Lender, the relevant Issuing Bank may, by notice to that Lender, request that Lender to pay and that Lender shall pay, on or prior to the date falling three Business Days after the request by the Issuing Bank, an amount equal to that Lender’s L/C Proportion of the outstanding amount of a Letter of Credit and in the currency of that Letter of Credit to an interest-bearing account held in the name of that Lender with the Issuing Bank.
(b)
The Non-Acceptable L/C Lender to whom a request has been made in accordance with paragraph ‎(a) above shall enter into a security document or other form of collateral arrangement over the account, in form and substance satisfactory to the Issuing Bank, as collateral for any amounts due and payable under the Finance Documents by that Lender to the Issuing Bank in respect of that Letter of Credit.
(c)
Until no amount is or may be outstanding under that Letter of Credit, withdrawals from the account may only be made to pay to the Issuing Bank amounts due and payable to the Issuing Bank by the Non-Acceptable L/C Lender under the Finance Documents in respect of that Letter of Credit.
(d)
Each Lender shall notify the Agent and the Company:
(i)
on the date of this Agreement or on any later date on which it becomes a Lender in accordance with Clause ‎29 ( Changes to the Lenders ) whether it is a Non-Acceptable L/C Lender; and
(ii)
as soon as practicable upon becoming aware of the same, that it has become a Non-Acceptable L/C Lender,
and an indication in ‎Schedule 1 ( The Original Parties ), in a Transfer Certificate, in an Assignment Agreement to that effect will constitute a notice under paragraph ‎(d)‎(i) to the Agent and, upon delivery in accordance with Clause ‎29.7 ( Copy of Transfer Certificate or Assignment Certificate to Company ), to the Company.
(e)
Any notice received by the Agent pursuant to paragraph ‎(d) above shall constitute notice to the Issuing Bank of that Lender’s status and the Agent shall, upon receiving such notice, promptly notify the Issuing Bank of that Lender’s status as specified in that notice.
(f)
If a Lender who has provided cash collateral in accordance with this Clause ‎8.5:
(i)
ceases to be a Non-Acceptable L/C Lender; and
(ii)
no amount is due and payable by that Lender in respect of a Letter of Credit,
that Lender may, at any time it is not a Non-Acceptable L/C Lender, by notice to the Issuing Bank request that an amount equal to the amount of the cash provided by it as collateral in respect of that Letter of Credit (together with any accrued interest) standing to the credit of the relevant account held with the Issuing Bank be returned to it and the Issuing Bank shall pay that amount to the Lender within three Business Days after the request from the Lender (and shall cooperate with the Lender in order to procure that the relevant security or collateral arrangement is released and discharged).
8.6
Cash cover by Borrower
(a)
If a Lender which is a Non-Acceptable L/C Lender fails to provide cash collateral (or notifies the Issuing Bank that it will not provide cash collateral) in accordance with Clause ‎8.5 ( Cash collateral by Non-Acceptable L/C Lender ) and the Issuing Bank notifies the Company (with a copy to the Agent) that it requires the Borrower of the relevant Letter of Credit or proposed Letter of Credit to provide cash cover to an account with the Issuing Bank in an amount equal to that Lender’s L/C Proportion of the outstanding amount of that Letter of Credit and in the currency of that Letter of Credit then that Borrower shall do so within three Business Days after the notice is given.
(b)
Notwithstanding paragraph ‎(b)‎(ix) of Clause ‎7.1 ( General ), the Issuing Bank may agree to the withdrawal of amounts up to the level of that cash cover from the account if:
(i)
it is satisfied that the relevant Lender is no longer a Non-Acceptable L/C Lender; or
(ii)
the relevant Lender’s obligations in respect of the relevant Letter of Credit are transferred to a New Lender (as defined in Clause ‎29 ( Changes to the Lenders ) in accordance with the terms of this Agreement.
(c)
To the extent that a Borrower has complied with its obligations to provide cash cover in accordance with this Clause ‎8.6, the relevant Lender’s L/C Proportion in respect of that Letter of Credit will remain (but that Lender’s obligations in relation to that Letter of Credit may be satisfied in accordance with paragraph ‎(b)‎(ix)‎(B) of Clause ‎7.1 ( General )). However, the relevant Borrower’s obligation to pay any letter of credit fee in relation to the relevant letter of credit to the Agent (for the account of that Lender) in accordance with paragraph ‎(b) of Clause ‎8.2 ( Fee payable in respect of Letters of Credit ) will be reduced proportionately as from the date on which it complies with that obligation to provide cash cover (and for so long as the relevant amount of cash cover continues to stand as collateral).
(d)
The relevant Issuing Bank shall promptly notify the Agent of the extent to which a Borrower provides cash cover pursuant to this Clause ‎8.6 and of any change in the amount of cash cover so provided.
8.7
Rights of contribution
No Obligor will be entitled to any right of contribution or indemnity from any Finance Party in respect of any payment it may make under this Clause ‎8.
8.8
Role of the Issuing Banks
(a)
Nothing in this Agreement constitutes any Issuing Bank as a trustee ( Treuhänder ) of any other person. No Issuing Bank has any financial or commercial duty of care ( Vermögensfürsorgepflicht ) for any person.
(b)
No Issuing Bank shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.
(c)
An Issuing Bank may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.
(d)
An Issuing Bank may rely on:
(i)
any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and
(ii)
any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.
(e)
An Issuing Bank may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.
(f)
An Issuing Bank may act in relation to the Finance Documents through its personnel and agents.
(g)
An Issuing Bank is not responsible for:
(i)
the adequacy, accuracy and/or completeness of any information (whether oral or written) provided by the Agent, any Party (including itself), or any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; or
(ii)
the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.
(h)
Notwithstanding any other provision of any Finance Document to the contrary, an Issuing Bank is not obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
8.9
Exclusion of liability
(a)
Without limiting paragraph (b) below, an Issuing Bank will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.
(b)
No Party (other than an Issuing Bank) may take any proceedings against any officer, employee or agent of an Issuing Bank in respect of any claim it might have against an Issuing Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document (and any officer, employee or agent of an Issuing Bank may rely on this Clause pursuant to Section 328 para 1 Civil Code ( Bürgerliches Gesetzbuch ) ( echter berechtigender Vertrag zugunsten Dritter ).
8.10
Credit appraisal by the Lenders
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to each Issuing Bank that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including, but not limited to, those listed in paragraphs (a) to (d) of Clause ‎31.14 (Credit appraisal by the Lenders) .
8.11
Affiliates of Lenders as Issuing Banks
(a)
Subject to the terms of this Agreement, an Affiliate of a Lender may become an Issuing Bank. In such case, the Lender and its Affiliate shall be treated as a single Issuing Bank for all purposes of this Agreement except this Clause ‎8.11 ( Affiliates of Lenders as Issuing Banks ).
(b)
Prior to such an Affiliate becoming an Issuing Bank, the Lender shall specify such Affiliate for this purpose in a notice delivered by that Lender to the Agent.
(c)
An Affiliate of a Lender which becomes an Issuing Bank shall accede to this Agreement by delivery to the Agent of a duly completed Lender Accession Letter.
(d)
Where this Agreement or any other Finance Document imposes an obligation on an Issuing Bank and the relevant Issuing Bank is an Affiliate of a Lender which is not a party to that document, the relevant Lender shall ensure that the obligation is performed by its Affiliate.
9.      UTILISATION - SWINGLINE LOANS
9.1
General
(a)
In this Clause and Clause ‎10 ( Swingline Loans ):
(i)
Available Swingline Commitment means (but without limiting Clause ‎9.6 ( Relationship with the Revolving Facility ) a Swingline Lender's Swingline Commitment minus:
(A)
the Base Currency Amount of its (and its Lender Affiliates') participation in any outstanding Swingline Loans; and
(B)
in relation to any proposed Utilisation, the Base Currency Amount of its (and its Lender Affiliates') participation in any Swingline Loans that are due to be made on or before the proposed Utilisation Date,
other than the Base Currency Amount of that Swingline Lender's (and its Lender Affiliates') participation in any Swingline Loans that are due to be repaid or prepaid on or before the proposed Utilisation Date.
(ii)
Available Swingline Facility means EUR 500,000,000 less the Base Currency Amount of any Swingline Loans outstanding at such time and adjusted so as to take account of any Swingline Loans due to be made and/or repaid on the proposed Utilisation Date.
(iii)
Relevant Swingline Lenders means:
(A)
in the case of any Swingline Loan denominated in euro, the Swingline Lenders listed in Section 2 of ‎Part B of ‎Schedule 1 ( The Original Parties ) or any other person that becomes a Swingline Lender after the date of this Agreement in accordance with Clause ‎29‎ ( Changes to the Lenders ) and to whom a Swingline Commitment is transferred; and
(B)
in the case of any Swingline Loan denominated in US Dollars, the Swingline Lenders listed in Section 2 of ‎Part B of ‎Schedule 1 ( The Original Parties ) or any other person that becomes a Swingline Lender after the date of this Agreement in accordance with Clause ‎29‎ ( Changes to the Lenders ) and to whom or to whom's Affiliate a Swingline Commitment is transferred and that has notified the Relevant Swingline Agent as being the Swingline Lender through whom the obligation to participate in Swingline Loans denominated in US Dollars may be fulfilled.
(iv)
Relevant Swingline Rate means, in relation to
(A)
a Swingline Loan denominated in US Dollars, the percentage rate per annum which is the aggregate of:
(I)
the rate per annum determined by the USD Swingline Agent to be the Federal Funds Rate (as published by the Federal Reserve Bank of New York) for that day and if any such rate is below zero the relevant rate will be deemed to be zero; and
(II)
the Margin; and
(B)
a Swingline Loan denominated in euro, the percentage rate per annum which is the aggregate of:
(I)
the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the European interbank market as of 11.00 a.m. on the Utilisation Date for that Swingline Loan for the offering of deposits in euro for a period comparable to the Interest Period for the relevant Swingline Loan and for settlement on that day and if any such rate is below zero the relevant rate will be deemed to be zero; and
(II)
the Margin.
(v)
Overall Commitment of a Lender means:
(A)
its Commitment minus the Base Currency Amount of the aggregate of its Ancillary Commitments; or
(B)
in the case of a Swingline Lender which does not have a Commitment, the Commitment of a Lender which is its Affiliate minus the Base Currency Amount of the aggregate of such Lender's (or its Affiliate's) Ancillary Commitments.
(b)
Any reference in this Agreement to:
(i)
an Interest Period includes each period determined under this Agreement by reference to which interest on a Swingline Loan is calculated; and
(ii)
a Lender includes a Swingline Lender unless the context otherwise requires.
(c)
(i)    Clause ‎5.2 ( Further conditions precedent ) and ‎5.3 ( Conditions relating to optional

currencies );
(ii)    Clause ‎6 ( Utilisation - Revolving Facility Loans );
(iii)    Clause ‎11 ( Optional currencies );
(iv)
Clause ‎15 ( Interest ) as it applies to the calculation of interest on a Loan but not default interest on an overdue amount; and
(v)    Clause ‎16 ( Interest Periods ),
do not apply to Swingline Loans.
9.2
Delivery of a Utilisation Request for Swingline Loans
(a)
A Borrower may utilise the Swingline Facility by delivery to the Relevant Swingline Agent of a duly completed Utilisation Request not later than the Specified Time.
(b)
Each Utilisation Request for a Swingline Loan must be sent to the Relevant Swingline Agent to the address notified by the Relevant Swingline Agent for this purpose with a copy to its address referred to in Clause ‎36 ( Notices ). A copy of each Utilisation Request for Swingline Loans must also be sent to the Agent at the same time as such Utilisation Request is sent to the Relevant Swingline Agent.
9.3
Completion of a Utilisation Request for Swingline Loans
(a)
Each Utilisation Request for a Swingline Loan is irrevocable and will not be regarded as having been duly completed unless:
(i)
it identifies the Borrower;
(ii)
the proposed Utilisation Date is a TARGET Day and a Business Day in Luxembourg with respect to Swingline Loans denominated in euro or with respect to Swingline Loans denominated in US Dollars, a New York Business Day, in each case within the Availability Period;
(iii)
it specifies the currency for the Swingline Loan as being either euro or US Dollar;
(iv)
the Base Currency Amounts of the Swingline Loans outstanding following the requested Utilisation will not exceed the amount of the Total Swingline Commitments;
(v)
the amount of the proposed Swingline Loan is not more than the Available Swingline Facility and the Available Facility and is a minimum of EUR 10,000,000 if denominated in euro, or, USD 10,000,000 if denominated in US Dollars or, if less, the Available Swingline Facility;
(vi)
the aggregate amount of outstanding Swingline Loans denominated in US Dollars does not and, following the requested Utilisation, will not exceed the Base Currency Amount of EUR 250,000,000;
(vii)
the proposed Interest Period:
(A)
does not overrun the Termination Date;
(B)
is a period of not more than seven Business Days; and
(C)
ends on a Business Day (in case of a Swingline Loan denominated in euro) or a New York Business Day (in case of a Swingline Loan denominated in USD);
(viii)
it specifies the account bank details to which the proceeds of the Swingline Loan are to be credited; and
(ix)
it is duly signed by authorised signatories of the relevant Borrower.
(b)
Only one Swingline Loan may be requested in each Utilisation Request.
9.4
Swingline Lenders' participation
(a)
Subject to Clause ‎9.5 ( Affiliate Facility Offices – Swingline Loans ), if the conditions set out in this Agreement have been met, each Relevant Swingline Lender shall make its participation in each Swingline Loan available through its Facility Office in New York or such other Facility Office nominated by a Swingline Lender and notified to the USD Swingline Agent (for Swingline Loans denominated in US Dollar) or its Facility Office in any Participating Member State or London (for Swingline Loans denominated in euro).
(b)
The Relevant Swingline Lenders will only be obliged to comply with paragraph (a) above if on the date of the Utilisation Request and on the proposed Utilisation Date:
(i)
no Default is continuing or would result from the proposed Swingline Loan; and
(ii)
the Repeating Representations made by each Obligor are true in all material respects.
(c)
The amount of each Relevant Swingline Lender's participation in each Swingline Loan in which it is obliged to participate will be equal to the proportion borne by its Available Swingline Commitment (or, in the case of a Lender Affiliate, that of the Swingline Lender of which it is a Lender Affiliate) to the Available Swingline Facility immediately prior to making the Swingline Loan, adjusted to take account of any limit applying under Clause ‎9.6 ( Relationship with the Facility ).
(d)
The Relevant Swingline Agent shall notify each Relevant Swingline Lender of the amount of each Swingline Loan in which it is obliged to participate, the Base Currency Amount of each Swingline Loan and its participation in that Swingline Loan by the Specified Time.
(e)
Notwithstanding any other term of this Agreement a Swingline Lender is only obliged to participate in a Swingline Loan to the extent that it would not result in the Base Currency Amount of its participation in such Swingline Loan exceeding the Available Swingline Commitment of such Swingline Lender (or in the case of a Lender Affiliate, that of the Swingline Lender of which it is a Lender Affiliate).
9.5
Affiliate Facility Offices – Swingline Loans
(a)
A Swingline Lender may fulfil its obligations to participate in or make any Swingline Loan to a certain Borrower, certain Borrowers or, as the case may be, all Borrowers in a particular jurisdiction or particular jurisdictions through a Lender Affiliate.
(b)
A Lender Affiliate shall not have any Swingline Commitment, but the Available Swingline Commitment of the relevant Swingline Lender shall be reduced by the amount of the Base Currency Amount of Swingline Loans made available by its Lender Affiliate. The Swingline Lender and the relevant Lender Affiliate shall be treated as having a single vote which is exercised by the Swingline Lender.
(c)
A Swingline Lender which has a Lender Affiliate will remain liable for the relevant obligations under the Finance Documents in the event that the Lender Affiliate fails to perform them.
9.6
Relationship with the Revolving Facility
(a)
This Subclause applies when a Swingline Loan is outstanding or is to be borrowed.
(b)
The Revolving Facility may be used by way of Swingline Loans. The Swingline Facility is not independent of the Revolving Facility.
(c)
Notwithstanding any other term of this Agreement a Lender is only obliged to participate in a Utilisation to the extent that it would not result in the aggregate Base Currency Amounts of all its participation and that of a Lender which is its Affiliate in Utilisations exceeding its Overall Commitment.
(d)
Where, but for the operation of paragraph (c) above, the Base Currency Amount of a Lender's participation and that of a Lender which is its Affiliate in Utilisations would have exceeded its Overall Commitment, the excess will be apportioned among the other Lenders participating in the relevant Utilisation pro rata according to their relevant Commitments (or in the case of a Lender Affiliate, that of the Lender of which it is a Lender Affiliate). This calculation will be applied as often as necessary until the Utilisation is apportioned among the relevant Lenders in a manner consistent with paragraph (c) above.
10.      SWINGLINE LOANS
10.1
Swingline
(a)
Subject to the terms of this Agreement the Swingline Lenders make available to the Borrowers a dual-currency swingline loan facility in an aggregate amount equal to the Total Swingline Commitments.
(b)
A Swingline Loan may not be applied in repayment or prepayment of another Swingline Loan.
10.2
Repayment
(a)
Each Borrower that has drawn a Swingline Loan shall repay that Swingline Loan on the last day of its Interest Period.
(b)
If a Swingline Loan is not repaid in full on its due date, the Relevant Swingline Agent shall (if requested to do so in writing by any affected Swingline Lender) set a date (the Loss Sharing Date ) on which payments shall be made between the Lenders to re-distribute the unpaid amount between them. The Relevant Swingline Agent shall give at least three Business Days notice to each affected Lender of the Loss Sharing Date and notify it of the amounts to be paid or received by it.
(c)
On the Loss Sharing Date each Lender must pay to the Relevant Swingline Agent its Proportion of the Unpaid Amount minus its (or its Affiliate's) Unpaid Swingline Participation (if any). If this produces a negative figure for a Lender no amount need be paid by that Lender.
The Proportion of a Lender means the proportion borne by:
(i)
its Commitment (or in the case of a Lender Affiliate, that of the Lender of which it is a Lender Affiliate) (or, if the Total Commitments are then zero, its Commitment (or in the case of a Lender Affiliate, that of the Lender of which it is a Lender Affiliate) immediately prior to their reduction to zero) minus (A) the Base Currency Amount of its participation (or that of a Lender which is its Affiliate) in any outstanding Utilisations (but ignoring its (or its Affiliate's) participation in the unpaid Swingline Loan) and (B) its (and/or its Affiliate's) Ancillary Commitment: to
(ii)
the Total Commitments (or, if the Total Commitments are then zero, the Total Commitments immediately prior to their reduction to zero) minus (A) any outstanding Utilisations (but ignoring the unpaid Swingline Loan) and (B) the aggregate of all Ancillary Commitments.
The Unpaid Amount means, in relation to a Swingline Loan, any principal not repaid and/or any interest accrued but unpaid on that Swingline Loan calculated from the Utilisation Date to the Loss Sharing Date.
The Unpaid Swingline Participation of a Lender means that part of the Unpaid Amount (if any) owed to that Lender (or its Affiliate) (before any re-distribution under this Clause ‎10.2 ( Repayment )).
(d)
Out of the funds received by the Relevant Swingline Agent pursuant to sub-clause (c) the Agent shall pay to each Swingline Lender an amount equal to the Shortfall (if any) of that Swingline Lender where:
The Shortfall of a Swingline Lender is an amount equal to its Unpaid Swingline Participation minus its (or its Affiliate's) Proportion of the Unpaid Amount.
(e)
If the amount actually received by the Relevant Swingline Agent from the Lenders is insufficient to pay the full amount of the Shortfall of all Swingline Lenders then the amount actually received will be distributed amongst the Swingline Lenders pro rata to the Shortfall of each Swingline Lender.
(f)     
(i)
Upon a payment under this paragraph, the paying Lender will be subrogated to the rights of the Swingline Lenders which have shared in the payment received.
(ii)
If and to the extent the paying Lender is not able to rely on its rights under sub-paragraph (i) above, the relevant Borrower shall be liable to the paying Lender for a debt equal to the amount the paying Lender has paid under this paragraph.
(iii)
Any payment under this paragraph does not reduce the obligations in aggregate of any Obligor.
10.3
Voluntary Prepayment of Swingline Loans
(a)
The Borrower to which a Swingline Loan has been made may prepay at any time the whole of that Swingline Loan.
(b)
Unless a contrary indication appears in this Agreement, any part of the Swingline Facility which is prepaid may be reborrowed in accordance with the terms of this Agreement.
10.4
Interest
(a)
The rate of interest on each Swingline Loan for its Interest Period is the Relevant Swingline Rate.
(b)
The Relevant Swingline Agent shall promptly notify the relevant Swingline Lenders and the relevant Borrower of the Relevant Swingline Rate applicable to a Swingline Loan.
(c)
Each Borrower shall pay accrued interest on each Swingline Loan made to it on the last day of its Interest Period.
10.5
Interest Period
(a)
Each Swingline Loan has one Interest Period only.
(b)
The Interest Period for a Swingline Loan must be selected in the relevant Utilisation Request.
10.6
Swingline Agent
(a)
The Relevant Swingline Agent may perform its duties in respect of the Swingline Facility through an Affiliate acting as its agent.
(b)
Notwithstanding any other term of this Agreement and without limiting the liability of any Obligor under the Finance Documents, each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) pay to or indemnify the Relevant Swingline Agent, within three Business Days of demand, for or against any cost, loss or liability incurred by the Relevant Swingline Agent or its Affiliate (other than by reason of the Agent's or the Affiliate's gross negligence or wilful misconduct) in acting as the Relevant Swingline Agent for the Swingline Facility under the Finance Documents (unless the Relevant Swingline Agent or its Affiliate has been reimbursed by an Obligor pursuant to a Finance Document).
10.7
Conditions of assignment or transfer
Notwithstanding any other term of this Agreement, each Lender shall ensure that at all times its (or the Lender's of which it is an Affiliate) Overall Commitment is not less than:
(a)
its Swingline Commitment; or
(b)
if it does not have a Swingline Commitment, the Swingline Commitment of a Lender which is its Affiliate.
11.      OPTIONAL CURRENCIES
11.1
Selection of currency
A Borrower (or the Company on behalf of a Borrower) shall select the currency of a Utilisation in a Utilisation Request.
11.2
Unavailability of a currency
If before the Specified Time on any Quotation Day:
(a)
a Lender notifies the Agent that the Optional Currency (other than GBP or USD) requested is not readily available to it in the amount required; or
(b)
a Lender notifies the Agent that compliance with its obligation to participate in a Loan in the proposed Optional Currency would contravene a law or regulation applicable to it,
the Agent will give notice to the relevant Borrower to that effect by the Specified Time on that day. Each Lender that gives notice pursuant to this Clause ‎11.2 will be required to participate in the Loan in the Base Currency (in an amount equal to that Lender’s proportion of the Base Currency Amount or, in respect of a Rollover Loan, an amount equal to that Lender’s proportion of the Base Currency Amount of the Rollover Loan that is due to be made) and its participation will be treated as a separate Loan denominated in the Base Currency during that Interest Period.
12.      ANCILLARY FACILITIES
12.1
Type of Facility
An Ancillary Facility may be by way of:
(i)
an overdraft facility;
(ii)
a guarantee, bonding, documentary or stand-by letter of credit facility;
(iii)
a short term loan facility;
(iv)
a derivatives facility;
(v)
a foreign exchange facility; or
(vi)
any other facility or accommodation required in connection with the business of the Group and which is agreed by the Company with an Ancillary Lender.
12.2
Availability
(a)
If the Company and a Lender agree and except as otherwise provided in this Agreement, the Lender may provide an Ancillary Facility on a bilateral basis in place of part of that Lender's unutilised Commitment (which shall (except for the purposes of determining the Majority Lenders) be reduced by the amount of the Ancillary Commitment under that Ancillary Facility).
(b)
An Ancillary Facility shall not be made available unless, not later than 10 Business Days prior to the Ancillary Commencement Date for an Ancillary Facility, the Agent has received from the Company:
(i)
a notice in writing of the establishment of an Ancillary Facility and specifying:
(A)
the proposed Borrower(s) (or Affiliate(s) of a Borrower) which may use the Ancillary Facility;
(B)
the proposed Ancillary Commencement Date and expiry date of the Ancillary Facility;
(C)
the proposed type of Ancillary Facility to be provided;
(D)
the proposed Ancillary Lender;
(E)
the proposed Ancillary Commitment, the maximum amount of the Ancillary Facility and, if the Ancillary Facility is an overdraft facility comprising more than one account its maximum gross amount (that amount being the Designated Gross Amount ) and its maximum net amount (that amount being the Designated Net Amount ); and
(F)
the proposed currency of the Ancillary Facility (if not denominated in EUR); and
(ii)
any other information which the Agent may reasonably request in connection with the Ancillary Facility.
The Agent shall promptly notify the Ancillary Lender and the other Lenders of the establishment of an Ancillary Facility.
No amendment or waiver of a term of any Ancillary Facility shall require the consent of any Finance Party other than the relevant Ancillary Lender unless such amendment or waiver itself relates to or gives rise to a matter which would require an amendment of or under this Agreement (including, for the avoidance of doubt, under this Clause). In such a case, the provisions of this Agreement with regard to amendments and waivers will apply.
(c)
Subject to compliance with paragraph (b) above:
(i)
the Lender concerned will become an Ancillary Lender; and
(ii)
the Ancillary Facility will be available,
with effect from the date agreed by the Company and the Ancillary Lender.
12.3
Terms of Ancillary Facilities
(a)
Except as provided below, the terms of any Ancillary Facility will be those agreed by the Ancillary Lender and the Company.
(b)
However, those terms:
(i)
must be based upon normal commercial terms at that time (except as varied by this Agreement);
(ii)
may allow only Borrowers (or Affiliates of Borrowers nominated pursuant to Clause ‎12.8 ( Affiliates of Borrowers )) to use the Ancillary Facility;
(iii)
may not allow the Ancillary Outstandings to exceed the Ancillary Commitment;
(iv)
may not allow the Ancillary Commitment of a Lender to exceed the Available Commitment of that Lender; and
(v)
must require that the Ancillary Commitment is reduced to nil, and that all Ancillary Outstandings are repaid (or cash cover provided in respect of all the Ancillary Outstandings) not later than the Termination Date (or such earlier date as the Commitment of the relevant Ancillary Lender (or its Affiliate) is reduced to zero).
(c)
If there is any inconsistency between any term of an Ancillary Facility and any term of this Agreement, this Agreement shall prevail except for (i) Clause ‎37.3 ( Day count convention ) which shall not prevail for the purposes of calculating fees, interest or commission relating to an Ancillary Facility; (ii) an Ancillary Facility comprising more than one account where the terms of the Ancillary Documents shall prevail to the extent required to permit the netting of balances on those accounts; and (iii) where the relevant term of this Agreement would be contrary to, or inconsistent with, the law governing the relevant Ancillary Document, in which case that term of this Agreement shall not prevail.
12.4
Repayment of Ancillary Facility
(a)
An Ancillary Facility shall cease to be available on the Termination Date or such earlier date on which its expiry date occurs or on which it is cancelled in accordance with the terms of this Agreement.
(b)
If an Ancillary Facility expires in accordance with its terms the Ancillary Commitment of the Ancillary Lender shall be reduced to zero (and its Commitment shall be increased accordingly).
(c)
No Ancillary Lender may demand repayment or prepayment of any amounts or demand cash cover for any liabilities made available or incurred by it under its Ancillary Facility (except where the Ancillary Facility is provided on a net limit basis to the extent required to bring any gross outstandings down to the net limit) unless:
(i)
the Total Commitments have been cancelled in full, or all outstanding Utilisations under the Facility have become due and payable in accordance with the terms of this Agreement, or the Agent has declared all outstanding Utilisations under the Facility immediately due and payable, or the expiry date of the Ancillary Facility occurs; or
(ii)
it becomes unlawful in any applicable jurisdiction for the Ancillary Lender to perform any of its obligations as contemplated by this Agreement or to fund, issue or maintain its participation in its Ancillary Facility; or
(iii)
the Ancillary Outstandings (if any) under that Ancillary Facility can be refinanced by a Utilisation and the Ancillary Lender gives sufficient notice to enable a Utilisation to be made to refinance those Ancillary Outstandings.
(d)
For the purposes of determining whether or not the Ancillary Outstandings under an Ancillary Facility mentioned in paragraph (c)(iii) above can be refinanced by a Utilisation of the Facility:
(i)
the Commitment of the Ancillary Lender will be increased by the amount of its Ancillary Commitment; and
(ii)
the Utilisation may (so long as paragraph (c)(i) above does not apply) be made irrespective of whether a Default is outstanding or any other applicable condition precedent is not satisfied (but only to the extent that the proceeds are applied in refinancing those Ancillary Outstandings) and irrespective of whether Clause ‎5.4 ( Maximum number of Utilisations ) or paragraph (a)(iii) of Clause ‎6.2 ( Completion of a Utilisation Request for Loans ) applies.
(e)
On the making of a Utilisation of the Facility to refinance Ancillary Outstandings:
(i)
each Lender will participate in that Utilisation in an amount (as determined by the Agent) which will result as nearly as possible in the aggregate amount of its participation in the Utilisations then outstanding bearing the same proportion to the aggregate amount of the Utilisations then outstanding as its Commitment bears to the Total Commitments; and
(ii)
the relevant Ancillary Facility shall be cancelled.
(f)
In relation to an Ancillary Facility which comprises an overdraft facility where a Designated Net Amount has been established, the Ancillary Lender providing that Ancillary Facility shall only be obliged to take into account for the purposes of calculating compliance with the Designated Net Amount those credit balances which it is permitted to take into account by the then current law and regulations in relation to its reporting of exposures to the applicable regulatory authorities as netted for capital adequacy purposes.
12.5
Ancillary Outstandings
Each Borrower and each Ancillary Lender agrees with and for the benefit of each Lender that:
(a)
the Ancillary Outstandings under any Ancillary Facility provided by that Ancillary Lender shall not exceed the Ancillary Commitment applicable to that Ancillary Facility and where the Ancillary Facility is an overdraft facility comprising more than one account, Ancillary Outstandings under that Ancillary Facility shall not exceed the Designated Net Amount in respect of that Ancillary Facility; and
(b)
where all or part of the Ancillary Facility is an overdraft facility comprising more than one account, the Ancillary Outstandings (calculated on the basis that the words in brackets in paragraph (a) of the definition of that term were deleted) shall not exceed the Designated Gross Amount applicable to that Ancillary Facility.
12.6
Information
Each Borrower and each Ancillary Lender shall, promptly upon request by the Agent, supply the Agent with any information relating to the operation of an Ancillary Facility (including the Ancillary Outstandings) as the Agent may reasonably request from time to time. Each Borrower consents to all such information being released to the Agent and the other Finance Parties.
12.7
Affiliates of Lenders as Ancillary Lenders
(a)
Subject to the terms of this Agreement, an Affiliate of a Lender may become an Ancillary Lender. In such case, the Lender and its Affiliate shall be treated as a single Lender whose Commitment is the amount set out opposite the relevant Lender's name in Part B of Schedule 1 ( The Original Parties ) and/or the amount of any Commitment transferred to that Lender under this Agreement, to the extent (in each case) not cancelled, reduced or transferred by it under this Agreement. For the purposes of calculating the Lender's Available Commitment, the Lender's Commitment shall be reduced to the extent of the aggregate of the Ancillary Commitments of its Affiliates.
(b)
The Company shall specify any relevant Affiliate of a Lender in any notice delivered by the Company to the Agent pursuant to paragraph (b)(i) of Clause ‎12.2 ( Availability ).
(c)
If a Lender assigns all of its rights and benefits or transfers all of its rights and obligations to a New Lender (as defined in Clause ‎29 ( Changes to the Lenders ), its Affiliate shall cease to have any obligations under this Agreement or any Ancillary Document.
(d)
Where this Agreement or any other Finance Document imposes an obligation on an Ancillary Lender and the relevant Ancillary Lender is an Affiliate of a Lender which is not a party to that document, the relevant Lender shall ensure that the obligation is performed by its Affiliate.
12.8
Affiliates of Borrowers
(a)
Subject to the terms of this Agreement, an Affiliate of a Borrower may with the approval of the relevant Lender become a borrower with respect to an Ancillary Facility.
(b)
The Company shall specify any relevant Affiliate of a Borrower in any notice delivered by the Company to the Agent pursuant to paragraph (b)(i) of Clause ‎12.2 ( Availability ).
(c)
If a Borrower ceases to be a Borrower under this Agreement in accordance with Clause ‎30.3 ( Resignation of a Borrower ), its Affiliate shall cease to have any rights under this Agreement or any Ancillary Document.
(d)
Where this Agreement or any other Finance Document imposes an obligation on a Borrower under an Ancillary Facility and the relevant Borrower is an Affiliate of a Borrower which is not a party to that document, the relevant Borrower shall ensure that the obligation is performed by its Affiliate.
(e)
Any reference in this Agreement or any other Finance Document to a Borrower being under no obligations (whether actual or contingent) as a Borrower under such Finance Document shall be construed to include a reference to any Affiliate of a Borrower being under no obligations under any Finance Document or Ancillary Document.
12.9
Commitment amounts
Notwithstanding any other term of this Agreement, each Lender shall ensure that at all times its Commitment is not less than the aggregate of:
(a)
its Ancillary Commitment; and
(b)
the Ancillary Commitment of its Affiliate.
13.      REPAYMENT
Each Borrower which has drawn a Revolving Facility Loan shall repay that Revolving Facility Loan on the last day of its Interest Period and, in any case, all Utilisations shall be repaid not later than on the Termination Date.
14.      PREPAYMENT AND CANCELLATION
14.1
Illegality
(a)
If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Utilisation:
(i)
that Lender shall promptly notify the Agent upon becoming aware of that event;
(ii)
upon the Agent notifying the Company, the Commitment of that Lender will be immediately cancelled; and
(iii)
each Borrower shall repay that Lender’s participation (and that of each of its Lender Affiliates) in the Utilisations made to that Borrower on the last day of the Interest Period for each Utilisation occurring after the Agent has notified the Company or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law).
(b)
If it becomes unlawful for an Issuing Bank to issue any Letter of Credit, such Issuing Bank shall promptly notify the Agent upon becoming aware of that event, and upon the Agent notifying the Company, the Facility shall cease to be available for the issue of Letters of Credit by that Issuing Bank.
14.2
Change of control
(a)
Upon the occurrence of a Change of Control Event, the Agent (acting on the instructions of the Majority Lenders) shall have the right to terminate the Facility by giving a written Change of Control Termination Notice to the Company (to be given within 30 days after notice has been given by the Company to the Agent of such Change of Control Event). Upon receipt of such Change of Control Termination Notice the Facility will be cancelled as set forth in paragraph (c) below and all Utilisations shall be repaid together with accrued interest as set forth in paragraph (b) below.
(b)
Any repayment pursuant to paragraph (a) above of a Utilisation outstanding at the relevant time shall be made in full with accrued interest on (i) the earlier of the last day of the Interest Period for that Utilisation and the date falling 60 days after the date of the Change of Control Event or (ii) if later, the fifteenth Business Day following receipt by the Company of the Change of Control Termination Notice.
(c)
If a Change of Control Termination Notice is given pursuant to the provisions of paragraph (a) above, any undrawn Commitments shall automatically be cancelled on the date the Change of Control Termination Notice is given and, upon any repayment made thereafter or any repayment made in accordance with the provisions of paragraph (b) above, a portion of the Facility corresponding to the amount repaid or prepaid shall automatically be cancelled with effect from the date such repayment or prepayment is made.
14.3
Voluntary cancellation
The Company may, if it gives the Agent not less than three Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of EUR 20,000,000) of the Available Facility. Any cancellation under this Clause ‎14.3 shall reduce the Commitments of the Lenders rateably.
14.4
Voluntary prepayment of Revolving Facility Loans
The Borrower to which a Revolving Facility Loan has been made may, if it or the Company gives the Agent not less than three Business Days’ (or such shorter period as the Majority Lenders may agree) prior written notice, prepay the whole or any part of that Revolving Facility Loan in a minimum Base Currency Amount of EUR 20,000,000.
14.5
Right of repayment and cancellation in relation to a single Lender
(a)
If:
(i)
any sum payable to any Lender by an Obligor is required to be increased under paragraph ‎(c) of Clause ‎19.2 ( Tax gross-up ); or
(ii)
any Lender claims indemnification from the Company under Clause ‎19.3 ( Tax indemnity ) or Clause ‎20.1 ( Increased costs ),
the Company may, whilst the circumstance giving rise to the requirement for indemnification continues, give the Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender's (and all of its Lender Affiliates') participation in the Utilisation.
(b)
If any Lender becomes a Non-funding Lender, the Company may, at any time whilst the Lender continues to be a Non-funding Lender, give the Agent notice of cancellation of the Available Commitment of that Lender. On receipt of such notice, the Available Commitment of the Non-funding Lender shall immediately be reduced to zero. The Agent shall as soon as practicable after receipt of such notice, notify all the Lenders.
(c)
On receipt of a notice referred to in paragraph ‎(a) above, the Commitment of that Lender shall immediately be reduced to zero.
(d)
On the last day of each Interest Period which ends after the Company has given notice under paragraph ‎(a) above (or, if earlier, the date specified by the Company in that notice), each Borrower to which a Utilisation is outstanding shall repay that Lender’s participation in that Utilisation.
14.6
Restrictions
(a)
Any notice of cancellation or prepayment given by any Party under this Clause ‎14 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
(b)
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.
(c)
Unless a contrary indication appears in this Agreement, any part of the Facility which is repaid or prepaid may be reborrowed in accordance with the terms of this Agreement.
(d)
The Borrowers shall not repay or prepay all or any part of the Utilisations or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.
(e)
No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
(f)
If the Agent receives a notice under this Clause ‎14 it shall promptly forward a copy of that notice to either the Company or the affected Lender, as appropriate.
15.      INTEREST
15.1
Calculation of interest
The rate of interest on each Revolving Facility Loan (other than a Swingline Loan) for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
(a)
Margin; and
(b)
EURIBOR or, in relation to any Revolving Facility Loan in a currency other than euro, LIBOR.
15.2
Payment of interest
The Borrower to which a Loan has been made shall pay accrued interest on that Revolving Facility Loan on the last day of each Interest Period (and, if the Interest Period is longer than six months, on the dates falling at six-monthly intervals after the first day of the Interest Period).
15.3
Default interest and lump sum damages
(a)
If an Obligor fails to pay any amount (other than interest) payable by it under a Finance Document on its due date, subject to paragraph (b) below, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph ‎(b) below, is one per cent higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). If an Obligor fails to pay interest payable by it under the Finance Documents on its due date, lump sum damages ( pauschalierter Schadensersatz ) shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph ‎(b) below, is one per cent higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). In the case of lump sum damages, the relevant Obligor shall be free to prove that no damages have arisen or that damages have not arisen in the asserted amount and any Finance Party shall be entitled to prove that further damages have arisen. Any interest or lump sum damage accruing under this Clause ‎15.3 shall be immediately payable by the Obligor on demand by the Agent.
(b)
If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:
(i)
the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
(ii)
the rate of interest applying to the overdue amount during that first Interest Period shall be one per cent. higher than the rate which would have applied if the overdue amount had not become due.
15.4
Notification of rates of interest
The Agent or any Swingline Agent (if applicable) shall promptly notify the Lenders and the relevant Borrower of the determination of a rate of interest under this Agreement.
16.      INTEREST PERIODS
16.1
Selection of Interest Periods
(a)
Each Loan shall have an Interest Period of one, two, three or six Months or any other period agreed between the Company and the Agent (acting on the instructions of all the Lenders), in each case as the relevant Borrower (or the Company) may select in the Utilisation Request for the respective Loan.
(b)
An Interest Period for a Loan shall not extend beyond the Termination Date.
(c)
A Loan has one Interest Period only.
16.2
Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
17.      CHANGES TO THE CALCULATION OF INTEREST
17.1
Absence of quotations
Subject to Clause ‎17.2 ( Market disruption ), if EURIBOR or, if applicable, LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable EURIBOR or LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.
17.2
Market disruption
(a)
If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then:
(i)
the Agent shall promptly give notice of such to the relevant Borrower, the Company and the Lenders and the Loan which has been requested to be made:
(A)
if the relevant Borrower has given instruction to that effect in the Utilisation Request, shall not be made; or
(B)
if the relevant Borrower has not given such instruction, shall be made, and
(ii)
the rate of interest on each Lender’s share of that Loan for the Interest Period shall be the percentage rate per annum which is the sum of:
(A)
the Margin; and
(B)
the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Loan from whatever source it may reasonably select.
(b)
In this Agreement Market Disruption Event means:
(i)
at or about noon on the Quotation Day for the relevant Interest Period EURIBOR or, if applicable, LIBOR is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies a rate to the Agent to determine EURIBOR or, if applicable, LIBOR for the relevant currency and Interest Period; or
(ii)
before close of business in Luxembourg on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in a Loan exceed thirty-five per cent. of that Loan) that the cost to it of obtaining matching deposits in the Relevant Interbank Market would be in excess of EURIBOR or, if applicable, LIBOR.
17.3
Alternative basis of interest or funding
(a)
If a Market Disruption Event occurs and the Agent or the Company so requires, the Agent and the Company shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.
(b)
Any alternative basis agreed pursuant to paragraph ‎(a) above shall, with the prior consent of all the Lenders and the Company, be binding on all Parties.
17.4
Break Costs
(a)
Each Borrower shall, within five Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by that Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.
(b)
Each Lender shall, as soon as reasonably practicable after a demand by the Agent or the Company, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
18.      FEES
18.1
Commitment fee
(a)
The Company shall pay to the Agent (for the account of each Lender) a fee in EUR computed at the rate of 35% of the applicable Margin on that Lender’s Available Commitment during the Availability Period.
(b)
The accrued commitment fee is payable quarterly in arrears during the Availability Period, on the last day of the Availability Period and, if cancelled in full, on the cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.
18.2
Utilisation fee
(a)
The Company shall pay to the Agent (for the account of each Lender pro rata to its Commitment) a fee in EUR computed at the rate of:
(i)
0.075 % p.a. on the aggregate amount of all Utilisations outstanding for each day on which the aggregate amount of all Utilisations outstanding is lower than or equal to one third (1/3) of the Total Commitments;
(ii)
0.15 % p.a. on the aggregate amount of all Utilisations outstanding for each day on which the aggregate amount of all Utilisations outstanding is higher than one third (1/3) of the Total Commitments but lower than or equal to two thirds (2/3) of the Total Commitments; or
(iii)
0.30 % p.a. on the aggregate amount of all Utilisations outstanding for each day on which the aggregate amount of all Utilisations outstanding is higher than two thirds (2/3) of the Total Commitments.
(b)
The accrued utilisation fee is payable in arrear on the last day of each calendar quarter and on the Termination Date. Accrued utilisation fee is also payable to the Agent for a Lender on the date such Lender's Commitment is cancelled and its participation in the Utilisations is prepaid or repaid in full.
18.3
Up-front Fee
The Company shall pay to the Original Lenders an up-front fee in the amount and at the times agreed in a Fee Letter.
18.4
Agency fee
The Company shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.
19.      TAX GROSS UP AND INDEMNITIES
19.1
Definitions
In this Agreement:
ECI Lender means, in relation to a payment of interest on a participation in an advance to a US Borrower, a Lender which is entitled to receive that interest payment without deduction or withholding of any United States federal income taxes (in relation to that Lender's participation in that Advance to that US Borrower) as a result of that interest payment being effectively connected with the conduct by that Lender of a trade or business within the United States (and assuming for this purpose only that any applicable filing or administrative requirements and any procedural formalities in relation to that entitlement are duly complied with).
German Borrower means a Borrower, which is tax resident in Germany at the date it becomes a Party to this Agreement.
PIE Lender means, in relation to a payment of interest on a participation in an advance to a US Borrower, a Lender (other than a "bank" for United States income tax purposes (which may or may not include a Lender which is a "bank" within the meaning of section 991 of the ITA)) which is entitled to receive that interest payment without deduction or withholding of any United States federal income taxes (in relation to that Lender’s participation in that advance to that US Borrower) as a result of the United States federal "portfolio interest exemption" applying to that interest payment (and assuming for this purpose that (i) all requirements for establishment of an exemption from United States withholding under the portfolio interest exemption (other than the status of the Lender as other than a bank for United States tax purposes) have been satisfied; and (ii) any applicable filing or administrative requirements and any procedural formalities in relation to that entitlement are duly complied with).
Protected Party means a Finance Party which is or will be subject to any liability or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
Qualifying Lender (Germany) means a Lender which is beneficially entitled to interest payable to that Lender under a Finance Document and is:
(a)
a Lender which is:
(i)
resident in Germany for German income tax purposes; or
(ii)
not so resident in Germany but which carries on a trade or business through a permanent establishment and which brings into account interest payable in respect of that advance in computing its taxable income in Germany; or
(b)
a Treaty Lender.
Qualifying Lender (UK) means a Lender or Issuing Bank which is beneficially entitled to interest payable to that Lender or Issuing Bank in respect of a Utilisation under a Finance Document and is
(a)
a Lender or Issuing Bank
(i)
which is a bank (as defined for the purpose of section 879 of the ITA, making an advance under a Finance Document; or
(ii)
in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 879 of the ITA) at the time that that advance was made,
and which is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or
(b)
a Lender or Issuing Bank which is
(i)
a company resident in the United Kingdom for United Kingdom tax purposes (as set out in section 933 of the ITA);
(ii)
a Lender which satisfies one of the other conditions in sections 934 to 937 of the ITA; or
(c)
a Treaty Lender.
Qualifying Lender (US) means, in relation to a payment of interest under the Finance Documents by a US Borrower, a Lender which is:
(a)
either
(i)
a US Lender;
(ii)
a Treaty Lender;
(iii)
an ECI Lender; or
(iv)
a PIE Lender,
in each case, provided that it is entitled to receive that payment under the Finance Documents without deduction or withholding of any United States federal income tax; or
(b)
otherwise entitled to receive that payment without deduction or withholding of any United States federal income taxes (assuming for this purpose only that any applicable filing or administrative requirements and any procedural formalities in relation to that entitlement are duly complied with).
Tax Confirmation means a confirmation by a Lender or Issuing Bank that the person beneficially entitled to interest payable to that Lender or Issuing Bank in respect of an advance under a Finance Document is a Lender falling within paragraph (b) of the definition of "Qualifying Lender (UK)".
Tax Credit means a credit against, relief or remission for, or repayment of, any Tax.
Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document other than a FATCA Deduction.
Tax Payment means either the increase in a payment made by an Obligor to a Finance Party under Clause ‎19.2 ( Tax gross up ) or a payment under Clause ‎19.3 ( Tax indemnity ).
Treaty Lender means in relation to an Obligor, a Lender or Issuing Bank which:
(a)
is treated as a resident of a Treaty State for the purposes of the relevant Treaty;
(b)
does not carry on a business in the United Kingdom (where a UK Borrower makes the interest payments) or the US (where a US Borrower makes the interest payments) or in Germany (where a German Borrower makes the interest payment) through a permanent establishment with which that Lender's or Issuing Bank's participation in the Utilisation is effectively connected; and
(c)
which under the terms of such Treaty is entitled to receive payments under the Finance Documents from the Obligor without any deduction of Tax.
Treaty State means a jurisdiction having a double taxation agreement (a Treaty ) with the United Kingdom (where a UK Borrower makes the interest payments) or with the United States (where a US Borrower makes the interest payments) or with Germany (where a German Borrower makes the interest payment) which makes provision for full exemption from tax imposed by the Borrower's jurisdiction (United Kingdom or United States or Germany, as the case may be) on interest (assuming for this purpose only that any applicable procedural requirements are duly complied with).
UK Non-Bank Lender means a Lender or Issuing Bank falling within paragraph (b) of the definition of "Qualifying Lender (UK)":
(a)
where such Lender or Issuing Bank becomes a Party on the day on which this Agreement is entered into, such Lender or Issuing Bank is listed in ‎Schedule 1 ( The Original Lenders ); and
(b)
where such Lender becomes a Party after the day on which this Agreement is entered into, such Lender or Issuing Bank gives a Tax Confirmation in the Transfer Certificate or Assignment Certificate which it executes on becoming a Party.
Unless a contrary indication appears, in this Clause ‎19 ( Tax Gross Up and Indemnities ) a reference to determines or determined means a determination made in the reasonable discretion of the person making the determination.
UK Borrower means a Borrower which is incorporated and/or tax resident in the United Kingdom at the date it becomes a Party to this Agreement.
US Borrower means a Borrower which is created or organised or is otherwise engaged in the conduct of a trade or business in the United States of America for the purposes of United States federal income taxes.
US Lender means, in relation to a payment of interest on a participation in an Utilisation to a US Borrower, a Lender which is created or organised under the laws of the United States of America or of any State thereof.
19.2
Tax gross up
(a)
Each Obligor shall make all payments to be made by it under the Finance Documents without any Tax Deduction, unless a Tax Deduction is required by law.
(b)
The Company or the relevant Obligor shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender or Issuing Bank shall notify the Agent on becoming so aware in respect of a payment payable to that Lender or Issuing Bank. If the Agent receives such notification from a Lender or Issuing Bank, it shall promptly notify the Company and that Obligor.
(c)
If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(d)
An Obligor is not required to make an increased payment to a Lender or Issuing Bank under paragraph (c) above for a Tax Deduction in respect of tax imposed by the United Kingdom or Germany from a payment of interest on a Utilisation if, on the date on which the payment falls due:
(i)
the payment could have been made to the relevant Lender or Issuing Bank without a Tax Deduction if it was a Qualifying Lender (UK) or a Qualifying Lender (Germany), but on that date that Lender or Issuing Bank is not or has ceased to be a Qualifying Lender (UK) or a Qualifying Lender (Germany) other than as a result of any change after the date it became a Lender or Issuing Bank under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority; or
(ii)     
(A)
the relevant Lender or Issuing Bank is a Qualifying Lender (UK) solely under paragraph (b) of the definition of Qualifying Lender (UK);
(B)
an officer of H.M. Revenues Customs has given (and not revoked) a direction (a Direction ) under section 931 of the ITA (as that provision has effect on the date on which the relevant Lender or Issuing Bank became a Party) which relates to that payment and that Lender or Issuing Bank has received from that Obligor or the Company a certified copy of that Direction; and
(C)
the payment could have been made to such Lender or Issuing Bank without any Tax Deduction in the absence of that Direction; or
(iii)
the relevant Lender or Issuing Bank is a Qualifying Lender (UK) solely under paragraph (b) of the definition of Qualifying Lender (UK) and it has not, other than by reason of any change after the date of this Agreement in (or in the interpretation, administration, or application of) any law, or any published practice or concession of any relevant taxing authority, given a Tax Confirmation to the Company; or
(iv)
the relevant Lender or Issuing Bank is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to such Lender or Issuing Bank without the Tax Deduction had that Lender or Issuing Bank complied with its obligations under paragraph (h) below.
(e)
A US Obligor is not required to make an increased payment to a Lender or Issuing Bank under paragraph (c) above for a Tax Deduction in respect of tax imposed by the United States from a payment of interest under the Finance Documents if, on the date on which the payment falls due, (i) with respect to any Utilisation made after 18 March 2012, withholding is required as a result of a failure by a Lender or Issuing Bank to comply with all requirements under Chapter 4, Subtitle A of the Code to permit any US Obligors to make payments to such Lender or Issuing Bank without deduction or withholding of any United States federal income tax; (ii) the payment could have been made to the relevant Lender or Issuing Bank without a Tax Deduction if it was a Qualifying Lender (US), but on that date that Lender or Issuing Bank is not or has ceased to be a Qualifying Lender (US) other than as a result of or any change, after the date it became a Lender or Issuing Bank under this Agreement, in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority; or (iii) the US Obligor making the payment is able to demonstrate that the payment could have been made to such Lender or Issuing Bank without the Tax Deduction had that Lender or Issuing Bank complied with its obligations under paragraphs ‎(h) or ‎(l) below.
(f)
If an Obligor is required to make a Tax Deduction, such Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
(g)
Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
(h)
Unless paragraph (l) below applies, a Treaty Lender shall complete and each Obligor which makes a payment to which that Treaty Lender is entitled shall co-operate in completing, any procedural formalities necessary for that Obligor to obtain authorisation to make that payment without a Tax Deduction.
(i)
A UK Non-Bank Lender which becomes a Party on the day on which this Agreement is entered into gives a Tax Confirmation to the Company by entering into this Agreement.
(j)
A UK Non-Bank Lender shall promptly notify the Company and the Agent if there is any change in the position from that set out in the Tax Confirmation.
(k)
If appropriate, each Finance Party which is not a Qualifying Lender agrees that, upon request by an Obligor affected, it shall deliver, as soon as it can (and is entitled to) do so in the ordinary course of business, to such Obligor the relevant tax form as may be required under the laws of the Relevant Jurisdiction or under the relevant Treaty to avoid or reduce a Tax Deduction.
(l)
If requested by the Agent or by (or on behalf of) a US Borrower, a Qualifying Lender (US) shall, as soon as reasonably practicable, deliver to that US Borrower or the Company:
(i)
a duly completed United States of America Internal Revenue Service Form W-8BEN relating to exemption from withholding in respect of payments made by that US Borrower to that Lender in relation to participations in Utilisations to that US Borrower:
(A)
in the case of a PIE Lender, claiming that Lender's entitlement to the United States federal "portfolio interest exemption" in relation to participations in Utilisations to that US Borrower; or
(B)
in the case of a Treaty Lender, certifying that that Lender is entitled to a zero rate of withholding under a Treaty;
(ii)
in the case of an ECI Lender, a duly completed United States of America Internal Revenue Service Form W-8ECI certifying that the payments made by that US Borrower to that Lender in relation to participations in Utilisations to that US Borrower are effectively connected with the conduct by that Lender of a trade or business within the United States of America; or
(iii)
in the case of foreign intermediary or foreign flow-through entity, a duly completed United States of America Internal Revenue Service Form W-8IMY with all appropriate attachments establishing full exemption from withholding in respect of payments made by that US Borrower to that Lender in relation to participations in Utilisations to that US Borrower;
(iv)
in the case of a US Lender, a duly completed United States of America Internal Revenue Service Form W-9; or
(v)
in the case of any other Qualifying Lender (US) other than a US Lender, such other evidence as may reasonably be required from time to time to establish that the Lender is entitled to full exemption or relief from any federal taxation otherwise imposed by the United States of America in relation to participations by that Lender in Utilisations to that US Borrower,
provided always that no Lender shall have any obligation to complete or deliver any document under this paragraph (l) to the extent that it is unable properly so to do by reason of a change in Tax law.
(m)
Each Finance Party confirms on the date it becomes a Party to this Agreement (whether by transfer or otherwise) that it is or would be a Qualifying Lender (UK) with respect to any payments under the Finance Documents by any relevant UK Borrower and a Qualifying Lender (US) with respect to any payments under the Finance Documents by any relevant US Borrower, in each case, unless otherwise notified to the Company and the Agent and each Finance Party agrees to promptly notify the Company if it is a Treaty Lender.
19.3
Tax indemnity
(a)
The Company shall (within five Business Days of demand by the Agent) pay (or procure that an Obligor pays) to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax (including the loss or setting-off of any relief, deduction, credit or allowance in respect of tax which would otherwise have been available to that Protected Party) by that Protected Party in respect of a Finance Document, except as provided below in (b).
(b)
Paragraph (a) above shall not apply to any Tax assessed on a Finance Party under the laws of (x) the jurisdiction in which that Finance Party is incorporated, (y) the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for Tax purposes or (z) the jurisdiction in which that Finance Party's Facility Office is located, in respect of amounts received or receivable in that jurisdiction:
(i)
if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or
(ii)
to the extent a loss, liability or cost:
(A)
is compensated for by an increased payment under Clause ‎19.2 ( Tax gross up );
(B)
would have been compensated for by an increased payment under Clause ‎19.2 ( Tax gross up ) but was not so compensated solely because one of the exclusions in paragraphs (d) or (e) of Clause ‎19.2 ( Tax gross up ) applied; or
(C)
relates to a FATCA Deduction required to be made by a Party.
(c)
A Protected Party making, or intending to make a claim under paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, setting out such event in reasonable detail, following which the Agent shall notify the Company.
(d)
A Protected Party shall, on receiving a payment from an Obligor under this Clause ‎19.3 ( Tax indemnity ), notify the Agent.
19.4
Tax Credit
If an Obligor makes a Tax Payment and the relevant Finance Party in its sole discretion determines that:
(a)
a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment; and
(b)
that Finance Party has obtained, utilised and retained that Tax Credit (in whole or in part),
the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-tax position as it would have been in had the Tax Payment not been required to be made by the Obligor, provided that:
(i)
no Finance Party shall be obliged to make any such payment if to do so would contravene any applicable law or requirement of any governmental or regulatory authority (whether or not having the force of law);
(ii)
if a Finance Party has made a payment to an Obligor under this Clause ‎19.4 ( Tax Credit ) and it transpires that such Finance Party did not receive the relevant Tax Credit, that Obligor shall on demand pay to that Finance Party such amount as that Finance Party determines will put it in the same after-tax position as it would have been had no such payment been made to the Obligor; and
(iii)
no Finance Party shall be obliged to disclose to any other person any information regarding its business, tax affairs or tax computations.
19.5
Stamp Taxes
The Company shall pay and, within five Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document (other than a Transfer Certificate).
19.6
Value Added Tax
(a)
All consideration expressed to be payable under a Finance Document by any Party to a Finance Party shall be deemed to be exclusive of any VAT. If VAT is chargeable on any supply made by any Finance Party to any Party in connection with a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party) provided that the reverse charge mechanism is not applicable.
(b)
If VAT is chargeable on any supply made by a Finance Party (the Supplier ) to any other Finance Party (the Recipient ) in connection with a Finance Document, and any Party is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier, such Party shall also pay to the Supplier (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT.
(c)
Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Finance Party against all VAT incurred by the Finance Party in respect of the costs or expenses to the extent that the Finance Party reasonably determines that neither it nor any other member of any group of which it is a member for VAT purposes is entitled to a credit or repayment from the relevant authority of the VAT.
19.7
FATCA Information
(a)
Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:
(i)
confirm to that other Party whether it is:
(A)
a FATCA Exempt Party; or
(B)
not a FATCA Exempt Party; and
(ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA.
(b)
If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
(c)
Paragraph (a) above shall not oblige any Finance Party to do anything which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any fiduciary duty; or
    
(iii)
any duty of confidentiality.
If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
(d)
If a Borrower is a US Tax Obligor, or where the Agent reasonably believes that its obligations under FATCA require it, each Lender shall, within fifteen Business Days of:
(i)
where a Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;
(ii)
where a Borrower is a US Tax Obligor and the relevant Lender is a New Lender, the relevant Transfer Date;
(iii)
the date a new US Tax Obligor accedes as a Borrower; or
(iv)
where the Borrower is not a US Tax Obligor, the date of a request from the Agent,
supply to the Agent:
(i)
a withholding certificate on Form W-8 or Form W-9 (or any successor form) (as applicable); or
(ii)
any withholding statement and other documentation, authorisations and waivers as the Agent may require to certify or establish the status of such Lender under FATCA.
The Agent shall provide any withholding certificate, withholding statement, documentation, authorisations and waivers it receives from a Lender pursuant to this paragraph (e) to the Borrower and shall be entitled to rely on any such withholding certificate, withholding statement, documentation, authorisations and waivers provided without further verification. The Agent shall not be liable for any action taken by it under or in connection with this paragraph (e).
    

(e)
Each Lender agrees that if any withholding certificate, withholding statement, documentation, authorisations and waivers provided to the Agent pursuant to paragraph (e) above is or becomes materially inaccurate or incomplete, it shall promptly update such withholding certificate, withholding statement, documentation, authorisations and waivers or promptly notify the Agent in writing of its legal inability to do so. The Agent shall provide any such updated withholding certificate, withholding statement, documentation, authorisations and waivers to the Borrower. The Agent shall not be liable for any action taken by it under or in connection with this paragraph (f).
19.8
FATCA Deduction
(a)
Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
(b)
Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Company, the Agent and the other Finance Parties.
20.      INCREASED COSTS
20.1
Increased costs
(a)
Subject to Clause ‎20.3 ( Exceptions ) the Company shall, for any Interest Period beginning after the day on which the Agent has notified the Company in accordance with paragraph ‎(a) of Clause ‎20.2 ( Increased cost claims ), pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application by any competent authority of) any law or regulation after the date of this Agreement, (ii) compliance with any law or regulation made after the date of this Agreement, or (iii) the compliance with, Basel III or any law or regulation that implements or applies Basel III. The amount of Increased Costs shall become due and payable within five Business Days of a demand by the Agent.
(b)
In this Agreement:
Basel III means (i) the Basel Committee on Banking Supervision's (the Committee ) revised rules relating to capital requirements set out in "Basel III: A global regulatory framework for more resilient banks and banking systems”, “Guidance for national authorities operating the countercyclical capital buffer” and “Basel III: International framework for liquidity risk measurement, standards and monitoring” published by the Committee in December 2010, “Revisions to the Basel II market risk framework” published by the Committee in February 2011 and the provision on assessment of the liquidity coverage ration “Basel III: The Liquidity Coverage Ration and liquidity risk monitoring tools” published in January 2013, (ii) the Capital Requirements Regulation (EU) No 575/2013 of 26 June 2013 and the Capital Requirements Directive 2013/36/EU of 26 June 2013 and (iii) any other documents published by the Committee or the European Commission addressing such proposals.
Increased Costs means:
(i)
a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;
(ii)
an additional or increased cost; or
(iii)
a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document or Letter of Credit.
20.2
Increased cost claims
(a)
A Finance Party intending to make a claim pursuant to Clause ‎20.1 ( Increased costs ) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Company.
(b)
Each Finance Party shall, as soon as practicable after a demand by the Agent or the Company, provide a certificate confirming the amount of its Increased Costs and setting out its calculation in reasonable detail.
20.3
Exceptions
(a)
Clause ‎20.1 ( Increased costs ) does not apply to the extent any Increased Cost is:
(i)
attributable to a Tax Deduction required by law to be made by an Obligor;
(ii)
compensated for by Clause ‎19.3 ( Tax indemnity ) (or would have been compensated for under Clause ‎19.3 ( Tax indemnity ) but was not so compensated solely because any of the exclusions in paragraph ‎(b) of Clause ‎19.3 ( Tax indemnity ) applied);
(iii)
attributable to a FATCA Deduction required to be made by a Party;
(iv)
attributable to the grossly negligent or wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or
(v)
attributable to the implementation or application of or compliance with the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement ( Basel II ) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates), but excluding, for the avoidance of doubt, any Increased Cost attributable to the implementation or application of or compliance with Basel III.
(b)
For the purpose of paragraph (a) above a reference to a "Tax Deduction" has the same meaning given to the term in Clause ‎19.1 ( Definitions ).
21.      OTHER INDEMNITIES
21.1
Currency indemnity
(a)
If any sum due from an Obligor under the Finance Documents (a Sum ), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the First Currency ) in which that Sum is payable into another currency (the Second Currency ) for the purpose of:
(i)
making or filing a claim or proof against that Obligor;
(ii)
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that Obligor shall as an independent obligation, within five Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b)
Unless otherwise required by law, each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
21.2
Other indemnities
The Company shall (or shall procure that an Obligor will), within five Business Days of demand and presentation of a reasonably detailed statement of account, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party (acting reasonably) as a result of:
(a)
the occurrence of any Event of Default;
(b)
a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause ‎33 ( Sharing among the Finance Parties );
(c)
funding, or making arrangements to fund, its participation in a Utilisation requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone); or
(d)
a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by a Borrower or the Company.
21.3
Indemnity to the Agent
The Company shall promptly indemnify the Agent and any Swingline Agent against any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:
(a)
investigating any event which it reasonably believes is a Default; or
(b)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised by an Obligor (or the Company on its behalf).
22.      MITIGATION BY THE LENDERS
22.1
Mitigation
(a)
Each Finance Party shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause ‎14.1 ( Illegality ), Clause ‎19 ( Tax gross-up and indemnities ) or Clause ‎20 ( Increased costs ) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
(b)
Paragraph ‎(a) above does not in any way limit the obligations of any Obligor under the Finance Documents.
22.2
Limitation of liability
(a)
The Company shall, upon presentation of a reasonably detailed statement of account, indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause ‎22.1 ( Mitigation ).
(b)
A Finance Party is not obliged to take any steps under Clause ‎22.1 ( Mitigation ) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
23.      COSTS AND EXPENSES
23.1
Transaction expenses
The Company shall promptly on demand upon presentation of a reasonably detailed statement of account pay the Agent, the Swingline Agents and the Arrangers the amount of all external costs and expenses (including legal fees (subject to any limitations agreed separately) reasonably incurred by any of them in connection with the negotiation, preparation, printing, execution and syndication of:
(a)
this Agreement and any other documents referred to in this Agreement; and
(b)
any other Finance Documents executed after the date of this Agreement.
23.2
Amendment costs
If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause ‎34.9 ( Change of currency ), the Company shall, within five Business Days of demand upon presentation of a reasonably detailed statement of account, reimburse the Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by the Agent in responding to, evaluating, negotiating or complying with that request or requirement.
23.3
Enforcement costs
The Company shall upon presentation of a reasonably detailed statement of account, within five Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) reasonably incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document.
24.      GUARANTEE AND INDEMNITY
24.1
Guarantee ( Garantie ) and indemnity ( Ausfallhaftung )
The Company irrevocably and unconditionally:
(a)
guarantees ( garantiert ) by way of an independent payment obligation ( selbständiges Zahlungsversprechen ) to each Finance Party to pay to that Finance Party within five Business Days of receipt by it of a written demand by a Finance Party (or the Agent on its behalf) the amount of principal, interest, costs, expenses or other amount demanded in that demand, which demand shall state that the sum demanded by that Finance Party is expressed to be payable by a Borrower (other than itself) under or in connection with the Finance Documents or, in relation to an Ancillary Facility, by a Borrower or an Affiliate of a Borrower under or in connection with the Ancillary Documents and has not been fully and irrevocably paid by that Borrower (other than the Company) or, in relation to an Ancillary Facility, by that Borrower or that Affiliate of a Borrower; and
(b)
undertakes vis-à-vis each Finance Party to indemnify ( schadloshalten ) each Finance Party within five Business Days of a written demand against any cost, loss or liability suffered or reasonably incurred by that Finance Party as a result of any obligation of a Borrower (other than the Company) under or in connection with any Finance Document or, in relation to an Ancillary Facility, any obligation of a Borrower or an Affiliate of a Borrower under or in connection with any Ancillary Document or any obligation under any Finance Document or any Ancillary Document guaranteed by it being or becoming unenforceable, invalid or illegal. The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover ( Ersatz des positiven Interesses ).
For the avoidance of doubt this guarantee and indemnity does not constitute a guarantee upon first demand ( Garantie auf erstes Anfordern ) and, in particular, receipt of such written demand shall not preclude any rights and/or defences the Guarantor may have with respect to any payment requested by a Finance Party (or the Agent on its behalf) under this guarantee and indemnity.
24.2
Continuing and independent guarantee and indemnity
This guarantee is independent and separate from the obligations of any Borrower and any Affiliate of a Borrower and is a continuing guarantee and indemnity which will extend to the ultimate balance of sums payable by any Borrower under the Finance Documents and any Borrower or Affiliate of a Borrower under the Ancillary Documents, regardless of any intermediate payment or discharge in whole or in part.
The guarantee and indemnity shall extend to any additional obligations of a Borrower and any Affiliate of a Borrower resulting from any amendment, novation, supplement, extension, restatement or replacement of any Finance Documents and any Ancillary Document, including without limitation any extension of or increase in any facility or the addition of a new facility under any Finance Document.
24.3
Reinstatement
If any payment by an Obligor or any discharge given by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:
(a)
the liability of each Obligor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and
(b)
each Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, avoidance or reduction had not occurred.
24.4
No defences
(a)
The obligations of the Company under this Clause ‎24 will not be affected by an act, omission, matter or thing which relates to the principal obligation (or purported obligation) of any Borrower and which but for this Clause, would reduce, release or prejudice any of its obligations under this Clause ‎24, including any personal defences of any Borrower ( Einreden des Hauptschuldners ) or any right of revocation ( Anfechtung ) or set-off ( Aufrechnung ) of any Borrower.
(b)
The obligations of the Company under this Clause ‎24 are independent from any other security or guarantee which may have been or will be given to the Finance Parties. In particular, the obligations of the Company under this Clause ‎24 will not be affected by any of the following:
(i)
the release of, or any time ( Stundung ), waiver or consent granted to, any other Obligor from or in respect of its obligations under or in connection with any Finance Document;
(ii)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or any other person or any failure to realise the full value of any security;
(iii)
any incapacity or lack of power, authority or legal personality of or dissolution or a deterioration of the financial condition of any other Obligor; or
(iv)
any unenforceability, illegality or invalidity of any obligation of any other Obligor under any Finance Document.
(c)
For the avoidance of doubt nothing in this Clause ‎24 shall preclude any defences that the Company (in its capacity as Company only) may have against a Finance Party that the guarantee and indemnity does not constitute its legal, valid, binding or enforceable obligations.
24.5
Immediate recourse
No Finance Party will be required to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Company under this Clause ‎24. This applies irrespective of any other provision of a Finance Document to the contrary.
24.6
Deferral of Company’s rights
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, the Company will not exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:
(a)
to be indemnified by an Obligor;
(b)
to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents; and/or
(c)
to take the benefit (in whole or in part and whether by way of legal subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party.
25.      REPRESENTATIONS
Each Obligor makes the representations and warranties set out in this Clause ‎25 to each Finance Party on the date of this Agreement, provided that the representations and warranties set out in Clause ‎25.8 ( No Event of Default ), ‎25.11 ( No Material Adverse Change ), ‎25.14 ( No proceedings pending or threatened ) and ‎25.15 ( Ownership ) are only made by the Company and that the representations and warranties set out in Clause ‎25.16 ( United States Additional Borrower ) are only made by each Additional US Borrower.
25.1
Status
(a)
It is a corporation, limited liability company or partnership with limited liability, duly incorporated or, in the case of a partnership, established and validly existing under the law of its jurisdiction of incorporation.
(b)
It and each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted.
25.2
Binding obligations
The obligations expressed to be assumed by it in each Finance Document are:
(a)
in respect of Obligors incorporated in Germany and the Netherlands, subject to the Reservations, legal, valid, binding and enforceable obligations; and
(b)
in respect of Obligors incorporated in jurisdictions other than Germany and the Netherlands, subject to any general principles of law limiting its obligations which are specifically referred to in any legal opinion delivered pursuant to Clause ‎5 ( Conditions of Utilisations ) or Clause ‎30 ( Changes to the Obligors ) legal, valid, binding and enforceable obligations.
25.3
Non-conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not conflict with:
(a)
any law or regulation applicable to it;
(b)
its or any of its Subsidiaries’ constitutional documents; or
(c)
any agreement or instrument binding upon it or any of its Subsidiaries or any of its or any of its Subsidiaries’ assets;
where any such conflict would have a Material Adverse Effect.
25.4
Power and authority
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.
25.5
Validity and admissibility in evidence
All Authorisations required or desirable:
(a)
to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party; and
(b)
to make the Finance Documents to which it is a party admissible in evidence in its jurisdiction of incorporation,
have been obtained or effected and are in full force and effect.
25.6
Governing law and enforcement
(a)
The choice of German law as the governing law of the Finance Documents will be recognised and enforced in its jurisdiction of incorporation.
(b)
Any judgment obtained in Germany in relation to a Finance Document will be recognised and enforced in its jurisdiction of incorporation.
25.7
Deduction of Tax
Under the laws of the Relevant Jurisdiction in force at the date of this Agreement, except in relation to a UK Borrower or a US Borrower, it will not be required to make any deduction or withholding from any payment it may make hereunder on account of any withholding Taxes referred to in Clause ‎19.2 ( Tax gross up ), and in relation to a UK Borrower it will not be required to make any deduction or withholding from any payment it may make to a Qualifying Lender (UK), and in relation to a US Borrower it will not be required to make any deduction or withholding from any payment it may make to a Qualifying Lender (US) that provides appropriate documentation pursuant to Clause ‎19.2‎(l) ( Tax gross up ), hereunder on account of any withholding Taxes referred to in Clause ‎19.2 ( Tax gross up ).
25.8
No Event of Default
No Event of Default is continuing and no Default might reasonably be expected to result from the making of the Utilisation.
25.9
No misleading information
All written information supplied by any member of the Group to a Finance Party is true, complete and accurate in all material respects as at the date it was given and is not misleading in any respect.
25.10
Financial statements
The financial statements most recently delivered to the Agent (including the Original Financial Statements):
(a)
were, in the case of the annual audited consolidated financial statements of the Company, prepared in accordance with IFRS consistently applied or, if not consistently applied, with any inconsistency disclosed in the notes thereto;
(b)
were, in the case of the annual audited unconsolidated financial statements of the Company, prepared in accordance with generally accepted accounting principles of the German Commercial Code ( Handelsgesetzbuch ) consistently applied or, if not consistently applied, with any inconsistency disclosed in the notes thereto;
(c)
were, in case of other financial statements, prepared in accordance with generally accepted accounting principles in the Relevant Jurisdiction consistently applied or, if not consistently applied, with any inconsistency disclosed in the notes thereto;
(d)
were, in the case of audited financial statements, accompanied by an unqualified audit opinion which, in the case of the audited consolidated financial statements of the Company, states that the relevant financial statements give a true and fair view of the Group´s results and financial position; and
(e)
were complete and correct in all material respects and accordingly, as of their respective dates, there were neither any material liabilities, direct or indirect, actual or contingent, of it nor any material unrealised or anticipated losses from any unfavourable commitments not disclosed by, or reserved against in, any such financial statement or in the notes thereto.
25.11
No Material Adverse Change
There has been no material adverse change in the business, assets or financial condition of the Company (or the business, assets or financial condition of the Group on a consolidated basis) since the date of the Company's Original Financial Statement.
25.12
Pari passu ranking
Its payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors save those whose claims are preferred by any bankruptcy, insolvency, liquidation or other similar laws of general application.
25.13
No Insolvency
No Obligor nor any Material Subsidiary has taken any corporate action nor have any other steps been taken or legal proceedings been started (except, in the case of any member of the Group for the purpose of a solvent liquidation) or, so far as it is aware, threatened against it or any Material Subsidiary for its liquidation, administration or re-organisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of it or any Material Subsidiary or of any material part or all of its or any Material Subsidiary's assets or revenues.
25.14
No proceedings pending or threatened
No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which are reasonably likely to be adversely determined and, if so determined, are reasonably likely to have a Material Adverse Effect have been started or (to the best of its knowledge and belief) threatened against it or any of its Subsidiaries.
25.15
Ownership
The Company represents and warrants to each Finance Party that Linde Finance B.V. and any Obligor which is an Additional Borrower under the Facility is directly or indirectly wholly owned by the Company.
25.16
United States Additional Borrower
(a)
Any Additional Borrower incorporated in the United States of America or any sub-division thereof (an Additional US Borrower ) is not:
(i)
a public utility as defined in the United States Federal Power Act of 1935 or subject to regulation thereunder;
(ii)
required to be registered as an investment company as defined in the United States Investment Company Act of 1940 or subject to regulation thereunder, or
(iii)
subject to regulation under any United States Federal or State law or regulation that limits its ability to incur or guarantee indebtedness.
(b)
To the best of its knowledge each Additional US Borrower
(i)
is not and is not controlled by a Designated Party
(ii)
has not received funds or other property from a Designated Party; or
(iii)
is not in material breach of or is the subject of any action or investigation under any Anti-Terrorism Law.
(c)
Each Additional US Borrower and each of its Affiliates incorporated in the United States of America or any sub-division thereof have taken commercially reasonable measures to ensure compliance with the Anti-Terrorism Laws.
(d)
The proceeds of the Facility have been and will be used by each Additional US Borrower only for the purposes described in Clause ‎4 ( Purpose ).
(e)
No Additional US Borrower is engaged principally in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations U and X of the Board of Governors of the United States Federal Reserve System), and no portion of any Utilisation has been or will be used, directly or indirectly, to purchase or carry margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock.
(f)
No Additional US Borrower is an "investment company" or a company "controlled" by an "investment company", within the meaning of the United States Investment Company Act of 1940, as amended.
(g)
No Additional US Borrower is a "public utility" within the meaning of, or otherwise subject to regulation under, the United States Federal Power Act.
(h)
Nothing in this Clause ‎‎25.16 shall establish an obligation of, or confer a right to, any Party where to do so or to comply with such obligation would be in violation of any law applicable to such Party and this Clause ‎‎25.16 shall be limited and not apply to such extent vis-à-vis such Party.
25.17
Repetition
(a)
The Repeated Representations shall be made by the Company on its own behalf and on behalf of the other Obligors (under a power of attorney ( Vollmacht ) granted to it by the other Obligors pursuant to paragraph ‎(c) below) by reference to the facts and circumstances then existing on;
(i)
the date of each Utilisation Request; and
(ii)
in the case of an Additional Borrower, the day on which the company becomes (or it is proposed that the company becomes) an Additional Borrower.
(b)
Each Additional US Borrower makes the representation set out in Clause ‎25.16 ( United States Additional Borrower ) on the date it becomes an Additional Borrower pursuant to Clause ‎30 ( Changes to the Obligors ).
(c)
Each Obligor (other than the Company) hereby empowers ( bevollmächtigt ) the Company to make the Repeated Representations on its behalf as its attorney ( Stellvertreter ). Each Obligor (other than the Company) hereby relieves the Company from the restrictions pursuant to section 181 of the Civil Code ( Bürgerliches Gesetzbuch ) for the purpose of making the Repeated Representations on its behalf as attorney ( Stellvertreter ) to the extent legally permissible.
26.      INFORMATION UNDERTAKINGS
The undertakings in this Clause ‎26 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
26.1
Financial statements
The Company shall supply to the Agent in sufficient copies for all the Lenders:
(a)
as soon as the same become available, but in any event within 180 days after the end of each of its financial years:
(i)
the audited unconsolidated financial statements of each Obligor; and
(ii)
the audited consolidated financial statements of the Company for that financial year; and
(b)
in the case of the Company only, as soon as the same are available, and in any event within 90 days of the end of each first, second and third financial quarter of each of its financial years, its consolidated interim financial statements and all other documents dispatched to its shareholders (or any class of them) at the same time as they are dispatched.
26.2
Information: proceedings
Each Obligor shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests) promptly upon becoming aware of them the details of any litigation, arbitration or administrative proceedings which are pending against any member of the Group, and which in the reasonable opinion of the Company is material in the context of the Facility.
26.3
Notification of default, Change of Control Event, Change of Rating
(a)
The Company shall notify the Agent of any Default and any Change of Control Event promptly upon becoming aware of its occurrence.
(b)
The Company shall notify the Agent of any change of its Rating and of the date such changed Rating is published promptly upon publication of such changed Rating.
26.4
Use of websites
(a)
The Company may satisfy its obligation under this Agreement to deliver any information in relation to those Lenders (the Website Lenders ) who accept this method of communication by posting this information onto an electronic website designated by the Company and the Agent (the Designated Website ) if:
(i)
the Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;
(ii)
both the Company and the Agent are aware of the address of and any relevant password specifications for the Designated Website; and
(iii)
the information is in a format previously agreed between the Company and the Agent.
If any Lender (a Paper Form Lender ) does not agree to the delivery of information electronically then the Agent shall notify the Company accordingly and the Company shall supply the information to the Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event the Company shall supply the Agent with at least one copy in paper form of any information required to be provided by it.
(b)
The Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Company and the Agent.
(c)
The Company shall promptly upon becoming aware of its occurrence notify the Agent if:
(i)
the Designated Website cannot be accessed due to technical failure;
(ii)
the password specifications for the Designated Website change;
(iii)
any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(iv)
any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
(v)
the Company becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.
If the Company notifies the Agent under paragraph ‎(c)‎(i) or paragraph ‎(c)‎(v) above, all information to be provided by the Company under this Agreement after the date of that notice shall be supplied in paper form unless and until the Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.
(d)
Any Website Lender may request, through the Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. The Company shall comply with any such request within ten Business Days.
26.5
"Know your customer" checks
(a)
If:
(i)
existing law or the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii)
any change in the status of an Obligor after the date of this Agreement; or
(iii)
a proposed assignment or assignment and transfer by way of assumption of contract ( Vertragsübernahme ) by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or assignment and transfer by way of assumption of contract ( Vertragsübernahme ),
obliges the Agent or any Lender (or, in the case of paragraph ‎(iii) above, any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph ‎(iii) above, on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in paragraph ‎(iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(b)
Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(c)
If the accession of an Additional Borrower obliges the Agent, any Swingline Agent, the Issuing Bank or any Lender to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Company shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the accession of such Subsidiary to this Agreement as an Additional Borrower.
26.6
Information: miscellaneous
Upon request of the Agent the Company shall supply to the Agent (in sufficient copies for all the Lenders if the Agent so requests) promptly such further information as may be required by applicable banking supervisory laws and regulations and/or in line with standard banking practice.
27.      GENERAL UNDERTAKINGS
27.1
Negative Pledge
Each of the Obligors undertakes not to create or permit to subsist, and (in case of the Company only) to procure that no Material Subsidiary shall create or permit to subsist, any Security over all or any of its present or future assets as security for Financial Indebtedness of any person other than:
(a)
any Security arising in the ordinary course of business or on the basis of customary general business conditions;
(b)
any Security arising solely by operation of law (or by an agreement evidencing the same);
(c)
any Security created or permitted to subsist with the prior written consent of the Majority Lenders;
(d)
any Security arising in connection with any netting or set off arrangement entered into in the ordinary course of business for the purpose of netting debit and credit balances or in connection with customary framework/master agreements relating to derivatives transactions made in the ordinary course of business;
(e)
any Security existing over newly acquired assets at the time of their acquisition not created in contemplation of such acquisition or over assets of an entity which becomes subject to the provisions of this Clause ‎27.1 ( Negative Pledge ) after the date of this Agreement;
(f)
any Security existing or created in order to comply with section 8a of the German Partial Retirement Act ( Altersteilzeitgesetz ) or pursuant to section 7e of the German Social Security Code IV ( Sozialgesetzbuch IV ) or granted to a pension fund (or the respective pension trustee) or contractual trust arrangement initiated by the Group to secure contribution obligations towards such pension fund or contractual trust arrangement;
(g)
any Security provided under customary export finance or other subsidised loans or to a public financial institution (including the European Investment Bank and the European Bank for Reconstruction and Development) in accordance with such institution’s published lending policy;
(h)
any Security arising in connection with the issue of asset-backed securities entered into in the ordinary course of business;
(i)
any Security arising in connection with any arrangement made within the ordinary course of treasury activities of the Group by which a member of the Group disposes of any marketable securities on terms whereby they are or may be re-acquired by that member of the Group;
(j)
in relation to a Project Company, Security on the assets and/or the business constituted by that project and/or the shares in any Project Company and/or over loans made to it by members of the Group and/or claims under insurance contracts insuring the assets of the business constituted by that project;
(k)
in relation to a project finance transaction (entered into by a member of the Group other than Linde) in relation to which the borrower is not a Project Company any Security over project assets (including ancillary rights and any proceeds therefrom), the acquisition, construction or development of which is financed with debt incurred for the purpose of such project finance transaction where the only recourse is to such assets of such borrower (it being understood that a completion guarantee granted by another member of the Group does not constitute recourse for the purpose of the preceding sentence);
(l)
any Security existing or created over cash accounts held with banks in connection with the local funding needs of foreign members of the Group (back-to-back);
(m)
any Security over claims under loans made by Linde Finance B.V. to any other member of the Group as security for the repayment of notes, the proceeds of the issuance of which were used by Linde Finance B.V. to make the respective loans;
(n)
any Security over cash deposits granted in favour of the trustee for the holder of Loan Notes;
(o)
any Security over cash deposits or cash equivalents using funds drawn hereunder and used in connection with the defeasance of Existing Financial Indebtedness provided that the aggregate amount of the Financial Indebtedness secured hereunder does not exceed EUR 500,000,000 (or its equivalent);
(p)
in relation to Financial Indebtedness incurred locally for local financing needs if it is customary to provide Security in respect of such Financial Indebtedness provided that the aggregate amount of Financial Indebtedness secured hereunder does not exceed EUR 225,000,000 (or its equivalent);
(q)
any other Security, provided that the aggregate amount of all claims which are at any time outstanding and secured by Security created or existing in reliance on this paragraph ‎(q) (converted into EUR in case a claim is not denominated in EUR) does not exceed EUR 525,000,000 (or its equivalent); and
(r)
any Security created in favour of the Finance Parties under the Finance Documents.
27.2
Consents, Licences and Authority
Each of the Obligors undertakes that it will obtain promptly at any time and maintain from time to time such registrations, licenses, consents and approvals as may be required in respect of this Agreement under applicable law or regulation to enable the relevant Obligor to perform its obligations hereunder and upon the Agent’s request promptly supply the Agent with copies thereof.
27.3
Disposals
Each of the Obligors undertakes that it will not Dispose of and (in the case of the Company only) to procure that no member of the Group, other than an Excluded Subsidiary, shall Dispose of any part of its assets which is substantial in the context of the Group taken as a whole provided that the following Disposals shall not be taken into account:
(a)
Disposals in the ordinary course of business;
(b)
Disposals of obsolete or waste assets;
(c)
Disposals made by one member of the Group to another member of the Group;
(d)
Disposals in exchange for assets of an identical or similar nature;
(e)
Disposals of receivables in connection with:
(i)
factoring arrangements not exceeding EUR 1,000,000,000 (converted into EUR in case not denominated in EUR);
(ii)
the issuance of asset-backed securities provided that the aggregate amount outstanding thereunder shall not exceed EUR 750,000,000 (or its equivalent);
(f)
Disposals made with the prior consent of the Majority Lenders;
(g)
Disposals in connection with sale and lease-back transactions, provided that the aggregate net disposal proceeds received from any such transaction shall not exceed EUR 1.350,000,000 (or its equivalent);
(h)
Disposals of assets together with the transfer of, or for, the purposes of securing pension liabilities, claims of (former) employees under working time saving arrangements ( Langzeitkonten ) and/or deferred payment arrangements under partial retirement schemes ( Wertguthaben aus Altersteilzeit ) to any pension fund or contractual trust arrangement initiated by the Group;
(i)
Disposals of assets the net proceeds of which are reinvested in a timely manner in similar or equivalent assets or applied towards the repayment of Financial Indebtedness incurred in connection with the acquisition of such assets; and
(j)
disposals of assets which are required to be made due to competition authority requirements in the context of an acquisition the net proceeds of which are applied towards the repayment of Financial Indebtedness of the Group; and
(k)
any other Disposal provided that upon receipt of the net proceeds of such disposal a portion of the Total Commitments equal to the net proceeds is cancelled and to the extent the aggregate of Utilisations would exceed Total Commitments after such cancellation, such amount being applied towards a corresponding prepayment of Utilisations.
27.4
Compliance with laws
Each of the Obligors undertakes to comply and in case of the Company to procure that all members of the Group comply in all respects with all applicable laws, regulations, orders, decrees, permits (including those relating to environmental matters) where failure to do so would be reasonably likely to have a Material Adverse Effect.
27.5
Pari Passu Ranking
Each of the Obligors undertakes to ensure that at all times the claims of the Finance Parties against it under the Finance Documents and the Ancillary Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors save those whose claims are preferred by any bankruptcy, insolvency, liquidation or other similar laws of general application.
27.6
Change of Business
The Company undertakes to ensure that there will be no material change made to the general nature of the business of the Group taken as a whole as carried out on the date of this Agreement.
27.7
Merger
The Company undertakes not to merge with or into any other person where such merger will result in at least one Solicited Rating immediately after the completion of such merger or during a period of 90 days thereafter being lower than BBB- (in the case of Standard & Poor’s) or Baa3 (in the case of Moody’s).
27.8
Borrowings
The Company will procure that no other member of the Group other than (i) Linde Finance B.V., (ii) any other Finance Subsidiary or (iii) any Excluded Subsidiary will incur any Borrowings other than
(a)
any Borrowings under facilities or issuances existing at the date of this Agreement including any refinancing and replacement thereof;
(b)
any Borrowings of an entity under facilities or issuances existing at the time such entity becomes a member of the Group after the date of this Agreement including any refinancing and replacement thereof;
(c)
working capital financings not exceeding EUR 750,000,000 (or its equivalent) in aggregate at any time;
(d)
any Borrowings incurred locally for local financing needs in cases where it is illegal and/or uneconomical to provide shareholder financing from the Group up to EUR 750,000,000 (or its equivalent) in aggregate outstanding; or
(e)
Borrowings not permitted by the preceding paragraphs provided that the aggregate amount of Borrowings permitted under this paragraph (e) does not exceed EUR 1,125,000,000 (or its equivalent).
For the avoidance of doubt, intra-group Borrowings shall be excluded from the above restrictions.
27.9
Loans out and External Guarantees
The Company will not, and will procure that no other member of the Group other than an Excluded Subsidiary will, make any loan to any person which is not a member of the Group, or grant any External Guarantee other than:
(a)
any such loans and External Guarantees existing at the date of this Agreement (including any refinancing or replacement thereof) to the extent not increased in size;
(b)
loans made to, or External Guarantees securing Financial Indebtedness of, a Joint Venture to which a member of the Group is a party which are either (i) in satisfaction of any requirement to provide equity or shareholder loans or External Guarantees securing the Financial Indebtedness of such Joint Venture and are made pro rata with the other joint venture partners, or (ii) otherwise where the aggregate of all outstandings under such loans and/or External Guarantees made or given by members of the Group at any time do not exceed EUR 375,000,000 (or its equivalent) at any time;
(c)
loans made by a member of the Group to an employee or director of any member of the Group;
(d)
loans made and External Guarantees granted by an entity existing at the time such entity becomes a member of the Group after the date of signing of this Agreement;
(e)
External Guarantees in connection with the endorsement of negotiable instruments in the ordinary course of trade; and
(f)
loans and External Guarantees not permitted by the preceding paragraphs provided that the aggregate amount of loans and External Guarantees permitted under this paragraph (f) does not exceed EUR 375,000,000 (or its equivalent) at any time.
27.10
Letters of Credit upon first demand
(a)
Taking into account German case law dealing with the validity of an obligation to provide sureties payable upon first demand, the Company and each other Borrower undertake that, in the event obligations are to be secured where the underlying contract is governed by German law, it will only request the issuance of a surety or guarantee payable upon first demand ( auf erstes Anfordern ) under this Agreement if the respective agreement on the secured obligation and the obligation to provide for a surety or guarantee payable upon first demand are agreed upon in an individual agreement ( Individualabrede ) between the relevant counterparties.
(b)
The Company shall monitor the development of German case law which is generally available and dealing with the validity of an obligation to provide a surety or guarantee payable upon first demand ( auf erstes Anfordern ) and shall comply with any additional requirements identified by such case law as is necessary to make the respective agreement on the obligation to provide a surety or guarantee payable upon first demand legal, valid and binding. If it is not possible at all under German law to make the respective agreement on the obligation to provide a surety or guarantee payable upon first demand legal, valid and binding, no Borrower shall request such a surety or guarantee to be issued under this Agreement.
28.      EVENTS OF DEFAULT
Each of the events or circumstances set out in Clauses ‎28.1 ( Non-payment ) to ‎28.10 ( Repudiation ) is an Event of Default.
28.1
Non-payment
An Obligor does not pay on the due date any amount payable pursuant to this Agreement or in relation to an Ancillary Facility, a Borrower or an Affiliate of a Borrower does not pay on the due date any amount payable pursuant to any Ancillary Document, in each case, at the place and in the currency in which it is expressed to be payable unless payment is made within five Business Days after notice has been given by the Agent to such Obligor or in relation to an Ancillary Facility by the relevant Ancillary Lender to such Borrower or Affiliate of a Borrower, that payment has not been made when due.
28.2
Other obligations
(a)
An Obligor does not comply with any provision of this Agreement (other than the obligation referred to in Clause ‎28.1 ( Non-payment )).
(b)
No Event of Default under paragraph ‎(a) above will occur if the failure to comply is capable of remedy and is remedied within fifteen Business Days of the Agent giving notice of such failure to the Company.
28.3
Misrepresentation
Any representation or statement made or deemed to be made by or on behalf of an Obligor in this Agreement or any other document delivered by or on behalf of any Obligor under or in connection with this Agreement is or proves to have been incorrect or misleading in any material respect when made or deemed to be made, unless the circumstances giving rise to the misrepresentation are capable of remedy and are remedied within fifteen Business Days after notice thereof has been given by the Agent to such Obligor and (in case an Additional Borrower is concerned) the Company.
28.4
Cross payment default and cross acceleration
(a)
Any Financial Indebtedness of any Obligor incurred otherwise than under this Agreement and owed to a person which is not a member of the Group:
(i)
is not paid when due nor within any originally applicable grace period; or
(ii)
becomes due and payable prior to its specified maturity as a result of an event of default (however described).
(b)
No Event of Default will occur under this Clause ‎28.4 if the aggregate amount of Financial Indebtedness falling within paragraph ‎(a) above is less than EUR 150,000,000 (or its equivalent in any other currency or currencies).
28.5
Insolvency
(a)
An Obligor or a Material Subsidiary is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness and, in particular, an Obligor or a Material Subsidiary incorporated in Germany is unable to pay its debts as they fall due ( zahlungsunfähig ) within the meaning of section 17 of the Insolvency Code ( Insolvenzordnung ).
(b)
An Obligor or a Material Subsidiary incorporated in Germany is overindebted within the meaning of section 19 of the Insolvency Code ( Insolvenzordnung ) and its board of directors is required to file for insolvency or, with respect to any other Obligor or Material Subsidiary, the value of the assets of any Obligor or Material Subsidiary is less than its liabilities (taking into account contingent and prospective liabilities) and, if applicable, its board of directors or equivalent body is required to file for bankruptcy or equivalent proceedings.
28.6
Insolvency proceedings
Any corporate action, legal proceedings or other procedure or step is taken in relation to:
(a)
the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor or Material Subsidiary other than a solvent liquidation or reorganisation of such Obligor or Material Subsidiary;
(b)
a general readjustment or rescheduling of the indebtedness of, or a general composition with or a general assignment for the benefit of the creditors of, any Obligor or Material Subsidiary;
(c)
the appointment of a liquidator (other than in respect of a solvent liquidation of an Obligor or a Material Subsidiary which is not an Obligor), receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of any Obligor or Material Subsidiary or all, or a substantial part, of its assets,
or any analogous procedure or step is taken in any jurisdiction.
28.7
Ownership of the Obligors
An Obligor (other than the Company) is not or ceases to be a wholly-owned Subsidiary of the Company.
28.8
Consents, Licenses and Authority
Any governmental or other consent, licence or authority required to make this Agreement legal, valid, binding, enforceable and admissible in evidence or required to enable any Obligor to perform its obligations hereunder is withdrawn or ceases to be in full force and effect.
28.9
Unlawfulness
It is or becomes unlawful for an Obligor to perform any of its obligations under this Agreement (including the Guarantee in Clause ‎24 ( Guarantee and Indemnity ).
28.10
Repudiation
An Obligor repudiates this Agreement or evidences an intention to repudiate this Agreement.
28.11
Acceleration
(a)
On and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders, by notice to the Company:
(i)
cancel the Total Commitments and the Ancillary Commitments whereupon they shall immediately be cancelled;
(ii)
declare that all or part of the Utilisations, together with accrued interest, and all other amounts accrued or outstanding under this Agreement be immediately due and payable, whereupon they shall become immediately due and payable;
(iii)
declare that full cash cover in respect of each Letter of Credit is immediately due and payable whereupon it shall become immediately due and payable; and/or
(iv)
declare all or any part of the amounts outstanding under the Ancillary Facilities to be immediately due and payable whereupon they shall become immediately due and payable.
(b)
Notwithstanding paragraph (a) above, upon the occurrence of an Event of Default in relation to any Obligor under Clause ‎28.5 ( Insolvency ) arising in relation to any matter or circumstance described therein under the U.S. Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law of the United States of America or any state thereof, the Facility shall cease to be available to such Obligor, all Utilisations outstanding to such Obligor shall become immediately due and payable and cash cover shall be immediately due and payable in respect of each Letter of Credit drawn by it hereunder.
28.12
Section 490 (1) of the German Civil Code
Section 490 (1) of the German Civil Code ( Bürgerliches Gesetzbuch ) shall be disapplied.
29.      CHANGES TO THE LENDERS
29.1
Assignments and transfers by the Lenders
(a)
Subject to this Clause ‎29, a Lender (the Existing Lender ) may:
(i)
change its Facility Office:
(ii)
assign any of its rights; or
(iii)
assign and transfer by assumption of contract ( Vertragsübernahme ) any of its rights and obligations,
to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the New Lender ).
(b)
The minimum participation in respect of Commitments and Utilisations of each Lender shall at all times be an aggregate amount of at least EUR 10,000,000 (or the equivalent in an Optional Currency) or nil.
(c)
Subject to paragraph ‎(b) above and except for an assignment or an assignment and transfer by assumption of contract ( Vertragsübernahme ) from a Lender Affiliate to the Lender of which it is an Affiliate, an assignment of part of any rights or an assignment and transfer by assumption of contract ( Vertragsübernahme ) or part of any rights and obligations under this Agreement by an Existing Lender must be in a minimum amount of EUR 10,000,000 (or the equivalent in an Optional Currency) or if less its Commitments.
29.2
Conditions of assignment or assignment and transfer by assumption of contract ( Vertragsübernahme )
(a)
The prior written consent of the Company (such consent not to be unreasonably withheld or delayed) is required for an assignment or an assignment and transfer by assumption of contract ( Vertragsübernahme ) by an Existing Lender, unless the assignment or assignment and transfer by assumption of contract ( Vertragsübernahme ) is to another Lender or an Affiliate of a Lender or at any time when an Event of Default is continuing.
(b)
An assignment will only be effective upon acceptance by the Agent of an otherwise duly completed Assignment Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to the following sentence, as soon as reasonably practicable after receipt by it of a duly completed Assignment Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, accept that Assignment Agreement. The Agent shall only be obliged to accept an Assignment Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the assignment to such New Lender.
(c)
Notwithstanding any other provision of this Agreement, the consent of each Issuing Bank is required for any assignment or transfer of any Lender's rights and/or obligations under the Facility.
(d)
An assignment and transfer by assumption of contract ( Vertragsübernahme ) will only be effective if the procedure set out in Clause ‎29.5 ( Procedure for assignment and transfer by assumption of contract ( Vertragsübernahme )) is complied with.
(e)
If:
(i)
a Lender assigns or assigns and transfers by assumption of contract ( Vertragsübernahme ) any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(ii)
as a result of circumstances existing at the date the assignment, assignment and transfer by assumption of contract ( Vertragsübernahme ) or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause ‎19 ( Tax gross-up and indemnities ) or Clause ‎20 ( Increased Costs ),
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, assignment and transfer by assumption of contract ( Vertragsübernahme ) or change had not occurred.
(f)
In the event of any assignment or assignment and transfer by assumption of contract ( Vertragsübernahme ) by any Lender which has a Lender Affiliate, such assignment or assignment and transfer by assumption of contract ( Vertragsübernahme ) shall only be permitted if following such assignment or transfer the Lender Affiliates' participation in any Utilisations does not exceed the remaining Commitment of that Lender.
(g)
In the event of an assignment and transfer by assumption of contract ( Vertragsübernahme ) by any Lender Affiliate, such transfer shall only be permitted to another Affiliate of the relevant Lender or if and to the extent the transferee (or any of its Affiliates) acquires a commitment from the relevant Lender at least equal to the amount of the participation in Utilisations to be transferred by the Affiliate of the Lender.
29.3
Assignment or transfer fee
The New Lender shall, on the date upon which an assignment or assignment and transfer by assumption of contract ( Vertragsübernahme ) takes effect, pay to the Agent (for its own account) a fee of EUR 3,500.
29.4
Limitation of responsibility of Existing Lenders
(a)
Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:
(i)
the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;
(ii)
the financial condition of any Obligor;
(iii)
the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or
(iv)
the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,
and any representations or warranties implied by law are excluded.
(b)
Each New Lender confirms to the Existing Lender and the other Finance Parties that it:
(i)
has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and
(ii)
will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.
(c)
Nothing in any Finance Document obliges an Existing Lender to:
(i)
accept a re-assignment or a re-assignment and re-transfer by assumption of contract ( Vertragsübernahme ) from a New Lender of any of the rights and obligations assigned or assigned and transferred by assumption of contract ( Vertragsübernahme ) under this Clause ‎29; or
(ii)
support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise.
29.5
Procedure for assignment and transfer by assumption of contract ( Vertragsübernahme )
(a)
Subject to the conditions set out in Clause ‎29.2 ( Conditions of assignment or assignment and transfer by assumption of contract ( Vertragsübernahme )) an assignment and transfer by assumption of contract ( Vertragsübernahme ) is effected in accordance with paragraph ‎(c) below when the Agent accepts an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to paragraph ‎(b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, accept that Transfer Certificate.
(b)
The Agent shall only be obliged to accept a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.
(c)
On the Transfer Date:
(i)
to the extent that in the Transfer Certificate the Existing Lender seeks to assign and transfer by assumption of contract ( Vertragsübernahme ) its rights and obligations under the Finance Documents each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the Discharged Rights and Obligations );
(ii)
each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;
(iii)
the Agent, the Arrangers, each Issuing Bank, the New Lender, the other Lenders and any relevant Ancillary Lender shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the assignment and transfer by assumption of contract ( Vertragsübernahme ) and to that extent the Agent, the Arrangers, the Issuing Banks and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and
(iv)
the New Lender shall become a Party as a "Lender".
29.6
Additional Lender Affiliates
(a)
A Lender may request that any of its Affiliates becomes a Lender Affiliate ( Vertragsbeitritt ) by delivering to the Agent a Lender Affiliate Accession Agreement.
(b)
The Affiliate of the Lender will become a Party to this Agreement as a Lender Affiliate when the Agent notifies the other Finance Parties and the Company that it has received the Lender Accession Agreement in form and substance satisfactory to it. The Agent must give this notification as soon as reasonably practicable provided that the Agent shall not be obliged to give such notification prior to it being satisfied that it has complied with all necessary know your customer requirements or other similar checks under all applicable laws and regulations in relation to the accession of such Lender Affiliate.
(c)
The Lender Affiliate that accedes to this Agreement must pay to the Agent for its own account, on or before the date the Agent has received the Lender Affiliate Accession Agreement, a fee of EUR 3,500.
29.7
Copy of Transfer Certificate or Assignment Certificate to Company
The Agent shall promptly after it has accepted a Transfer Certificate or an Assignment Certificate, send to the Company a copy of that Transfer Certificate or Assignment Certificate.
29.8
Disclosure of information
Any Lender may disclose to any of its Affiliates and any other person (including such person's professional advisers who are under a duty of confidentiality to that person):
(a)
to (or through) whom that Lender assigns or assigns and transfers by assumption of contract ( Vertragsübernahme ) (or may potentially assign or assign and transfer by assumption of contract ( Vertragsübernahme )) all or any of its rights and obligations under this Agreement;
(b)
with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or any Obligor;
(c)
to whom or for whose benefit that Lender charges, assigns or otherwise creates Security (or may do so) pursuant to Clause ‎29.10 ( Central Bank Refinancing ); or
(d)
to whom, and to the extent that, information is requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or is required to be disclosed by any applicable law or regulation,
any information about any Obligor, the Group and the Finance Documents as that Lender shall consider appropriate if, in relation to paragraphs ‎(a) and ‎(b) above, the person to whom the information is to be given has entered into a Confidentiality Undertaking on which the Company and the members of the Group may rely on.
29.9
Pro rata interest settlement
If the Agent has notified the Lenders that it is able to distribute interest payments on a "pro rata basis" to Existing Lenders and New Lenders then (in respect of any assignment and transfer pursuant to Clause ‎29.5 ( Procedure for assignment and transfer by assumption of contract ( Vertragsübernahme )) or any assignment pursuant to paragraph (c) of Clause ‎29.2 ( Conditions of assignment or assignment and transfer by assumption of contract (Vertragsübernahme) ) the Transfer Date or Assignment Date (as the case may be) of which, in each case, is after the date of such notification and is not on the last day of an Interest Period):
(a)
any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the respective Transfer Date or Assignment Date ( Accrued Amounts ) and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that Interest Period); and
(b)
the rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:
(i)
when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and
(ii)
the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause ‎29.9, have been payable to it on that date, but after deduction of the Accrued Amounts.
29.10
Central Bank Refinancing
The Lenders may freely assign or pledge all or any part of their rights or interests under this Agreement to any federal reserve or central bank in the European Union, in the European Economic Area, the United States of America, Australia and Japan (including the European Central Bank or any member of the European System of Central Banks) as security for the benefit of the respective federal reserve or central bank, provided that (i) such assignment or pledge does not involve a release of such Lender from any of its obligations under this Agreement and (ii) in no event shall the respective federal reserve or central bank be considered to be a Lender or be entitled to require the transferring or assigning Lender to take or omit any action under this Agreement. Enforcement by the respective federal reserve or central bank (including the European Central Bank or any member of the European System of Central Banks) shall not be subject to any restriction.
29.11
Disenfranchisement of a Non-funding Lender
(a)
For so long as a Non-funding Lender has any Available Commitment, in ascertaining the Majority Lenders or whether any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments or the Loans has been obtained to approve any request for a consent, waiver, amendment or other vote under the Finance Documents, that Non-funding Lender's Commitments will be reduced by the amount of its Available Commitments.
(b)
For the purposes of this Clause ‎29.11, the Agent shall assume that a Non-funding Lender continues to be a Non-funding Lender until it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Agent).
29.12
Replacement of a Non-funding Lender
(a)
If at any time a Lender becomes a Non-funding Lender, then the Company may, whilst the Lender continues to be a Non-funding Lender, on 10 Business Days' prior written notice to the Agent and such Non-funding Lender, replace such Non-funding Lender by requiring such Non-funding Lender to (and such Non-funding Lender shall) transfer pursuant to this Clause 24 ( Changes to the Lenders ) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a Replacement Lender ) selected by the Company, and which is acceptable to the Agent (acting reasonably), which confirms its willingness to assume and does assume all the obligations of the transferring Non-funding Lender (including the assumption of the transferring Non-funding Lender's participations on the same basis as the transferring Non-funding Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Non-funding Lender's participation in the outstanding Loans and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents.
(b)
The replacement of a Non-funding Lender pursuant to this Clause ‎29.12 shall be subject to the following conditions:
(i)
the Company shall have no right to replace the Agent (in such capacity);
(ii)
neither the Agent nor the Non-funding Lender shall have any obligation to the Company to find a Replacement Lender;
(iii)
the replacement must take place no later than 6 months after the date the Non-funding Lender fails to comply with its obligations as set out in paragraph (a) above; and
(iv)
in no event shall the Non-funding Lender replaced under this Clause ‎29.12 be required to pay or surrender to the Replacement Lender any of the fees received by such Non-funding Lender pursuant to the Finance Documents.
30.      CHANGES TO THE OBLIGORS
30.1
Assignments and transfer by Obligors
No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
30.2
Additional Borrowers
(a)
Subject to compliance with the provisions of paragraph ‎(c) of Clause ‎26.5 ( "Know your customer" checks ), the Company may request that any of its wholly owned Subsidiaries becomes an Additional Borrower ( Vertragsbeitritt ). That Subsidiary shall become an Additional Borrower if:
(i)
either (A) it is incorporated in Germany, the Netherlands, the UK, Sweden, Switzerland or the US, (B) it is incorporated in the same jurisdiction as an existing Borrower and the Majority Lenders approve the addition of that Subsidiary or (C) if all the Lenders approve the addition of that Subsidiary;
(ii)
the Company delivers to the Agent a duly completed and executed Borrower Accession Letter;
(iii)
the Company confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower; and
(iv)
the Agent has received all of the documents and other evidence listed in ‎Part B of ‎Schedule 2 ( Conditions precedent ) in relation to that Additional Borrower, each in form and substance satisfactory to the Agent.
(b)
The Agent shall notify the Company, the Swingline Agents, the Issuing Bank and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in ‎Part B of ‎Schedule 2 ( Conditions precedent ).
30.3
Resignation of a Borrower
(a)
The Company may request that a Borrower ceases to be a Borrower by delivering to the Agent a Resignation Letter.
(b)
The Agent shall accept a Resignation Letter and notify the Company, and the Lenders of its acceptance if:
(i)
no Default is continuing or would result from the acceptance of the Resignation Letter (and the Company has confirmed this is the case); and
(ii)
the Borrower is under no actual or contingent obligations as a Borrower under any Finance Documents,
whereupon that company shall cease to be a Borrower and shall have no further rights or obligations under the Finance Documents.
30.4
Repetition of Representations
Delivery of a Borrower Accession Letter constitutes confirmation by the relevant Subsidiary that the Repeated Representations are true and correct in all material respects in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.
31.      ROLE OF THE AGENT AND THE ARRANGERS
31.1
Appointment of the Agent
(a)
Each other Finance Party appoints the Agent to act as its agent and attorney ( Stellvertreter ) under and in connection with the Finance Documents.
(b)
Each other Finance Party authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.
(c)
Each other Finance Party hereby relieves the Agent from the restrictions pursuant to section 181 Civil Code ( Bürgerliches Gesetzbuch ) and similar restrictions applicable to it pursuant to any other applicable law, in each case to the extent legally possible to such Finance Party. A Finance Party which is barred by its constitutional documents or by-laws from granting such exemption shall notify the Agent accordingly.
31.2
Duties of the Agent
(a)
The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.
(b)
Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(c)
If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.
(d)
If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent or the Arrangers) under this Agreement it shall promptly notify the other Finance Parties.
(e)
The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.
31.3
Role of the Arrangers
Except as specifically provided in the Finance Documents, the Arrangers have no obligations of any kind to any other Party under or in connection with any Finance Document.
31.4
No fiduciary duties
(a)
Nothing in this Agreement constitutes the Agent or the Arrangers as a trustee ( Treuhänder ) of any other person. Neither the Agent nor the Arrangers have any financial or commercial duty of care ( Vermögensfürsorgepflicht ) for any person.
(b)
Neither the Agent nor the Arrangers shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.
31.5
Business with the Group
The Agent and the Arrangers may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.
31.6
Rights and discretions of the Agent
(a)
The Agent may rely on:
(i)
any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and
(ii)
any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.
(b)
The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:
(i)
no Default has occurred (unless it has actual knowledge of a Default arising under Clause ‎28.1 ( Non-payment ));
(ii)
any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and
(iii)
any notice or request made by the Company (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all the Obligors.
(c)
The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.
(d)
The Agent may act in relation to the Finance Documents through its personnel and agents.
(e)
The Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.
(f)
Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arrangers are obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
31.7
Majority Lenders’ instructions
(a)
Unless a contrary indication appears in a Finance Document, the Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.
(b)
Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties.
(c)
The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.
(d)
In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) the Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.
(e)
The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Finance Document.
31.8
Responsibility for documentation
Neither the Agent nor the Arrangers:
(a)
are responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arrangers, an Obligor or any other person given in or in connection with any Finance Document; or
(b)
are responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document.
31.9
Exclusion of liability
(a)
Without limiting paragraph ‎(b) below, the Agent will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.
(b)
No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent may rely on this Clause pursuant to section 328 para 1 Civil Code ( Bürgerliches Gesetzbuch ) ( echter berechtigender Vertrag zugunsten Dritter ).
(c)
The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose.
(d)
Nothing in this Agreement shall oblige the Agent or the Arrangers to carry out any "know your customer" or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Agent and the Arrangers that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arrangers.
31.10
Lenders’ indemnity to the Agent
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within five Business Days of demand, against any cost, loss or liability incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant to a Finance Document).
31.11
Resignation of the Agent
(a)
The Agent may resign and appoint one of its Affiliates acting through an office in Germany, Luxembourg or London as successor by giving notice to the other Finance Parties and the Company.
(b)
Alternatively the Agent may resign by giving notice to the other Finance Parties and the Company, in which case the Majority Lenders (after consultation with the Company) may appoint a successor Agent.
(c)
If the Majority Lenders have not appointed a successor Agent in accordance with paragraph ‎(b) above within 30 days after notice of resignation was given, the Agent (after consultation with the Company) may appoint a successor Agent acting through an office in Germany, Luxembourg or London by giving notice to the other Finance Parties and the Company.
(d)
The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.
(e)
The Agent’s resignation notice shall only take effect upon the appointment of a successor.
(f)
Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause ‎31. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(g)
After consultation with the Company, the Majority Lenders may, by notice to the Agent, require it to resign in accordance with paragraph ‎(b) above. In this event, the Agent shall resign in accordance with paragraph ‎(b) above.
(h)
The Agent shall resign in accordance with paragraph (b) above (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant to paragraph (c) above) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Agent under the Finance Documents, either:
(i)
the Agent fails to respond to a request under Clause 19.7 ( FATCA

Information ) and the Company or a Lender reasonably believes that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
(ii)
the information supplied by the Agent pursuant to Clause 19.7 ( FATCA

Information ) indicates that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or
(iii)
the Agent notifies the Company and the Lenders that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
and (in each case) the Company or a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Agent were a FATCA Exempt Party, and the Company or that Lender, by notice to the Agent, requires it to resign.
    
31.12
Confidentiality
(a)
In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.
(b)
If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.
31.13
Relationship with the Lenders
The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
31.14
Credit appraisal by the Lenders
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Agent and the Arrangers that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:
(a)
the financial condition, status and nature of each member of the Group;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;
(c)
whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and
(d)
the adequacy, accuracy and/or completeness of any information provided by the Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.
31.15
Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Agent shall (in consultation with the Company) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.
31.16
Deduction from amounts payable by the Agent
If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.
31.17
Swingline Agents
In this Clause ‎31 ( Role of the Agent and the Arrangers ) all references to the "Agent" shall, except where the context otherwise requires, include a reference to the Swingline Agents.
32.      CONDUCT OF BUSINESS BY THE FINANCE PARTIES
No provision of this Agreement will:
(a)
interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b)
oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c)
oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.
33.      SHARING AMONG THE FINANCE PARTIES
33.1
Payments to Finance Parties
If a Finance Party (a Recovering Finance Party ) receives or recovers any amount from an Obligor other than in accordance with Clause ‎34 ( Payment mechanics ) and applies that amount to a payment due under the Finance Documents then:
(a)
the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to the Agent;
(b)
the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent or Relevant Swingline Agent (as applicable) and distributed in accordance with Clause ‎34 ( Payment mechanics ), without taking account of any Tax which would be imposed on the Agent or Relevant Swingline Agent (as applicable) in relation to the receipt, recovery or distribution; and
(c)
the Recovering Finance Party shall, within three Business Days of demand by the Agent or Relevant Swingline Agent (as applicable), pay to the Agent or Relevant Swingline Agent (as applicable) an amount (the Sharing Payment ) equal to such receipt or recovery less any amount which the Agent or Relevant Swingline Agent (as applicable) determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause ‎34.5 ( Partial payments ).
33.2
Redistribution of payments
The Agent or Relevant Swingline Agent (as applicable) shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with Clause ‎34.5 ( Partial payments ).
33.3
Recovering Finance Party’s rights
(a)
The Finance Parties shall assign to the Recovering Finance Party their rights against the Obligors to the extent such Finance Parties have shared in the distribution by the Agent or Relevant Swingline Agent (as applicable) under Clause ‎33.2 ( Redistribution of payments ).
(b)
If and to the extent that the Recovering Finance Party is not able to rely on its rights under paragraph ‎(a) above, the relevant Obligor shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due and payable.
33.4
Reversal of redistribution
If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
(a)
each Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause ‎33.2 ( Redistribution of payments ) shall, upon request of the Agent or Swingline Agent (as applicable), pay to the Agent or Relevant Swingline Agent (as applicable) for account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay); and
(b)
that Recovering Finance Party’s rights of assignment in respect of any reimbursement shall be cancelled and the relevant Obligor will be liable to the reimbursing Finance Party for the amount so reimbursed and the Recovering Finance Party shall re-assign any claims assigned to it pursuant to paragraph ‎(a) of Clause ‎33.3 ( Recovering Finance Party’s rights ).
33.5
Exceptions
(a)
This Clause ‎33 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor.
(b)
A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:
(i)
it notified that other Finance Party of the legal or arbitration proceedings; and
(ii)
that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.
33.6
Ancillary Lenders
(a)
This Clause ‎33 shall not apply to any receipt or recovery by a Lender in its capacity as an Ancillary Lender at any time prior to service of notice under Clause ‎28.11 ( Acceleration ).
(b)
Following service of notice under Clause ‎28.11 ( Acceleration ), this Clause ‎33 shall apply to all receipts or recoveries by Ancillary Lenders except to the extent that the receipt or recovery represents a reduction from the Designated Gross Amount for an Ancillary Facility to its Designated Net Amount.
34.      PAYMENT MECHANICS
34.1
Payments to the Agent or Swingline Agent (as applicable)
(a)
On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) or the Relevant Swingline Agent (as the case may be) for value on the due date at the time and in such funds specified by the Agent or the Relevant Swingline Agent (as the case may be) as being customary at the time for settlement of transactions in the relevant currency in the place of payment.
(b)
Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in a principal financial centre in a Participating Member State or London) with such bank as the Agent or the Relevant Swingline Agent (as the case may be) specifies.
34.2
Distributions by the Agent
Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause ‎34.3 ( Distributions to an Obligor ) and Clause ‎34.4 ( Clawback ) be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London).
34.3
Distributions to an Obligor
The Agent may (with the consent of the Obligor or in accordance with Clause ‎35 ( Set-off )) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
34.4
Clawback
(a)
Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.
(b)
If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.
34.5
Partial payments
(a)
If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order:
(i)
first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent and any Issuing Bank under the Finance Documents;
(ii)
secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;
(iii)
thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement and any amount due but unpaid under Clauses ‎8.3 ( Claims under a Letter of Credit ) and ‎8.4 ( Indemnities ); and
(iv)
fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.
(b)
The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs ‎(a)‎(ii) to ‎(iv) above.
(c)
Paragraphs ‎(a) and ‎(b) above will override any appropriation made by an Obligor.
34.6
No set-off by Obligors
All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim unless the counterclaim is undisputed or has been confirmed in a final non-appealable judgement.
34.7
Business Days
(a)
Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
(b)
During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.
34.8
Currency of account
(a)
Subject to paragraphs ‎(b) to ‎(e) below, the Base Currency is the currency of account and payment for any sum due from an Obligor under any Finance Document.
(b)
A repayment of a Utilisation or Unpaid Sum or a part of a Utilisation or Unpaid Sum shall be made in the currency in which that Utilisation or Unpaid Sum is denominated on its due date.
(c)
Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.
(d)
Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
(e)
Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.
34.9
Change of currency
(a)
Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:
(i)
any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Company); and
(ii)
any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).
(b)
If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Company) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.
34.10
Swingline Agents
In this Clause ‎34 ( Payment Mechanics ) all references to the "Agent" shall, except where the context otherwise requires, include a reference to the Swingline Agents.
35.      SET-OFF
A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents against any satisfiable ( erfüllbar ) obligation (within the meaning of section 387 Civil Code ( Bürgerliches Gesetzbuch )) owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
36.      NOTICES
36.1
Communications in writing
Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
36.2
Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:
(a)
in the case of the Company, that identified with its name below;
(b)
in the case of each Lender, any Issuing Bank or any other Obligor, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and
(c)
in the case of the Agent and each Swingline Agent, that identified with its name below,
or any substitute address or fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days’ notice.
36.3
Delivery
(a)
Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective when received ( zugegangen ), in particular:
(i)
if by way of fax, when received in legible form; or
(ii)
if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;
and, if a particular department or officer is specified as part of its address details provided under Clause ‎36.2 ( Addresses ), if addressed to that department or officer.
(b)
Any communication or document to be made or delivered to the Agent or a Swingline Agent (as the case may be) will be effective only when actually received by the Agent or the respective Swingline Agent (as the case may be) and then only if it is expressly marked for the attention of the department or officer identified with the Agent’s or the respective Swingline Agent's (as the case may be) signature below (or any substitute department or officer as the Agent shall specify for this purpose).
(c)
All notices from or to an Obligor shall be sent through the Agent or the relevant Swingline Agent (as the case may be).
(d)
Any communication or document by the Finance Parties to the Obligors may be made or delivered to the Company for its own account and for the account of the Obligors. For that purpose each Obligor appoints the Company as its agent of receipt ( Empfangsvertreter ).
36.4
Notification of address and fax number
Promptly upon receipt of notification of an address or fax number or change of address or fax number pursuant to Clause ‎36.2 ( Addresses ) or changing its own address or fax number, the Agent shall notify the other Parties.
36.5
Electronic communication
(a)
Any communication to be made between the Agent or a Swingline Agent (as the case may be) and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent or the relevant Swingline Agent (as the case may be) and the relevant Lender:
(i)
agree that, unless and until notified to the contrary, this is to be an accepted form of communication;
(ii)
notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
(iii)
notify each other of any change to their address or any other such information supplied by them.
(b)
Any electronic communication made between the Agent and a Lender will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender to the Agent only if it is addressed in such a manner as the Agent shall specify for this purpose.
36.6
English language
(a)
Any notice given under or in connection with any Finance Document must be in English.
(b)
All other documents provided under or in connection with any Finance Document must be:
(i)
in English or, in relation to the corporate documents referred to in ‎Schedule 2 ( Conditions Precedent ), in their original language); or
(ii)
if not in English and not a corporate document referred to in ‎Schedule 2 ( Conditions Precedent ), and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
37.      CALCULATIONS AND CERTIFICATES
37.1
Accounts
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence ( Beweis des ersten Anscheins ) of the matters to which they relate.
37.2
Certificates and Determinations
Any certification or determination by a Finance Party of a rate or amount under any Finance Document is prima facie evidence ( Beweis des ersten Anscheins ) of the matters to which it relates.
37.3
Day count convention
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days (but in case of sterling 365 days) or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.
38.      PARTIAL INVALIDITY
The Parties agree that should at any time, any provisions of this Agreement be or become void ( nichtig ), invalid or due to any reason ineffective ( unwirksam ) this will indisputably ( unwiderlegbar ) not affect the validity or effectiveness of the remaining provisions and this Agreement will remain valid and effective, save for the void, invalid or ineffective provisions, without any Party having to argue ( darlegen ) and prove ( beweisen ) the Parties’ intent to uphold this Agreement even without the void, invalid or ineffective provisions.
The void, invalid or ineffective provision shall be deemed replaced by such valid and effective provision that in legal and economic terms comes closest to what the Parties intended or would have intended in accordance with the purpose of this Agreement if they had considered the point at the time of conclusion of this Agreement.
39.      REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.
40.      AMENDMENTS AND WAIVERS
40.1
Required consents
(a)
Subject to Clause ‎40.2 ( Exceptions ) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.
(b)
The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause.
40.2
Exceptions
(a)
An amendment or waiver that has the effect of changing or which relates to:
(i)
the definition of Majority Lenders in Clause ‎1.1 ( Definitions );
(ii)
an extension to the date of payment of any amount under the Finance Documents;
(iii)
a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;
(iv)
an increase in or an extension of any Commitment;
(v)
a change to the Borrowers or the Guarantor other than in accordance with Clause ‎30 ( Changes to the Obligors );
(vi)
any provision which expressly requires the consent of all the Lenders; or
(vii)
Clause ‎2.2 ( Finance Parties’ rights and obligations ), Clause ‎29 ( Changes to the Lenders ) or this Clause ‎40
shall not be made without the prior consent of all the Lenders.
(b)
An amendment or waiver which relates to the rights or obligations of the Agent, any Swingline Agent, an Issuing Bank, an Ancillary Lender or the Arrangers may not be effected without the consent of the Agent, such Swingline Agent, such Issuing Bank, such Ancillary Lender or the Arrangers.
(c)
An amendment or waiver that has the effect of changing or which relates to paragraph 4 (c) of Part A of Schedule 2 may not be effected without the consent of all Lenders participating in the Existing Revolving Facility.
41.      USA PATRIOT ACT
Each Finance Party that is subject to the requirements of the USA Patriot Act hereby notifies each Obligor that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Obligors, which information includes the name and address of the Obligors and other information that will allow such Finance Party to identify the Obligors in accordance with the USA Patriot Act. Each Obligor agrees that it will provide each Finance Party with such information as it may request in order for such Finance Party to satisfy the requirements of the USA Patriot Act.
42.      GOVERNING LAW
This Agreement and any non-contractual obligations arising out of or in connection therewith shall be governed by and construed in accordance with the laws of the Federal Republic of Germany.
43.      GENERAL BUSINESS CONDITIONS
For the avoidance of doubt, no general business conditions ( Allgemeine Geschäftsbedingungen ) of any party to this Agreement will be part of or will apply to this Agreement.
44.      ENFORCEMENT
44.1
Jurisdiction
Each of the Parties to this Agreement agrees that any legal action or proceedings arising out of or in connection with the Finance Documents, including any non-contractual obligations arising out of or in connection therewith, may be brought in the courts in the city of Munich, Germany.
44.2
Service of process
(a)
Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in Germany):
(i)
irrevocably appoints the Company (the Process Agent ) as its agent for service of process in relation to any proceedings before the German courts in connection with any Finance Document;
(ii)
agrees that failure by a Process Agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned; and
(iii)
undertakes to deliver to the Process Agent without undue delay upon execution of this Agreement a process agent appointment letter (the Process Agent Appointment Letter ) substantially in the form of ‎Schedule 11 ( Form of Process Agent Appointment Letter ) and to send a copy of the executed Process Agent Appointment Letter to the Agent.
(b)
The Process Agent hereby acknowledges the appointment. The Process Agent shall ensure that documents to be served to an Obligor may validly be served by delivery to the Process Agent. In particular, the Process Agent shall notify the Agent of any change of address, accept any documents delivered to it on behalf of an Obligor and fulfil any requirements of section 171 Code of Civil Procedure ( Zivilprozessordnung ), in particular present the original Process Agent Appointment Letter to any person effecting the service of process as required pursuant to section 171 sentence 2 Code of Civil Procedure ( Zivilprozessordnung ).
45.      CONCLUSION OF THIS AGREEMENT ( VERTRAGSSCHLUSS )
(a)
The Parties to this Agreement may choose to conclude this Agreement by an exchange of signed signature page(s), transmitted by means of telecommunication ( telekommunikative Übermittlung ) by way of fax or attached as an electronic photocopy (pdf., tif., etc.) to electronic mail.
(b)
If the Parties to this Agreement choose to conclude this Agreement in accordance with sub-Clause ‎(a) above, they will transmit the signed signature page(s) of this Agreement to Bettina Steinhauer (bettina.steinhauer@cliffordchance.com) and/or Philipp Kropatscheck (philipp.kropatscheck@cliffordchance.com) (the Recipients ). The Agreement will be considered concluded once a Recipient has actually received the signed signature page(s) ( Zugang der Unterschriftsseite (n)) from all Parties to this Agreement and at the time of the receipt of the last outstanding signature page(s).
(c)
For the purposes of this Clause ‎45 only, the Parties to this Agreement appoint the Recipients as agents of receipt ( Empfangsvertreter ) and expressly allow ( gestatten ) the Recipients to collect the signed signature page(s) from all and for all Parties to this Agreement. For the avoidance of doubt, the Recipients will have no further duties connected with its position as Recipients. In particular, the Recipients may assume the conformity to the authentic original(s) of the signature page(s) transmitted to it by means of telecommunication, the genuineness of all signatures on the original signature page(s) and the signing authority of the signatories.
This Agreement has been entered into on the date stated at the beginning of this Agreement.
Schedule 1
THE ORIGINAL PARTIES
Part A     
The Original Obligors
Name of Original Borrower        Registration number (or equivalent, if any)
Linde AG            (Amtsgericht München, HRB 169850)
Linde Finance B.V.        (commercial register of Amsterdam, number 34115238)

Name of Guarantor            Registration number (or equivalent, if any)
Linde AG            (Amtsgericht München, HRB 169850)






Part B     
The Original Lenders
Section 1 – The Revolving Facility

Name of Original Lender
 
Commitment
in EUR
Barclays Bank PLC
 
90,000,000
Bayerische Landesbank
 
90,000,000
Banc of America Securities Limited
 
90,000,000
Bank of China Limited Zweigniederlassung Frankfurt am Main Frankfurt Branch
 
90,000,000
BNP Paribas Fortis SA/NV, Niederlassung Deutschland
 
90,000,000
Citibank N.A. in New York, Filiale Frankfurt
 
90,000,000
Commerzbank Aktiengesellschaft, Filiale Luxemburg
 
90,000,000
Crédit Agricole Corporate and Investment Bank Deutschland
 
90,000,000
Deutsche Bank Luxembourg S.A.
 
90,000,000
DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main
 
90,000,000
HSBC Bank plc
 
45,000,000
HSBC Trinkaus & Burkhardt AG
 
45,000,000
ING Bank, a branch of ING-Diba AG
 
90,000,000
Landesbank Baden-Württemberg
 
90,000,000
Lloyds TSB Bank plc
 
90,000,000
Mizuho Bank Ltd.
 
90,000,000
MORGAN STANLEY BANK, N.A.
 
90,000,000
Royal Bank of Canada
 
90,000,000
SEB AG
 
90,000,000
Standard Chartered Bank
 
90,000,000
Sumitomo Mitsui Banking Corporation
 
90,000,000
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Düsseldorf Branch
 
90,000,000
TD Bank Europe Limited
 
90,000,000
UniCredit Luxembourg S.A.
 
90,000,000
Australia and New Zealand Banking Group Limited
 
43,000,000
CommBank Europe Limited
 
43,000,000
INTESA SANPAOLO S.p.A., Frankfurt Branch
 
43,000,000
JPMorgan Chase Bank, N.A.
 
43,000,000
Landesbank Hessen-Thüringen Girozentrale
 
43,000,000
Riyad Bank London Branch
 
43,000,000
SOCIETE GENERALE, FRANKFURT BRANCH
 
43,000,000
The Bank of New York Mellon
 
43,000,000
Wells Fargo Bank International
 
43,000,000
Westpac Banking Corporation
 
43,000,000
Total
 
2,500,000,000
 
 
 

Section 2 –Swingline Loans

Name of Original Lender
Swingline Commitment
in EUR
Affiliate for Swingline Loans in US Dollar (if any)
Barclays Bank PLC
22,727,272.72
 
Bayerische Landesbank
22,727,272.72
Bayerische Landesbank New York Branch
Banc of America Securities Limited
22,727,272.72
Bank of America, N.A.
BNP Paribas Fortis SA/NV, Niederlassung Deutschland
22,727,272.72
 
Citibank N.A. in New York, Filiale Frankfurt
22,727,272.80
Citibank, N.A.
Commerzbank Aktiengesellschaft, Filiale Luxemburg
22,727,272.72
Commerzbank AG, New York and Grand Cayman Branches
Crédit Agricole Corporate and Investment Bank Deutschland
22,727,272.72
 
Deutsche Bank Luxembourg S.A.
22,727,272.72
 
DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main
22,727,272.72
DZ BANK AG New York Branch
HSBC Bank plc
22,727,272.72
 
ING Bank, a branch of ING-Diba AG
22,727,272.72
ING Bank N.V., Dublin Branch
Landesbank Baden-Württemberg
22,727,272.72
Landesbank Baden-Württemberg, New York Branch
Lloyds TSB Bank plc
22,727,272.72
 
Mizuho Bank Ltd.
22,727,272.72
 
MORGAN STANLEY BANK, N.A.
22,727,272.72
 
Royal Bank of Canada
22,727,272.72
Royal Bank of Canada, New York Branch
SEB AG
22,727,272.72
SEB AG
Standard Chartered Bank
22,727,272.72
Standard Chartered Bank
Sumitomo Mitsui Banking Corporation
22,727,272.72
 
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Düsseldorf Branch
22,727,272.72
The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch
TD Bank Europe Limited
22,727,272.72
 
UniCredit Luxembourg S.A.
22,727,272.80
.
Total
500,000,000
 



SCHEDULE 2     
CONDITIONS PRECEDENT
Part A     
Conditions Precedent To Initial Utilisation
1.      Company
(a)
In relation to the Company an up-to-date commercial register extract ( Handelsregisterauszug ) and a copy of the Company's articles of association ( Satzung ), certified by two authorised signatories of the Company to be a true copy.
(b)
A certificate signed by two duly authorised signatories of the Company (as evidenced by the commercial register extract referred to in (a) above) setting out the names and signatures of the persons authorised to sign, on behalf of the Company, any documents to be delivered by it pursuant to this Agreement (such certificate being subject to such amendments as may be notified to the Agent by the Company from time to time).
2.      Linde Finance B.V.
(a)
A certified extract of the entry in the Commercial Trade Register of the Amsterdam Chamber of Commerce relating to Linde Finance B.V.
(b)
A copy, certified a true copy by authorised signatories of Linde Finance B.V., of its deed of incorporation and its articles of association.
(c)
A copy of the resolution of the board of managing directors of Linde Finance B.V. resolving to enter this Agreement and to enter into such further agreements and to take such further steps as may deemed useful or necessary for the company's participation in this Agreement, and a copy of the resolution of the board of supervisory directors of Linde Finance B.V. approving the aforementioned resolution of the board of managing directors of Linde Finance B.V.
(d)
A certificate executed by authorised signatories of Linde Finance B.V. setting out the names and signatures of the persons authorised to sign, on behalf of Linde Finance B.V., any documents to be delivered by Linde Finance B.V. pursuant to this Agreement (such certificate being to such amendments as may be notified to the Agent by Linde Finance B.V. from time to time).
3.      Legal opinions
(a)
A legal opinion of Clifford Chance Partnerschaftsgesellschaft, legal advisers to the Arrangers and the Agent in Germany, substantially in the form distributed to the Original Lenders prior to signing this Agreement.
(b)
A legal opinion in respect of German law of Freshfields Bruckhaus Derringer LLP, legal advisers to the Company in Germany, substantially in the form distributed to the Original Lenders prior to signing this Agreement.
(c)
A legal opinion in respect of Dutch law of Freshfields Bruckhaus Derringer LLP, legal advisers to the Company in the Netherlands, substantially in the form distributed to the Lenders prior to signing this Agreement.
4.      Other documents and evidence
(a)
A copy of the executed Process Agent Appointment Letter executed by Linde Finance B.V.
(b)
The Original Financial Statements of each Original Obligor.
(c)
Evidence that the facilities under the Existing Facility Agreement have been or will be prepaid and/or cancelled in full on or before the day falling 10 Business Days after the date of this Agreement and, in any case, simultaneously with the first Utilisation.
(d)
Evidence that the fees, costs and expenses then due from the Company pursuant to Clause ‎18 ( Fees ) and Clause ‎23 ( Costs and expenses ) have been paid or will be paid by the first Utilisation Date.
Part B     
Conditions Precedent Required To Be Delivered By An Additional Borrower
1.      A Borrower Accession Letter, duly executed by the Additional Borrower and the Company.
2.      In relation to an Additional Borrower incorporated or established in Germany an up-to-date commercial register extract ( Handelsregisterauszug ), its articles of association ( Satzung ), certified by the commercial register as of a recent date, or partnership agreement ( Gesellschaftsvertrag ), copies of any by-laws as well as a list of shareholders ( Gesellschafterliste ) (if applicable). In relation to an Additional Borrower incorporated in a jurisdiction than other than Germany a copy of its constitutional documents.
3.      In relation to an Additional Borrower incorporated or established in Germany a copy of (in each case if applicable) a resolution signed by all the holders of the issued shares in such Additional Borrower and/or a resolution of the supervisory board ( Aufsichtsrat ) and/or the advisory board ( Beirat ) of such Additional Borrower approving the terms of, and the transactions contemplated by the Finance Documents. In relation to an Additional Borrower incorporated in a jurisdiction other than Germany a copy of a resolution signed by all the holders of the issued shares in each such Additional Borrower, approving the terms of, and the transactions contemplated by the Finance Documents.
4.      A copy of a resolution of the board of directors of the Additional Borrower incorporated or established in a jurisdiction other than Germany:
(a)
approving the terms of, and the transactions contemplated by, the Borrower Accession Letter and the Finance Documents and resolving that it execute the Borrower Accession Letter;
(b)
authorising a specified person or persons to execute the Borrower Accession Letter on its behalf; and
(c)
authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including, in relation to an Additional Borrower, any Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance Documents.
5.      A specimen of the signature of each person authorised to execute any Finance Document and other documents and notices (including, if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party.
6.      In relation to an Additional Borrower incorporated or established in a jurisdiction other than Germany a certificate of the Additional Borrower (signed by a director) confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on it to be exceeded.
7.      A certificate of an authorised signatory of the Additional Borrower certifying that each copy document listed in this ‎Part B of ‎Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of the Borrower Accession Letter.
8.      A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable in connection with the entry into and performance of the transactions contemplated by the Borrower Accession Letter or for the validity and enforceability of any Finance Document.
9.      If available, the latest audited financial statements of the Additional Borrower.
10.      A legal opinion of Clifford Chance Partnerschaftsgesellschaft, legal advisers to the Arrangers and the Agent in Germany.
11.      If the Additional Borrower is incorporated in a jurisdiction other than Germany, a legal opinion of the legal advisers to the Arrangers and the Agent in the jurisdiction in which the Additional Borrower is incorporated as to due organisation, good standing (if such term has a legal definition in such Relevant Jurisdiction), capacity and due authorisation, absence of conflicts with law and organisational documents, all necessary actions and registrations for enforceability and admission into evidence of Finance Documents, due execution, stamp and withholding taxes, and recognition and enforceability of judgments under the laws of the Relevant Jurisdiction.
12.      If the proposed Additional Borrower is incorporated in a jurisdiction other than Germany, evidence that the process agent specified in Clause ‎44.2 ( Service of process ), if not an Obligor, has accepted its appointment in relation to the proposed Additional Borrower together with a copy of the executed Process Agent Appointment Letter in relation to the proposed Additional Borrower.

SCHEDULE 3     
REQUESTS
Part A     
Utilisation Request
Revolving Facility Loans
From:    [Borrower]
To:    [Agent]
Dated:    

Dear Sirs
Linde AG – EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement
dated [ ] (the Agreement )
1.      We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.
2.      We wish to borrow a Revolving Facility Loan on the following terms:
Proposed Utilisation Date:    [ ] (or, if that is not a Business Day, the next Business Day)
Currency of
Revolving Facility Loan:        [ ]
Amount:            [ ] or, if less, the Available Facility
Interest Period:            [ ]
3.      We confirm that each condition specified in Clause ‎5.2 ( Further conditions precedent ) is satisfied on the date of this Utilisation Request.
4.      The Company confirms to each Finance Party that each of the Repeated Representations is true and correct as at the date hereof as if made by reference to the facts and circumstances existing on the date hereof.
5.      The Loan requested to be made pursuant to this Utilisation Request shall not be made in the event a Market Disruption Event occurs pursuant to Clause ‎17.2 ( Market Disruption ) of this Agreement.
6.      The proceeds of this Revolving Facility Loan should be credited to [account].
7.      This Utilisation Request is irrevocable.
 
Yours faithfully

…………………………………
authorised signatory for
[name of relevant Borrower]



…………………………………
authorised signatory for
[name of Company] **  

Part B     
Utilisation Request
Swingline Loans

From:    [ Borrower ]
To:    [ Relevant Swingline Agent ]
Dated:

Dear Sirs
Linde AG – EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement
dated [ ] (the Agreement )

1.
We wish to borrow a Swingline Loan in [EUR]/[USD] on the following terms:

Proposed Utilisation Date:
 
[  ] (or, if that is not a [TARGET Day]/[New York Business Day], the next [TARGET Day]/[New York Business Day])
 
 
 
Currency:
 
[EUR]/[USD]
Amount:
 
[  ] or, if less, the Available Swingline Facility
 
 
 
Interest Period:
 
[  ]

2.
We confirm that each condition specified in Clause ‎9.4(b) ( Swingline Lenders' participation ) is satisfied on the date of this Utilisation Request.

3.
The proceeds of this Swingline Loan should be credited to [account].

4.
This Utilisation Request is irrevocable.


Yours faithfully




.........................................................
authorised signatory for
[ name of relevant Borrower ]



…………………………………
authorised signatory for
[name of Company]
Part C     
Utilisation Request
Letters of Credit

From:    [ Borrower ]
To:    [ Agent ] and [ Issuing Bank ]
Dated:

Dear Sirs
Linde AG – EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement
dated [ ] (the Agreement )

1.
We wish to arrange for a Letter of Credit to be issued by [insert name of relevant Issuing Bank] on the following terms:

Borrower:
 
 
 
Proposed Utilisation Date:
[  ] (or, if that is not a Business Day, the next Business Day)
 
 
Currency:
[  ]
 
 
Amount:
[  ] or, if less, the Available Facility
 
 
Beneficiary:
 
 
 
Term or Expiry Date:
[ ]

2.
We confirm that each condition specified in Clause ‎7.6(b) ( Issue of Letters of Credit ) is satisfied on the date of this Utilisation Request.

3.
We attach a copy of the proposed Letter of Credit.

4.
This Utilisation Request is irrevocable.

Delivery Instructions:

[specify delivery instructions]

Yours faithfully


………………………………..
authorised signatory for
[ name of relevant Borrower ]


…………………………………
authorised signatory for
[name of Company]

SCHEDULE 4     
FORM OF ASSIGNMENT CERTIFICATE
To:    [ ] as Agent
From:    [The Existing Lender] (the Existing Lender ) and [The New Lender] (the New Lender )
Date [•]
Linde AG – EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement
dated [ ] (the Agreement )

1.
We refer to the Agreement. This is an Assignment Certificate. Terms defined in the Agreement have the same meaning in this Assignment Certificate unless given a different meaning in this Assignment Certificate.
2.
We refer to Clause ‎29.2(b) ( Conditions of assignment or assignment and transfer by assumption of contract ( Vertragsübernahme )) of the Agreement:
(a)
The Existing Lender and the New Lender agree to the Existing Lender assigning all or part of the Existing Lender’s rights referred to in the Schedule.
(b)
The proposed Assignment Date is [ ].
(c)
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause ‎36.2 ( Addresses ) of the Agreement are set out in the Schedule.
3.
The New Lender confirms that it will assume the same obligations to the other Finance Parties as it would have been subject to if the New Lender would have been an Original Lender to the extent such obligations relate to the assigned claims including, without limitation, any obligations under Clause ‎33 ( Sharing among the Finance Parties ) of the Agreement.
4.
The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (c) of Clause ‎29.4 ( Limitation of responsibility of Existing Lenders ) of the Agreement.
5.
The New Lender notifies the Agent that on the date of this Assignment Certificate [it is] [it is not] a Non-Acceptable L/C Lender.
[6.
The New Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of any Advance under a Finance Document is a Lender falling within paragraph (b) of the definition of "Qualifying Lender (UK)" in the Agreement.]
[[6/7].
This Assignment Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.]
[6/7/8].
This Assignment Certificate is governed by German law.
THE SCHEDULE
Rights to be assigned
[insert relevant details]
[Facility Office address, fax number and attention details for notices and account details for payments,]
[Existing Lender]
[New Lender]
By:
By:
This Assignment Certificate is accepted by the Agent on [_______].
[Agent]
 
By:
 


SCHEDULE 5     
FORM OF TRANSFER CERTIFICATE
To:    [ ] as Agent
From:    [The Existing Lender] (the Existing Lender ) and [The New Lender] (the New Lender )
Dated:    

Linde AG – EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement
dated [ ] (the Agreement )

1.      We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.
2.      We refer to Clause ‎29.5 ( Procedure for assignment and transfer by assumption of contract (Vertragsübernahme) ) of the Agreement:
(a)
The Existing Lender and the New Lender agree to the Existing Lender assigning and transferring to the New Lender by assumption of contract ( Vertragsübernahme ) all or part of the Existing Lender’s Commitment, rights and obligations referred to in the Schedule in accordance with Clause ‎29.5 ( Procedure for assignment and transfer by assumption of contract ( Vertragsübernahme )) of the Agreement.
(b)
The proposed Transfer Date is [ ].
(c)
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause ‎36.2 ( Addresses ) of the Agreement are set out in the Schedule.
3.      The New Lender confirms that it assumes the same obligations to the other Finance Parties as it would have been subject to if the New Lender would have been an Original Lender.
4.      The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph ‎(c) of Clause ‎29.4 ( Limitation of responsibility of Existing Lenders ) of the Agreement.
The New Lender expressly confirms that it [can/cannot] exempt the Agent from the restrictions pursuant to section 181 Civil Code ( Bürgerliches Gesetzbuch ) and similar restrictions applicable to it pursuant to any other applicable law as provided for in paragraph ‎(c) of Clause ‎31.1 ( Appointment of the Agent ).
[5.    The New Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of any Advance under a Finance Document is a Lender falling within paragraph (b) of the definition of "Qualifying Lender (UK)" in the Agreement.]
[[5/6].    This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.]
[5/6/7].    This Transfer Certificate is governed by German law.
THE SCHEDULE
Commitment/rights and obligations to be transferred
[ insert relevant details ]
[ Facility Office address, fax number and attention details for notices and account details for payments ,]
[Existing Lender]            [New Lender]
By:                    By:
This Transfer Certificate is accepted by the Agent on [ ].
[Agent]
SCHEDULE 6     
FORM OF ACCESSION LETTERS
Part A     
Borrower Accession Letter
To:    [ ] as Agent
From:    [ Subsidiary ] and [ Company ]
Dated:    
Dear Sirs
Linde AG – EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement
dated [ ] (the Agreement )

1.      We refer to the Agreement. This is a Borrower Accession Letter. Terms defined in the Agreement have the same meaning in this Borrower Accession Letter unless given a different meaning in this Borrower Accession Letter.
2.      [Subsidiary] agrees to become an Additional Borrower and to be bound by the terms of the Agreement as an Additional Borrower pursuant to Clause ‎30.2 ( Additional Borrowers ) of the Agreement. [Subsidiary] is a company duly incorporated under the laws of [name of relevant jurisdiction].
3.      We confirm to each Finance Party that each of the Repeated Representations is true and correct in all material respects relation to us as at the date hereof as if made by reference to the facts and circumstances existing on the date hereof.
4.      [Subsidiary’s] administrative details are as follows:
Address:    
Fax No:    
Attention:    
5.      This Borrower Accession Letter is governed by German law.
Linde AG    [Subsidiary]
    
Part B     
Form of Lender Accession Letter
To:    [ ] as Agent
From:    [ Subsidiary ] and [ Company ]
Dated:    
Dear Sirs

Linde AG – EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement
dated [ ] (the Agreement )

1.      We refer to the Agreement. This is a Lender Accession Letter. Terms defined in the Agreement have the same meaning in this Lender Accession Letter unless given a different meaning in this Lender Accession Letter.
2.      [ Affiliate Lender ] agrees to become an Issuing Bank and to be bound by the terms of the Agreement as an Issuing Bank pursuant to Clause ‎8.11 ( Affiliates of Lenders as Issuing Banks ) of the Agreement. [Affiliate Lender] is a financial institution duly incorporated under the laws of [name of Relevant Jurisdiction].
3.      [ Affiliate of Lender's ] administrative details are as follows:
Address:
Fax No:
Attention:
4.      This Lender Accession Letter is governed by German law.
[ Affiliate Lender ]            [Lender]


Part C     

Form of Lender Affiliate Accession Agreement
To:    [ ] as Agent
From:    [ Lender ] and [ Lender Affiliate ]
Dated:    
Dear Sirs

Linde AG – EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement
dated [ ] (the Agreement )

1.      We refer to the Agreement. This is a Lender Affiliate Accession Agreement. Terms defined in the Agreement have the same meaning in this Lender Affiliate Accession Agreement unless given a different meaning in this Lender Affiliate Accession Agreement.
2.      [ Lender Affiliate ] of [ address/registered office ] agrees to become a [ Lender Affiliate ] for the purposes of enabling [ Lender ] to fulfil its obligations to participate in or make any to [ Borrower or Borrowers or Borrower in particular jurisdiction ]] and to be bound by the terms of the Agreement as a [ Lender Affiliate ].
3.      We confirm that [ Lender Affiliate ] is an Affiliate of [ Lender ].
4.      The administrative details of the [ Lender Affiliate ] for the purposes of the Agreement are as follows:
Address:
Facility Office:
Address:
Telephone:
Facsimile:
Email:
Attn/Ref:
Account details:
5.      The [ Lender Affiliate ] expressly confirms that it [can/cannot] exempt the Agent from the restrictions pursuant to section 181 Civil Code ( Bürgerliches Gesetzbuch ) and similar restrictions applicable to it pursuant to any other applicable law as provided for in paragraph ‎(c) of Clause ‎31.1 ( Appointment of the Agent ).
6.      This Lender Affiliate Accession Agreement is governed by German law.
[ Lender ]            [ Lender Affiliate ]
SCHEDULE 7     
FORM OF RESIGNATION LETTER
To:    [ ] as Agent
From:    [ resigning Obligor ] and [ Company ]
Dated:    
Dear Sirs
Linde AG – EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement
dated [ ] (the Agreement )

1.      We refer to the Agreement. This is a Resignation Letter. Terms defined in the Agreement have the same meaning in this Resignation Letter unless given a different meaning in this Resignation Letter.
2.      Pursuant to [Clause ‎30.3 ( Resignation of a Borrower ) of the Agreement, we request that [resigning Obligor] be released from its obligations as a [Borrower] under the Agreement.
3.      We confirm that:
(a)
no Default is continuing or would result from the acceptance of this request; and
(b)
[ ]*
4.      This Resignation Letter is governed by German law.
[Company]    [Subsidiary]
By:        By:







* Insert any other conditions required by the Agreement.
SCHEDULE 8     
RESERVATIONS
Germany
1.
The obligations expressed to be assumed under the Finance Documents are subject to the limitations arising from the laws relating to bankruptcy, insolvency and all other laws affecting the rights of creditors generally.
2.
Any enforcement of the Finance Documents will be subject to generally applicable laws as applied by the courts or other competent authority of Germany.
3.
General German law requirements of fair dealing ( Treu und Glauben ) and public policy may lead to the application of general principles of German law being upheld in German courts or may render contracts or commitments void, voidable, not enforceable in accordance with their terms, or unenforceable.
4.
Where contractual or legal consequences are attached to the occurrence or non-occurrence of an event a German court would have discretion to decide (upon evidence being brought to it) whether such event has occurred.
5.
Any provision in the Finance Documents providing that certain certifications or determinations will be conclusive, binding and authoritative will not necessarily prevent judicial enquiry into the merits of any claim by any aggrieved party.
6.
Any provision in the Finance Documents stating that a notice or other expression of an intention or instruction or power of attorney is irrevocable may be open to challenge in circumstances where there have been material changes in the underlying situation.
7.
Where under the provisions of the Finance Documents any party is vested with a discretion or may determine a matter in its opinion, the laws of Germany may require that such a discretion is exercised reasonably or that such opinion is based on reasonable grounds.
8.
If a German court considers it impossible or unduly burdensome for an obligation to be performed the debtor is discharged from performing such obligation; the debtor may however be held liable for damages.
9.
A contractual requirement that notices or amendments must be made in writing may be complied with by electronic means of communication only if the email or fax address of the recipient has been made available by the recipient to the sender for such purpose.
10.
As regards payments made by a German resident to a non-resident, a notification has to be made to Deutsche Bundesbank for statistical purposes pursuant to section 59 et seq. German Foreign Trade and Payment Regulation ( Außenwirtschaftsverordnung ). The notification has to be filed by the relevant payor. Any omission of such notification may trigger an administrative fine ( Bußgeld ) under the Foreign Trade and Payment Regulation, but will neither affect the validity or enforceability of this Agreement nor otherwise cause disadvantageous legal consequences for non-resident legal entities or individuals receiving such payment.
11.
Obligations where any of the lenders is or will be deemed the direct or indirect shareholder of a German GmbH, will rank behind the general indebtedness of the German GmbH in its insolvency.
12.
These principles will, in principle, apply mutatis mutandis to a stock corporation ( Aktiengesellschaft ) if the relevant shareholder is under a financing liability ( Finanzierungsverantwortung ) for the corporation.
13.
If and to the extent that a claim of a Finance Party against a Borrower is subordinated pursuant to the criteria set out in item 11 above, upon rescission ( Anfechtung ) such Finance Party will be obliged to repay any payments on its subordinated claim received within the last year prior to the opening of insolvency proceedings of the relevant Borrower.
14.
Pursuant to section 489 of the German Civil Code ( Bürgerliches Gesetzbuch (BGB) ) any borrower may repay a loan facility with a variable interest rate at any time with three months' notice and may repay any loan facility with a fixed interest rate at the end of each period for which the interest is fixed, in each case without having to pay prepayment or breakage costs.
15.
Within the scope of section 354a of the German Commercial Code ( Handelsgesetzbuch (HGB) ), an assignment of monetary claims which are governed by German law would be valid even where this Agreement states that a claim shall not be assignable.
16.
If the performance of an obligation is contrary to the exchange control regulations of a member state of the International Monetary Fund, that obligation may be unenforceable in Germany by reason of paragraph 2 (b) of Article VIII of the International Monetary Fund Agreement.
The Netherlands

1.
The obligations under the Finance Documents are subject to and limited by the provisions of any applicable bankruptcy, insolvency, moratorium, suspension of payments, emergency and other similar rules and laws of general application relating to or affecting generally the enforcement of creditors’ rights and remedies from time to time in effect.
2.
The validity or enforceability of the Finance Documents or any legal act forming part thereof or contemplated thereby are subject to and limited by the protection afforded by Netherlands law to creditors whose interests have been adversely affected pursuant to the rules of Netherlands law relating to (x) unlawful acts based on section 6:162 et seq. of the Netherlands Civil Code and (y) fraudulent conveyance or preference ( actio pauliana ) within the meaning of section 3:45 of the Netherlands Civil Code and/or section 42 et seq. of the Netherlands Bankruptcy Act.
3.
Any enforcement of the Finance Documents and foreign judgments in the Netherlands will be subject to the rules of civil procedure as applied by the courts of the Netherlands; service of process for any proceedings before the courts of the Netherlands must be performed in accordance with Netherlands rules of civil procedure; the taking of concurrent proceedings in more than one jurisdiction in which Council Regulation (EC) No. 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the Council Regulation), the Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters of 27 September 1968 (as amended), or the 1988 Lugano Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters (together the Conventions ), is applicable, may be precluded by Article 27 of the Council Regulation or Article 21 of the Conventions; as regards jurisdiction generally, the courts of the Netherlands have powers to stay proceedings if concurrent proceedings are brought elsewhere; furthermore, the ability of any party to assume control over another party’s proceedings before the courts of the Netherlands may be limited by Netherlands rules of civil procedure.
4.
It is uncertain under Netherlands law whether, upon the enforcement of a money judgment expressed in a foreign currency against assets situated in the Netherlands by way of an enforced sale, proceeds can be obtained in such foreign currency.
5.
If insolvency proceedings would be opened under Netherlands law, claims of which payment is sought from the estate (and not from the enforcement of collateral security) in any currency other than euro must be valued on the basis of the exchange rate prevailing on the date on which such insolvency proceedings are opened.
6.
A Dutch Obligor may in certain circumstances have to comply with reporting requirements in connection with payments made to and by the Dutch Obligor under the Finance Documents pursuant to the Financial Foreign Relations Act 1994 and the rules promulgated thereunder.
7.
A power of attorney or mandate (i) can under Netherlands law only be made irrevocable to the extent its object is the performance of juridical acts in the interest of the representative appointed thereby or of a third party (and subject to the power of the court to amend or disapply the provisions by which it is made irrevocable for serious reasons and (ii) will terminate or become ineffective upon insolvency proceedings being opened under Netherlands law with respect to the issuer thereof (irrespective of the law applicable to the power of attorney).
8.
The amount of any payment under the Finance Documents which is in the nature of a liquidated damage payment may be mitigated by order of the court if this is manifestly required in the interest of fairness.
9.
Any assets of a Dutch Obligor that are destined for use in the public service are immune from attachment; furthermore, no attachment may be made on books and records required for the Dutch Obligor’s business.
10.
The courts of the Netherlands may (i) apply Netherlands law in a situation where those rules are mandatory irrespective of the law otherwise applicable to that Finance Document, (ii) give effect to the mandatory rules or the law of any other country with which the situation has a close connection, if and insofar as, under law of such country, those rules must be applied whatever the law applicable to that Finance Document, (iii) refuse the application of a rule of the law of any country otherwise applicable to that Finance Document, if such application is manifestly incompatible with the public policy ("ordre public") of the Netherlands and (iv) have regard to the laws of the country in which performance takes place as to the manner of performance and the steps to be taken in the event of defective performance.

SCHEDULE 9     
FORM OF CONFIDENTIALITY UNDERTAKING

[ letterhead of Existing Lender ]
To:



[insert name of Potential Lender]



EUR 2,500,000,000 Syndicated Multi-Currency Revolving Credit Facility Agreement  
between, inter alia, Linde AG and Deutsche Bank Luxembourg S.A. as Agent (the "Facility")  
dated [ ]



Dear Sirs,
We understand that you are considering to participate in the Facility. By your signature of a copy of this letter you agree as follows:
1.      Confidentiality Undertaking You undertake :
(i)
to keep the Confidential Information confidential and not to disclose it to anyone except as provided for by paragraph 2 below and to ensure that the Confidential Information is protected with security measures and a degree of care that would apply to your own confidential information;
(ii)
to keep confidential and not disclose to anyone the fact that the Confidential Information has been made available or that discussions or negotiations are taking place or have taken place between us in connection with the Facility;
(iii)
to use the Confidential Information only for the Permitted Purpose; and
(iv)
to use all reasonable endeavours to ensure that any person to whom you pass any Confidential Information (unless disclosed under paragraph 2(ii) below) acknowledges and agrees to comply with the provisions of this letter as if that person were also a party to it.
2.      Permitted Disclosure We agree that you may disclose Confidential Information:
(i)
to members of the Participant Group and their officers, directors, employees and professional advisers to the extent necessary for the Permitted Purpose and to any auditors of members of the Participant Group;
(ii)
(i) where requested or required by any court of competent jurisdiction or any competent judicial, governmental, supervisory or regulatory body, (ii) where required by the rules of any stock exchange on which the shares or other securities of any member of the Participant Group are listed or (iii) where required by the laws or regulations of any country with jurisdiction over the affairs of any member of the Participant Group; or
(iii)
with the prior written consent of us and the Borrower.
3.
Notification of Required or Unauthorized Disclosure You agree (to the extent permitted by law) to inform the Borrower and us as soon as becoming aware thereof of the full circumstances of any disclosure under paragraph 2(ii) or upon becoming aware that Confidential Information has been disclosed in breach of this letter.
4.
Return of Copies If we or the Borrower so request in writing, you shall return all Confidential Information supplied to you by us and/or by or on behalf of the Borrower or any other member of the Group and destroy or permanently erase all copies of Confidential Information made by you and use all reasonable endeavours to ensure that anyone to whom you have supplied any Confidential Information destroys or permanently erases such Confidential Information and any copies made by them, in each case save to the extent that you or the recipients are required to retain any such Confidential Information by any applicable law, rule or regulation or by any competent judicial, governmental, supervisory or regulatory body or in accordance with internal policy, or where the Confidential Information has been disclosed under paragraph 2(ii) above. Any Confidential Information not to be returned, destroyed or erased pursuant to the preceding sentence shall be kept confidential until it may be returned, destroyed or erased.
5.
Continuing Obligations The obligations in this letter are continuing and, in particular, shall survive the termination of any discussions or negotiations between you and us and/or the Borrower or any other member of the Group. Notwithstanding the previous sentence, the obligations in this letter shall cease (a) if you become a party to the agreement documenting the Facility or (b) twelve months after you have returned all Confidential Information supplied to you by us and/or by or on behalf of the Borrower or any other member of the Group and destroyed or permanently erased all copies of Confidential Information made by you (other than any such Confidential Information or copies which have been disclosed under paragraph 2 above (other than sub-paragraph 2(i)) or which, pursuant to paragraph 4 above, are not required to be returned or destroyed).
6.      No Representation; Consequences of Breach, etc You acknowledge and agree that:
(i)
neither we nor any member of the Group nor any of our or their officers, employees or advisers (each a "Relevant Person") (i) make any representation or warranty, express or implied, as to, or assume any responsibility for, the accuracy, reliability or completeness of any of the Confidential Information or any other information supplied by us or any member of the Group or the assumptions on which it is based or (ii) shall be under any obligation to update or correct any inaccuracy in the Confidential Information or any other information supplied by us or any member of the Group or be otherwise liable to you or any other person in respect to the Confidential Information or any such information (in the case of the relevant members of the Group, in each case without prejudice to any related representation and warranty that may be given in the agreement documenting the Facility); and
(ii)
we or members of the Group may be irreparably harmed by the breach of the terms of this letter and damages may not be an adequate remedy; each Relevant Person may be granted an injunction for specific performance for any threatened or actual breach of the provisions of this letter by you.
7.
No Waiver; Amendments, etc. This letter sets out the full extent of your obligations of confidentiality owed to us, the Borrower and each member of the Group in relation to the information the subject of this letter. No failure or delay in exercising any right, power or privilege under this letter will operate as a waiver thereof nor will any single or partial exercise of any right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privileges under this letter. The terms of this letter and your obligations under this letter may only be amended or modified by written agreement between us, subject in each case to the prior written consent of the Borrower.
8.
Inside Information You acknowledge that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation relating to insider dealing and you undertake not to use any Confidential Information for any unlawful purpose .
9.
Nature of Undertakings The acknowledgements and undertakings given by you under this letter are given to us and (without implying any fiduciary obligations on our part) are also given for the benefit of the Borrower and each other member of the Group in the form of a contract in favour of the Borrower and each other member of the Group as third party beneficiaries pursuant to §328(1) of the German Civil Code.
10.      Definitions In this letter (including the acknowledgement set out below):
" Borrower " means Linde AG.
" Confidential Information " means any information relating to the Borrower, the Group, any member thereof, and the Facility provided to you by us and/or the Borrower or any other member of the Group or any of our affiliates or advisers or any adviser of any member of the Group, in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that (a) is or becomes public knowledge other than as a direct or indirect result of any breach of this letter or (b) is known by you before the date the information is disclosed to you by us and/or the Borrower or any other member of the Group or any of our affiliates or advisers or any adviser of any member of the Group or is lawfully obtained by you after that date, other than from a source which is connected with the Group and which, in either case, as far as you are aware, has not been obtained in violation of, and is not otherwise subject to, any obligation of confidentiality;
" Group " means the Borrower and each of its Subsidiaries and each Subsidiary;
" Participant Group " means you, each of your Holding Companies and Subsidiaries and each Subsidiary of each of your Holding Companies;
" Permitted Purpose " means considering and evaluating whether to participate in the Facility; and
" Subsidiary " means an entity from time to time of which another person has direct or indirect control. For this purpose, one person being "controlled" by another means that (i) the second one owns more than 50% of the equity share capital of the first or has the right to receive more than 50% of the dividends declared from time to time by the first; or (ii) the second has the right to appoint a majority of the board of directors or supervisory board of the first, and "control" shall be construed accordingly.
11.
Governing Law and Jurisdiction This letter (including the agreement constituted by your acknowledgement of its terms) shall be governed by and construed in accordance with the laws of Germany and the parties submit to the non-exclusive jurisdiction of the courts of Frankfurt am Main.
Please acknowledge your agreement to the above by signing and returning the enclosed copy to [Existing Lender], [Attn.], Fax: [ ].
Yours faithfully

[Existing Lender]



We acknowledge and agree to the above:


…................................
For and on behalf of
[Potential Lender]

SCHEDULE 10     
TIMETABLES
Part A     
Revolving Facility Loans
"U" refers to the relevant Utilisation Date and/or the first day of the relevant Interest Period.
 
Loans in Euro
Loans in GBP
Loans in USD
Loans in other currencies
Company submits request for a currency to be approved under paragraph (a)(ii) of Clause 5.3 ( Conditions relating to Optional Currencies ) as an Optional Currency to the Agent
n.a.
n.a.
n.a.
U-6
Agent notifies the Company if a currency is approved as an Optional Currency in accordance with Clause 5.3 ( Conditions relating to Optional Currencies )
n.a.
n.a.
n.a.
U-4
Delivery of a duly completed Utilisation Request (Clause 6.1 ( Delivery of a Utilisation Request )
U-3
2.30 p.m.
U-3
11.00 a.m.
U-3
11.00 a.m.
U-3
11.00 a.m.
Agent determines (in relation to a Utilisation) the Base Currency Amount of the Loan, if required under Clause 6.4(c) ( Lenders’ participation ) and notifies the Lenders of the Loan in accordance with Clause ‎6.4(c) ( Lenders’ participation )
U-3
U-3
U-3
U-3
Agent receives a notification from a Lender under Clause 11.2 ( Unavailability of a currency )
n.a.
n.a.
n.a.
Quotation Day
9.00 a.m.
Agent gives notice in accordance with Clause 11.2 ( Unavailability of a currency )
n.a.
n.a.
n.a.
Quotation Day
9.30 a.m.
Agent determines amount of the Loan in an Optional Currency in accordance with Clause 34.9 ( Change of currency )
n.a.
Quotation Day for the second Interest Period

Quotation Day for the second Interest Period

Quotation Day for the second Interest Period

EURIBOR or LIBOR is fixed
Quotation Day as of 11:00 am in respect of EURIBOR
Quotation Day as of 11:00 a.m. (London time) in respect of LIBOR
Quotation Day as of 11:00 a.m. (London time) in respect of LIBOR
Quotation Day as of 11:00 a.m. (London time) in respect of LIBOR
Part B     
Swingline Loans

 
Loans in Euro
Loans in GBP
Loans in USD
Loans in other currencies
Delivery of a duly completed Utilisation Request (Clause 9.2 ( Delivery of a Utilisation Request for Swingline Loans ))
U
9.30 a.m.
n.a.
U
9.30 a.m.
New York time
n.a.
Relevant Agent notifies each Swingline Lender of the amount of its participation in the Swingline Loan pursuant to Clause 9.4(d) ( Swingline Lenders' participation )
U
10.30 a.m.
n.a.
U
10.30 a.m.
New York time
n.a.
Relevant Agent determines Relevant Swingline Rate under Clause 10.4 ( Interest )
U
11.00 a.m.

n.a.
U
11.00 a.m.
New York time
n.a.


Part C     
Letters of Credit

"U" refers to the relevant Utilisation Date.

Delivery of a duly completed Utilisation Request (Clause 7.3 ( Delivery of a Utilisation Request for Letters of Credit ))
U-3
9.30 a.m.
 
 
Issuing Bank informs the Agent and the relevant Borrower whether it intends to issue or to refuse the requested Letter of Credit (paragraph (a) of Clause 7.6 ( Issue of Letters of Credit ))
U-2
12.00 noon
 
 
If the Issuing Bank has informed the Agent that it intends to issue the requested Letter of Credit, Agent determines (in relation to a Utilisation) the Base Currency Amount of the Letter of Credit, if required under Clause 7.6 ( Issue of Letters of Credit ) and notifies the Issuing Bank and the Lenders of the Letter of Credit in accordance with ‎7.6 ( Issue of Letters of Credit )
U-2
3.00 pm
 
 
Delivery of a duly completed Renewal Request (Clause 7.7 ( Renewal of a Letter of Credit )
U-3
9.30 a.m.


SCHEDULE 11     
FORM OF PROCESS AGENT APPOINTMENT LETTER
To:    [ ] as process agent
From:    [Obligor (other than an Obligor incorporated in Germany)]
Date:    [•]
Dear Sirs
Linde AG – EUR 2,500,000,000 Revolving Credit Facility Agreement
dated [ ] (the Agreement )

We refer to the Agreement and hereby irrevocably appoint you as our agent for service of process ( Zustellungsbevollmächtigter ) in relation to any proceeding before any German court in connection with the above mentioned Agreement.
This letter is governed by German law.
Signed:    …..................                …..................
[Authorised signatory]            [Authorised signatory]
of                    of
[ Obligor ]                [ Obligor ]




SCHEDULE 12     
LIST OF EXCLUDED SUBSIDIARIES

African Oxygen Limited, Republic of South Africa
BOC Kenia Limited
BOC Gases Nigeria PLC
BOC Pakistan Limited
BOC Bangladesh Limited
Linde India Limited



SIGNATURES
THE ORIGINAL BORROWERS

LINDE AG        
By:        G. Denoke                ppa Schneider        

Address:    Klosterhofstrasse 1
    80331 Munich
    Germany
Fax:    
Attention:    

LINDE FINANCE B.V.
By:    Emir Erkan                Jörg Meier

Address:
Buitenveldertselaan 106
1081 AB Amsterdam
    The Netherlands
Fax:    +31 20 301 3809
Attention:    Micha Glaser




THE GUARANTOR

LINDE AG
By:    G. Denoke                ppa Schneider

Address:    Klosterhofstrasse 1
    80331 Munich
    Germany
Fax:    
Attention:    


THE ARRANGERS

BARCLAYS BANK PLC
By:    Roger Cosby

Name:
Roger Cosby
Director




BAYERISCHE LANDESBANK
By:    Dittler                Link

Name:        Gerhard Dittler            Christian Link




BANC OF AMERICA SECURITIES LIMITED
By:    A. Seyan

Name:        Amardeep Singh Seyan
        Director

BANK OF CHINA LIMITED ZWEIGNIEDERLASSUNG FRANKFURT AM MAIN FRANKFURT BRANCH
By:    Fang Wang            Meist

Name:        Fang Wang            Bernd Meist
        Deputy General Manager    Managing Director



BNP PARIBAS FORTIS SA/NV, NIEDERLASSUNG DEUTSCHLAND
By:    Sooth                Friedrich

Name:        Bernd Sooth            Andreas Friedrich
                        Head of Analysis Germany




CITIGROUP GLOBAL MARKETS LIMITED
By:    Lucy Devlin

Name:        Lucy Devlin
        Vice President


COMMERZBANK AKTIENGESELLSCHAFT
By:    Haas                M. Grape

Name:        Reinhard Haas            Michel Grape




CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK DEUTSCHLAND
By:    Schönherr            F. v. Kirch

Name:        Frank Schönherr        Ferdinand von Kirch
        General Manager        Managing Director




DEUTSCHE BANK AG
By:    Gaab                J. Hornung

Name:        M. Gaab            J. Hornung


DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK, FRANKFURT AM MAIN
By:     Döllinger            Derst

Name:        Dr. B. Döllinger        Sabine Derst




HSBC BANK PLC
By:    G R Jolly

Name:        Guy Richmond Jolly




ING BANK, A BRANCH OF ING-DIBA AG
By:    Berthold            Abe Koldijk

Name:        Berthold            Koldijk





LANDESBANK BADEN-WÜRTTEMBERG
By:    Diewald                Baral

Name:        Katrin Diewald                Günter Baral




LLOYDS TSB BANK PLC
By:    Frank Krickelberg            Stephanie Betz

Name:        Frank Krickelberg            Stephanie Betz
        Head of Corporate Germany        Associate Director
                            Transaction Execution




MIZUHO BANK LTD.
By:    Y. Takata                Ralf Gerhardt

Name:        Yoshizumi Takata            Ralf Gerhardt
        Joint General Manager            Senior Director
                            Corporate Finance Department II
                            Germany / Switzerland






MORGAN STANLEY BANK INTERNATIONAL LIMITED
By:    N. Ansari

Name:        Nauman Ansari




ROYAL BANK OF CANADA
By:    Müller-Wiefel

Name:        Susanne Müller-Wiefel




SEB AG
By:    M. Zottmann                Kalteier

Name:        Marion Zottmann            Michaela Kalteier






STANDARD CHARTERED BANK
By:    Singharay

Name:        Hiren Singharay




SUMITOMO MITSUI BANKING CORPORATION
By:    J. Legens                Wimmer

Name:        Jörg Legens                Harald Wimmer




THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., DÜSSELDORF BRANCH
By:    T. Fukuzumi                    M Knappertsbusch

Name:        Mr. Takashi Fukuzumi            Mr. Maximilian Knappertsbusch
        Deputy General Manager        Department Head
                            Corporate Banking Division
                            For EMES, Düsseldorf






TD BANK EUROPE LIMITED
By:    Bates

Name:        Philip Bates




UNICREDIT BANK AG
By:    Kaiser                Schiller

Name:        Thomas Kaiser            Marion Schiller



    
THE ORIGINAL LENDERS

BARCLAYS BANK PLC
By:    Roger Cosby

Name:        Roger Cosby
        Director




BAYERISCHE LANDESBANK
By:    Vogel                Heinen

Name:        Victor Vogel            Kim Marc Heinen




BANC OF AMERICA SECURITIES LIMITED
By:    A. Seyan

Name:        Amardeep Singh Seyan
        Director

BANK OF CHINA LIMITED ZWEIGNIEDERLASSUNG FRANKFURT AM MAIN FRANKFURT BRANCH
By:    Fang Wang                Meist

Name:        Fang Wang                Bernd Meist
        Deputy General Manager        Managing Director




BNP PARIBAS FORTIS SA/NV, NIEDERLASSUNG DEUTSCHLAND
By:    Sooth                Friedrich

Name:        Bernd Sooth            Andreas Friedrich
                        Head of Analysis Germany




CITIBANK N.A. IN NEW YORK, FILIALE FRANKFURT
By:    Stefan Hafke

Name:        Stefan T. Hafke
        Managing Director
COMMERZBANK AKTIENGESELLSCHAFT, FILIALE LUXEMBURG
By:    Bahn                Meintani

Name:        Bianca Bahn            Angeliki Meintani




CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK DEUTSCHLAND
By:    Schönherr                F. v. Kirch

Name:        Frank Schönherr            Ferdinand von Kirch
        General Manager            Managing Director




DEUTSCHE BANK LUXEMBOURG S.A.
By:    Belhoste                Sinn-Conrad

Name:        Belhoste                M. Sinn-Connrad
DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK, FRANKFURT AM MAIN
By:    Döllinger                Derst

Name:        Dr. B. Döllinger            Sabine Derst




HSBC BANK PLC
By:    G. R. Jolly

Name:        Guy Richmond Jolly




HSBC TRINKAUS & BURKHARDT AG
By:    Bernhof                Bock

Name:        Bernhof, Marc            Bock, Andreas
ING BANK, A BRANCH OF ING-DIBA AG
By:    Berthold                Abe Koldijk

Name:        Berthold                Koldijk




LANDESBANK BADEN-WÜRTTEMBERG
By:    Diewald                Baral

Name:        Katrin Diewald                Günter Baral




LLOYDS TSB BANK PLC
By:    Frank Krickelberg            Stephanie Betz

Name:        Frank Krickelberg            Stephanie Betz
        Head of Corporate Germany        Associate Director
                            Transaction Execution
MIZUHO BANK LTD.
By:    Y. Takata                Ralf Gerhardt

Name:        Yoshizumi Takata            Ralf Gerhardt
        Joint General Manager            Senior Director
                            Corporate Finance Department II
                            Germany /Switzerland




MORGAN STANLEY BANK, N.A.
By:    Michael King        

Name:        Michael King
        Authorized Signatory




ROYAL BANK OF CANADA
By:    Müller-Wiefel

Name:        Susanne Müller-Wiefel
SEB AG
By:    M. Zottmann                Kalteier

Name:        Marion Zottmann            Michaela Kalteier




STANDARD CHARTERED BANK
By:    Singharay

Name:        Hiren Singharay




SUMITOMO MITSUI BANKING CORPORATION
By:    J. Legens                    Wimmer

Name:        Jörg Legens                    Harald Wimmer
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., DÜSSELDORF BRANCH
By:    T. Fukuzumi                M. Knappertsbusch

Name:
Mr. Takashi Fukuzumi            Mr. Maximilian Knappertsbusch          Deputy General Manager        Department Head Corporate Banking
                        Division For EMEA, Düsseldorf



TD BANK EUROPE LIMITED
By:    Bates

Name:        Philip Bates




UNICREDIT LUXEMBOURG S.A.
By:    Moos                        S. Dell'Atti

Name:        Erwin Moos                    Simone Dell'Atti
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
By:    Seeger                        Munk

Name:        Martin Seeger                    Adam Munk




COMMBANK EUROPE LIMITED
By:    Ray DeCarlo

Name:        Raymond DeCarlo




INTESA SANPAOLO S.P.A., FRANKFURT BRANCH
By:    Rücken                    Ratje

Name:        Martin Rücken                Stephan Ratje
JPMORGAN CHASE BANK, N.A.
By:    R. O. Kimpel

Name:        Ralph Kimpel




LANDESBANK HESSEN-THÜRINGEN GIROZENTRALE
By:    Klich                            F. Uania

Name:        Klich                            Fabian Uania




RIYAD BANK LONDON BRANCH
By:    F. Mitchell                        S. Hill

Name:        Frank Mitchell                        Sue Hill
SOCIETE GENERALE, FRANKFURT BRANCH
By:    Beck                    A. Laske

Name:        Manfred Beck                Andreas Laske




THE BANK OF NEW YORK MELLON
By:    William M. Feathers

Name:        William M. Feathers
        Vice President



WELLS FARGO BANK INTERNATIONAL
By:    John O'Brien                Tom Schubert

Name:        Jason O'Brien                Tom Schubert
        Head of Operations            Chief Risk Officer
        Wells Fargo Bank International        Wells Fargo Bank International

WESTPAC BANKING CORPORATION
By:    S Ehr

Name:        Susan Ehr
        Tier One Attorney
THE SWINGLINE LENDERS

BARCLAYS BANK PLC
By:    Roger Cosby

Name:        Roger Cosby
         Director



BAYERISCHE LANDESBANK
By:    Vogel                Heinen

Name:        Victor Vogel            Kim Marc Heinen




For Swingline Loans denominated in US Dollar
BAYERISCHE LANDESBANK NEW YORK BRANCH
By:    Vogel                Zötl

Name:        Victor Vogel            Walter Zötl



BANC OF AMERICA SECURITIES LIMITED
By:    A. Seyan

Name:        Amardeep Singh Seyan
        Director



For Swingline Loans denominated in US Dollar
BANK OF AMERICA, N.A.
By:    George Hlentzas

Name:        George Hlentzas
        Director



BNP PARIBAS FORTIS SA/NV, NIEDERLASSUNG DEUTSCHLAND
By:    Sooth                    Friedrich

Name:        Bernd Sooth                Andreas Friedrich
                             Head of Analysis Germany





CITIBANK N.A. IN NEW YORK, FILIALE FRANKFURT
By:    Stefan Hafke

Name:        Stefan T. Hafke
        Managing Director



For Swingline Loans denominated in US Dollar
CITIBANK, N.A.
By:    R. Basham

Name:        Richard Basham
        Managing Director



COMMERZBANK AKTIENGESELLSCHAFT, FILIALE LUXEMBURG
By:    Bahn                Meintani

Name:        Bianca Bahn            Angeliki Meintani






For Swingline Loans denominated in US Dollar
COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
By:    Philipp Huesgen                Carl Kemmerer

Name:        Philipp Huesgen            Carl Kemmerer
        Vice President                Vice President





CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK DEUTSCHLAND
By:    Schönherr                    F.v.Kirch

Name:        Frank Schönherr                Ferdinand von Kirch
        General Manager                Managing Director




DEUTSCHE BANK LUXEMBOURG S.A.
By:    Belhoste                    M. Sinn-Conrad

Name:        Belhoste                    M. Sinn-Conrad




DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK, FRANKFURT AM MAIN
By:    Döllinger                Derst

Name:        Dr. B. Döllinger            Sabine Derst




For Swingline Loans denominated in US Dollar
DZ BANK AG, NEW YORK BRANCH
By:    Mark P. Markowski            Dominik Ochs

Name:        Mark P. Markowski            Dominik Ochs





HSBC BANK PLC
By:    G. R. Jolly

Name:        Guy Richmond Jolly



ING BANK, A BRANCH OF ING-DIBA AG
By:    Berthold                Abe Koldijk

Name:        Berthold                Koldijk




For Swingline Loans denominated in US Dollar
ING BANK N.V., DUBLIN BRANCH
By:    Emma Condon                Aidan Neill

Name:        Emma Condon                Aidan Neill
        Vice President                Director




LANDESBANK BADEN-WÜRTTEMBERG
By:    Diewald                    Baral

Name:        Katrin Diewald                    Günter Baral





For Swingline Loans denominated in US Dollar
LANDESBANK BADEN-WÜRTTEMBERG, NEW YORK BRANCH
By:    Diewald                    Baral

Name:        Katrin Diewald                    Günter Baral




LLOYDS TSB BANK PLC
By:    Frank Krickelberg                Stephanie Betz

Name:        Frank Krickelberg                Stephanie Betz
        Head of Corporate Germany            Associate Director
                                Transaction Executive



MIZUHO BANK LTD.
By:    Y. Takata                    Ralf Gerhardt

Name:        Yoshizumi Takata                Ralf Gerhardt
        Joint General Manager                Senior Director
                                 Corporate Finance Department II



MORGAN STANLEY BANK, N.A.
By:    Michael King

Name:        Michael King
        Authorized Signatory


 

ROYAL BANK OF CANADA
By:    Müller-Wiefel

Name:        Susanne Müller-Wiefel





For Swingline Loans denominated in US Dollar
ROYAL BANK OF CANADA, NEW YORK BRANCH
By:    Müller-Wiefel

Name:        Susanne Müller-Wiefel




SEB AG
By:    M. Zottmann                    Kalteier

Name:        Marion Zottmann                Michael Kalteier




STANDARD CHARTERED BANK
By:    Singharay

Name:        Hiren Singharay





SUMITOMO MITSUI BANKING CORPORATION
By:    J. Legens                    Wimmer

Name:        Jörg Legens                    Harald Wimmer





THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., DÜSSELDORF BRANCH
By:    Fukuzumi                M. Knappertsbusch

Name:
Mr. Takashi Fukuzumi            Mr. Maximilian Knappertsbusch     
Deputy General Manager        Department Head Corporate Banking
                    Division For EMEA, Düsseldorf




For Swingline Loans denominated in US Dollar
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH
By:    Charles Stewart

Name:        Charles Stewart
        Director



TD BANK EUROPE LIMITED
By:    Bates

Name:        Philip Bates




UNICREDIT LUXEMBOURG S.A.
By:    Moos                        S. Dell'Atti

Name:        Erwin Moos                    Simone Dell'Atti



THE EUR SWINGLINE AGENT
DEUTSCHE BANK LUXEMBOURG S.A.
By:    Blumhoff                    Ewerhardy

Name:        Gwen Blumhoff                    Ewerhardy
Address:
International Loans and Agency Services
2, Boulevard Konrad Adenauer
L-1115 Luxembourg
Luxembourg
Fax:        +352 421 22 95771
Attention:    Franz-Josef Ewerhardy / Johannes Philippi

THE USD SWINGLINE AGENT
DEUTSCHE BANK AG, NEW YORK Branch
By:    M. Lutz                        Philippi

Name:        M. Lutz                        Philippi
Address:
5022 Gate Parkway, Suite 200
Jacksonville, FL 322 56
USA
Fax:        +1 (866)2403622 / +1(904)494 6815
Attention:    Lee Joyner





THE AGENT
DEUTSCHE BANK LUXEMBOURG S.A.
By:    Blumhoff                    Ewerhardy

Name:        Gwen Blumhoff                    Ewerhardy
Address:
International Loans and Agency Services
2, Boulevard Konrad Adenauer
L-1115 Luxembourg
Luxembourg
Fax:        +352 421 22 95771
Attention:    Franz-Josef Ewerhardy / Johannes Philippi


THE ORIGINAL ISSUING BANKS

BNP PARIBAS FORTIS SA/NV, NIEDERLASSUNG DEUTSCHLAND
By:    Sooth                        Friedrich

Name:        Bernd Sooth                    Andreas Friedrich
                                Head of Analysis Germany



THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., DÜSSELDORF BRANCH
By:    Fukuzumi                M. Knappertsbusch

Name:
Mr. Takashi Fukuzumi            Mr. Maximilian Knappertsbusch     
Deputy General Manager        Department Head Corporate Banking
                    Division For EMEA, Düsseldorf






October , 2018


[NAME]
[ADDRESS]

Dear [NAME]:

As you are aware, Praxair, Inc. and Linde AG have announced their intention to combine their businesses (the “ Combination ”) under a new parent company, Linde plc. Once the Combination closes, Linde plc will be a “Successor” for purposes of the Severance Compensation Agreement between you and Praxair dated as of [insert] (the “ Severance Agreement ”).
Pursuant to Section 4.a. of the Severance Agreement, Praxair must require any Successor to assume and agree to perform the obligations under the Severance Agreement. Accordingly, this letter serves as your notice from Linde plc that it hereby (1) assumes the Severance Agreement subject to and effective upon the closing of the Combination, and (2) agrees that, from and after the closing of the Combination, it will perform the Severance Agreement in the same manner and to the same extent that Praxair would be required to perform the Severance Agreement if such closing had not occurred.
This letter also serves as your notice from Praxair that the Severance Agreement will terminate effective December 31, 2018. You hereby accept Praxair’s notice of such termination of the Severance Agreement and acknowledge your waiver of the requirement in Section 3 of the Severance Agreement that such notification be made not later than September 30, 2018. Further, in accordance with Section 3 of the Severance Agreement, if the Combination (or another a Change in Control) occurs within twelve months following the date of this letter, then this termination of the Severance Agreement will be deemed ineffective and the Severance Agreement will continue in effect until the second anniversary of the Combination (or such other Change in Control), at which time it will automatically terminate.
All capitalized terms not defined in this letter have the meaning ascribed to them in the Severance Agreement.

  
* * *

To acknowledge and accept the foregoing, please sign and return this letter.
Sincerely,
Praxair, Inc.
 
By
 
 
Name:
 
 
Title:
 


Linde plc
 
By
 
 
Name:
 
 
Title:
 


Acknowledgement:

[NAME]


Date: ______________________, 2018



NON-BINDING CONVENIENCE TRANSLATION ONLY March 2018 SECOND AMENDMENT AGREEMENT TO THE SERVICE AGREEMENT AND TO THE LTIP PLAN CONDITIONS between Linde Aktiengesellschaft represented by its Supervisory Board and [Executive Board Member] hereinafter referred to as "Counterparty"

 
2 NON-BINDING CONVENIENCE TRANSLATION ONLY Second Amendment to Service Agreement and LTIP Plan Conditions WHEREAS, A. The Counterparty and Linde Aktiengesellschaft ("Linde AG", "Linde" or the "Company"), represented by the chairman of the supervisory board, entered into a service agreement (the "Service Agreement"). B. By shareholders' resolution dated 4 May 2012, the general meeting of Linde AG resolved to create a conditional capital to grant subscription rights to members of the executive board of Linde, to executives of affiliated companies in Germany and abroad as well as to selected senior level employees of Linde and its affiliated companies, respectively (jointly the "Participants") under the so-called Long-Term Incentive Plan 2012 ("LTIP"). At the same time, the general meeting authorized the executive board and as regards the granting of subscription rights to the members of the executive board the supervisory board of the Company to grant subscription rights to the Participants in annual tranches (each a "Tranche") and subject to certain specified conditions. The conditional capital was registered with the commercial register of the Company on 22 May 2012. C. The terms under which Linde grants subscription rights to the Participants are specified for each Tranche in plan conditions that are part of the agreements concluded with the individual Participants in connection with their participation in LTIP. The plan conditions for the Tranches granted from 2012 through 2017 (jointly the "Plan Conditions") are substantially identical (other than with respect to dates etc.). D. The Plan Conditions provide that the Participants be granted option rights to subscribe for newly issued stock of Linde AG for a strike price equal to the nominal value of each share (being the legally permissible minimum strike price) (the "Option"). The Options of a Tranche are in principle granted as of 1 June of that calendar year during which the respective Tranche is issued (the "Grant Date"). They may be exercised for the first time four years after the Granting Date of the respective Tranche (the "Waiting Period") and have to be exercised within twelve months after the Waiting Period for the respective Tranche has expired. For the Options to be exercisable, one of two performance targets has to be achieved (performance target "earnings per share" and performance target "relative total shareholder return"), and the Options must not have been forfeited. E. In addition, the Participants who belong to the bands 5 and above of the Linde remuneration system including the members of the executive board of Linde AG are obliged to acquire Linde stock with their own funds and to continue to hold such shares until the end of the applicable Waiting Period without disposing over such shares; if such disposal occurs, the relevant Options of such Participant are forfeited. For any such share

 
3 NON-BINDING CONVENIENCE TRANSLATION ONLY Second Amendment to Service Agreement and LTIP Plan Conditions thus acquired, Linde AG grants to the relevant Participant at the end of the applicable Waiting Period one Linde share for free. F. The service agreements of the members of the executive board of Linde AG also provide that each executive board member is required to re-invest 40% of his annual bonus after deduction of taxes in Linde stock and to keep the shares thus acquired for a waiting period of four years (the "Deferral Component" within the meaning of the service agreements and the shares thus acquired and held the "Deferral Shares" and the respective provisions of the service agreements the "Deferral Share Provisions"). G. On 1 June 2017, Linde and Praxair, Inc. ("Praxair"), among others, entered into a business combination agreement (the "BCA") regarding the business combination of both companies (the "Transaction"). As part of the Transaction, the newly founded Linde plc has issued an exchange offer pursuant to sections 29 et seqq. of the German Takeover Act (WpÜG) to all shareholders of Linde (the "Exchange Offer") under which it has offered to exchange 1.54 shares in Linde plc for each Linde share (the "Exchange Ratio"). Such Exchange Offer has been accepted for 92.05% of the outstanding Linde shares. Consequently, Linde plc will be the (indirect) majority shareholder of Linde upon the completion of the Transaction (the "Closing"). Further, certain integration measures such as a domination and/or profit and loss transfer agreement (the "DPLTA") or a merger-related squeeze-out (the "Squeeze-out"; Squeeze-out and DPLTA each a "Post- Closing Reorganization Measure") are generally possible. Also on 1 June 2017, the Counterparty and Linde entered into an amendment agreement to the Service Agreement to which the parties hereto expressly refer. H. Upon the issuance of the Tranche for 2017, the LTIP has expired. Against the background of the contemplated Closing of the Transaction in the second half of 2018 and potential Post-Closing Reorganization Measures, Linde will not renew the LTIP for 2018. Further, the parties agree that the variable elements of the remuneration of the executive board members with respect to 2018 shall not depend on achieving the multi- year performance targets "earnings per share" and/or "relative total shareholder return" and that, therefore, as an exception and for the interim period until the Closing of the Transaction, the variable remuneration of the executive board members for the entire year of 2018 shall, for all practical purposes, depend on the performance targets with regard to the annual variable remuneration component. The parties further agree that any self- financed investment and the Deferral Component shall relate to Linde shares which were tendered into the Exchange Offer (currently 92.05% of the Linde shares).

 
4 NON-BINDING CONVENIENCE TRANSLATION ONLY Second Amendment to Service Agreement and LTIP Plan Conditions NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: § 1 Remuneration pursuant to clause 3 para. 4 of the Service Agreement for 2018 (a) For the year 2018, 80 per cent of the annual remuneration amount specified in section 3 para. 4 of the Service Agreement of the Counterparty shall, as an exception, be granted by way of variable cash remuneration. (b) For 2018, the cash remuneration under section 1(a) above shall consist of a ROCE-based component plus a component based on operating margin, both multiplied by an individual performance multiplier. (i) If in the fiscal year 2018 the return on capital employed (ROCE) of the Linde Group reaches or exceeds the performance hurdle determined by the supervisory board for the purpose of section 3 para. 2 lit. a) of the Service Agreement, the Counterparty shall receive a gross amount of EUR (in w ) for each 0.1 percentage point of ROCE achieved (ROCE-based Component). (ii) Upon reaching the performance hurdles determined by the supervisory board for the purpose of section 3 para. 2 lit. b) of the Service Agreement which may relate in particular to the operating margin of the Linde Group or of the segment for which the Counterparty is responsible, the Counterparty shall receive a gross amount of EUR each 0.1 percentage point of operating margin achieved by the Linde Group or, if so determined by the supervisory board, by the segment for which the Counterparty is responsible (Operating Margin-based Component). The supervisory board may determine that, depending on the degree to which performance hurdles are reached, only a part of the operating margin achieved is included in the calculation of the remuneration. (iii) Section 3 para. 2 lit. f) of the Service Agreement shall apply mutatis mutandis. (c) The cash remuneration under section 1(a) above shall not exceed 120% of the annual remuneration amount specified in section 3 para. 4 of the Service Agreement of the Counterparty. (d) For the purposes of the Service Agreement, the remuneration described in this section 1 shall not be construed as a component of the annual variable remuneration provided in section 3 para. 2 of the Service Agreement.

 
5 NON-BINDING CONVENIENCE TRANSLATION ONLY Second Amendment to Service Agreement and LTIP Plan Conditions § 2 Matching Share Rights / Self-financed Investment for 2018 (a) Payment of the remuneration under section 1 of this Agreement shall be subject to a self- financed investment by the Counterparty in Linde shares which were tendered into the Exchange Offer (the "Self-financed Investment Shares") and to the Counterparty not disposing of or otherwise transferring (excluding the transfer of Linde shares to Linde plc as part of the settlement of the Exchange Offer) those Linde shares or if the Exchange Offer has been settled the shares in Linde plc received in exchange for Linde shares until 1 June 2022 (the "Waiting Period"). The Counterparty shall be notified by way of an individual award letter about the definite number of required Self-financed Investment Shares. (b) Linde is entitled to open a securities account into which the shares acquired pursuant to section 2(a) of this Agreement shall be transferred. The self-financed investment pursuant to section 2(a) of this Agreement shall be made within two months following the issue date, i.e. 1 August 2018. The Self-financed Investment Shares shall be transferred to the securities account free of any third party rights. Linde plc shall not be considered as a third party with respect to the preceding sentence. (c) The Counterparty shall not enter into any hedging arrangements or back-to-back transactions by which the price risk pertaining to the Self-financed Investment Shares is fully or partially economically hedged. The Counterparty shall further not grant any sub- participations in the Self-financed Investment Shares nor agree on any trust relationship relating to Self-financed Investment Shares if the Counterparty acts as trustee. (d) In acquiring Self-financed Investment Shares, the Counterparty shall ensure that he does not violate mandatory insider trading restrictions. If the Counterparty for this reason is not allowed to make the self-financed investment within the time period specified in section 2(b) of this Agreement, such time period shall be extended by that period during which mandatory law interdicts such acquisition. In this case, the end of the time period specified in section 2(b) of this Agreement shall be announced by Linde. If the Counterparty for this reason is not allowed to make the self-financed investment prior to the Closing of the Transaction, Linde shall be entitled to waive the self-financed investment as precondition for receiving the remuneration under section 1 of this Agreement and may agree on an individual basis on the remuneration of Matching Shares within the meaning of section 2(e) below. (e) For each Self-financed Investment Share which is acquired in accordance with section 2(a) of this Agreement and which is held at the end of the Waiting Period, the Counterparty will be granted one Linde share or in the event of the Closing of the Transaction 1.54 Linde plc shares (together the "Matching Shares"), provided that:

 
6 NON-BINDING CONVENIENCE TRANSLATION ONLY Second Amendment to Service Agreement and LTIP Plan Conditions (i) the Self-financed Investment Shares have been transferred into the securities account pursuant to the provisions set forth in section 2(b) of this Agreement; (ii) the Counterparty has, during the Waiting Period, not violated the provisions under section 2(c) of this Agreement; (iii) the Self-financed Investment Shares have been in the securities account by the Counterparty permanently until the end of the Waiting Period; and (iv) at the end of the Waiting Period the Counterparty has an employment or service contract with Linde AG, Linde plc or any of their respective affiliated companies within the meaning of sections 15 et seqq. of the German Stock Corporation Act (AktG) which has not been terminated. (f) The Company shall at any time be entitled to replace the Counterparty's Matching Shares rights with an economically comparable remuneration system on the level of Linde plc. The Linde plc plan described in section 18.6 of the Exchange Offer shall in any event be considered as such an economically comparable remuneration system within the meaning of the preceding sentence. Further, the Company shall be entitled to compensate for the Matching Share rights at any time during the Waiting Period in accordance with section 3 of the Amendment Agreement dated 1 June 2017. (g) Subject to a replacement or compensation in accordance with section 2(f) above, the Counterparty shall, upon the expiry of the Waiting Period, receive a cash payment for each Matching Share, the amount of which shall be calculated based on the average of the closing prices of the shares in Linde AG or in the event of the Closing of the Transaction of Linde plc in the XETRA trading (or a comparable successor system) on the Frankfurt Stock Exchange within the last 60 trading days of the Waiting Period. § 3 Deferral Component of the Annual Variable Remuneration for 2017 (a) In deviation from section 3 para. 2 lit. e) of the Service Agreement of the Counterparty, the Counterparty agrees to re-invest the net amount of the Deferral Component for 2017 in Linde shares which were tendered into the Exchange Offer. (b) The rights and obligations set forth in the Deferral Share Provisions of the Service Agreement shall, with respect to the Deferral Shares acquired in accordance with section 3(a) of this Agreement, as of the time of the Closing of the Transaction, apply to the Linde plc shares that the Counterparty receives in exchange for his tendered Deferral Shares.

 
7 NON-BINDING CONVENIENCE TRANSLATION ONLY Second Amendment to Service Agreement and LTIP Plan Conditions § 4 Cash Settlement of the 2014 LTIP Tranche (a) In 2018, any Options and Matching Share rights which the Counterparty has received in connection with the 2014 LTIP Tranche shall be settled by Linde in cash in accordance with section 2 para. 11 and section 4 para. 3 of the LTIP Plan Conditions. (b) In deviation form section 3 para. 2 of the LTIP Plan Conditions, the supervisory board shall be entitled to determine the date for exercising the Options of the Counterparty. § 5 Miscellaneous (a) Unless explicitly agreed otherwise in this Agreement, the terms of the Service Agreement as well as the LTIP Plan Conditions shall continue to apply unchanged as between the Counterparty and the Company. (b) Clause 15 of the Service Agreement shall apply mutatis mutandis to this Agreement. ................................................................ ................................................................ (Place, date) (Place, date) ................................................................ ................................................................ (Chairman of the Supervisory Board) (Executive Board Member)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
OFFICER - STANDARD


NONQUALIFIED STOCK OPTION AWARD
UNDER THE
AMENDED AND RESTATED 2009 PRAXAIR, INC.
LONG TERM INCENTIVE PLAN
Effective as of (insert date) (the “Grant Date”), «Legal_First_Name» «Last_Name» (the “Participant”) is hereby granted the following Nonqualified Stock Option Award (the “Award”) under the Amended and Restated 2009 Praxair, Inc. Long Term Incentive Plan, as assumed by Linde plc (the “Plan”), subject to the terms and conditions of the Plan, which are incorporated herein by reference, and those set forth below. The Plan shall control in the event of any conflict between the terms and conditions of the Plan and those set forth in this Award.
This Award has been conveyed and will be managed online, and the Participant’s online acceptance and acknowledgement of this Award constitutes his or her acceptance of all of the terms and conditions of the Plan and this Award. A copy of the Plan has been made available to the Participant, and the Participant hereby acknowledges that he or she has read and understands the Plan and this Award.
Capitalized terms used herein and not defined shall have the meanings set forth in the Plan, as the same may be amended from time to time. For purposes of this Award, Linde plc (the “Company”) and its Subsidiaries are collectively referred to herein as “Linde.”
1.
Grant of Option . The Company hereby grants to Participant, as of the Grant Date, a Nonqualified Stock Option to purchase all or any part of the aggregate of (insert number) Shares (the “Option Shares”) at the Option Price of $ (insert strike price) per Share. This Award will be exercisable only as hereinafter provided.
2.
Expiration Date . Except as otherwise provided herein, this Award shall expire on the tenth anniversary of the Grant Date and in no event may this Award be exercised on or after such date.
3.
Exercisability; Treatment upon Termination of Service .
a.
Exercisability Generally . Except as otherwise provided in either the Plan or this Section 3, this Award shall become exercisable as to (insert fraction) of the Option Shares on (insert dates) . Once this Award has become exercisable, it shall continue to be exercisable until the earlier of its expiration date or the termination of the Participant’s rights hereunder pursuant to either the Plan or this Award. In the event that the number of Option Shares is not evenly divisible by (insert) , the remaining amount shall be added to the last vesting period. Notwithstanding the foregoing, this Award shall become immediately vested and exercisable as to all of the Option Shares upon the occurrence of the Participant’s death or Total and Permanent Disability, in either case occurring while the Participant remains actively employed by Linde and shall become vested and exercisable in the event of a Change in Control in accordance with Section 3.b.v. below. For purposes of this Award, the Participant shall be “Totally and Permanently Disabled” if the Participant is determined to be unable to engage in any substantial gainful activity because of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
b.
Termination of Employment . This Award is exercisable by the Participant only while the Participant is in active employment with Linde and will be immediately forfeited upon the effective date of the Participant’s termination of employment with Linde (an individual who is employed by a Subsidiary shall be deemed to have terminated employment for purposes of this Award at such time as the employing entity ceases to be a Subsidiary), except that this Award shall continue to be exercisable following the effective date of the Participant’s termination of employment with Linde as follows:
i.
Death . In the event the Participant’s employment terminates by reason of his or her death, this Award shall continue to be exercisable by the Participant’s executor, administrator, or legal representative at any time prior to the earlier of the first anniversary of the Participant’s death or the Award’s expiration date and thereafter shall be forfeited.
ii.
Total and Permanent Disability . In the event the Participant becomes Totally and Permanently Disabled while employed by Linde, this Award shall continue to be exercisable at any time prior to the earlier of the first anniversary of the date the Participant is determined to be Totally and Permanently Disabled or the Award’s expiration date and thereafter shall be forfeited.
iii.
Termination After Satisfying Age/Service Requirement . In the case of the Participant’s termination of employment with Linde for any reason other than for cause, and not due to the Participant’s death or Total and Permanent Disability, after: (A) attaining age 65; or (B) attaining age 55 and completing at least 10 years of employment with Linde (collectively, the “Age/Service Requirement”), this Award shall continue to be exercisable at any time prior to its expiration date; provided, however, that following the Participant’s satisfaction of the Age/Service Requirement, this Award shall only become exercisable in accordance with Section 3.a. ; and provided further, that in the event of the Participant’s termination of employment with Linde prior to the first anniversary of the Grant Date, regardless of satisfying the Age/Service Requirement, this Award shall never become vested and exercisable and shall be immediately forfeited upon the effective date of the Participant’s termination of employment with Linde.
iv.
Termination by Action of Linde Other than for Cause . In the event of the Participant’s termination of employment by action of Linde other than for cause prior to the Participant’s satisfaction of the Age/Service Requirement and not due to the Participant’s death or Total and Permanent Disability, this Award shall continue to be exercisable by the Participant at any time prior to the earlier of the third anniversary of the effective date of the Participant’s termination or the Award’s expiration date and thereafter shall be forfeited; provided, however, that following such termination of the Participant’s employment, this Award shall only become exercisable in accordance with Section 3.a.; and provided further, that in the event such termination of the Participant’s employment by Linde occurs prior to the first anniversary of the Grant Date, this Award shall never become exercisable and shall be immediately forfeited upon the effective date of such termination of the Participant’s employment. For purposes of this Award only, the Participant’s termination by action of Linde for cause, shall include, but not be limited to, the Participant’s termination by action of Linde for violation of Linde’s Code of Business Integrity (or any superseding integrity policy) or poor performance.
v.
Termination following a Change in Control . Notwithstanding any other provision of this Award to the contrary, in the event the Participant’s employment with Linde or any successor thereto is terminated (a) by action of Linde other than for Cause or (b) by Participant with Good Reason, in each case, within two (2) years following the Change in Control, this Award shall become immediately vested and exercisable as to all of the Option Shares and shall continue to be exercisable by the Participant at any time prior to the earlier of the first anniversary of the effective date of the Participant’s termination or the Award’s expiration date and thereafter shall be forfeited.
(A)
For purposes of this Section 3.b.v., “Cause” shall have the meaning set forth in the Participant’s employment agreement or severance compensation agreement, in either case, as in effect immediately before the Change in Control, provided, however, that in the absence of any such agreement or in the event that such agreement does not contain a definition of “Cause,” Cause shall include, but not be limited to, violation of Linde’s Standards of Business Integrity (or any superseding integrity policy) or poor performance.
(B)
For purposes of this Section 3.b.v., “Good Reason” shall have the meaning set forth in the Participant’s employment agreement or severance compensation agreement, in either case, as in effect immediately before the Change in Control, provided, however, that in the absence of such any such agreement or in the event that such agreement does not contain a definition of “Good Reason,” Good Reason shall mean, without the Participant’s express written consent, (a) a reduction in the annual rate of base salary as in effect immediately prior to the date of the Change in Control or as the same may be increased from time to time thereafter, unless such reduction is part of a policy, program or arrangement that is applicable on a nondiscriminatory basis to the Participant and other similarly situated executives employed by Linde or its successors or (b) the assignment of any duties or responsibilities or diminution of duties or responsibilities which in the Participant’s reasonable judgment are inconsistent with the Participant’s status or position with Linde in effect immediately prior to the Change in Control, provided, however, that Good Reason shall not exist unless the Participant provides Linde with a notice of termination not later than 60 days after the occurrence of the event giving rise to Good Reason and Linde fails to remedy such condition to the Participant’s reasonable satisfaction within 30 days of such notice.
4.
Transferability .
a.
This Award is not transferable other than:
i.
in the event of the Participant’s death, in which case this Award shall be transferred to the Participant’s executor, administrator, or legal representative, or
ii.
if the Participant has met the Company’s stock ownership guidelines applicable to him/her at the time of such proposed transfer, by the Participant, as a gift and without consideration, in whole or in parts to;
(A)
the Participant’s spouse, children (including by adoption), stepchildren or grandchildren (“immediate family members”),
(B)
a partnership in which such immediate family members are the only partners, or
(C)
a trust for the exclusive benefit of such immediate family members; or
iii.
in the case of a transferee’s or distributee’s death, to his/her estate, in which case this Award may be exercised only by the executor or administrator of such estate and shall not be subject to further transfer; or
iv.
pursuant to a domestic relations order.
b.
Any transfer of this Award, in whole or in part, is subject to acceptance by the Company in its sole discretion and shall be affected according to such procedures as the Company’s Chief Human Resources Officer may establish.
c.
The provisions of this Award, relating to the Participant, shall apply to this Award notwithstanding any transfer to a third party.
5.
Exercise of Option.
a.
Notice of Exercise . This Award may be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Option Shares with respect to which the Award is to be exercised, accompanied by full payment for the Option Shares. The Award may be exercised only in a whole number of Shares.
b.
Exercise Price Payment . A condition of the issuance of the Shares as to which this Award is exercised shall be the payment of the Option Price. The Option Price shall be payable to the Company in full either: (i) in cash or its equivalent; (ii) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Market Price at the time of exercise equal to the Option Price (provided that the Shares that are tendered may be subject to a minimum holding period, as determined by the Committee in its discretion, prior to their tender to satisfy the Option Price if acquired under this Plan or any other compensation plan maintained by the Company or have been purchased on the open market); (iii) by having the Company withhold Shares that otherwise would be delivered to the exerciser pursuant to the exercise of the Option having a value equaling the aggregate Option Price due; (iv) by a combination of (i), (ii) and/or (iii); or (v) any other method approved or accepted by the Committee in its sole discretion. Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.
c.
Taxes . To enable Linde to meet any applicable federal, state, city, local or foreign withholding tax requirements arising as a result of the exercise of the Award, the exerciser shall pay Linde the amount of tax to be withheld, if any, in cash or by having Linde withhold Shares that would otherwise be delivered pursuant to the exercise of the Award, provided that, if Shares are so withheld, they shall be withheld only up to the minimum required tax withholding rates or such other rate that will not trigger a negative accounting impact on Linde. The value of any Shares so withheld shall be the Share price at the time of exercise. Linde reserves the right to (i) disapprove an exerciser’s election to utilize any of the alternatives under this Section, and (ii) to delay the completion of any exercise of this Award until the applicable withholding tax has been paid.
d.
Delivery of Shares . Upon the exercise of an Award with respect to a part or all of the Option Shares in the manner and within the time herein provided, the Company shall issue and deliver to the exerciser, the number of Shares with respect to which the Award was exercised. Notwithstanding any provision of the Plan or this Award to the contrary, such Shares shall be subject to applicable Linde policies as from time to time in effect, including but not limited to, Linde’s insider trading and Executive Stock Ownership Policies.
6.
Other Terms and Conditions . It is understood and agreed that the Award evidenced hereby is subject to the following terms and conditions:
a.
No Right to Continued Employment . This Award shall not confer upon the Participant any right with respect to continuance of employment by Linde nor shall this Award interfere with the right of Linde to terminate the Participant’s employment.
b.
No Right to Future Awards . The selection of recipients of Awards under the Plan is determined annually on the basis of several factors, including job responsibilities and anticipated future job performance. The Participant’s selection to receive this Award shall in no way entitle him/her to receive, or otherwise obligate the Company to provide the Participant, any future option Award or other award under the Plan or otherwise.
c.
Cancellation of Award . Notwithstanding any other provision of this Award, the Committee may, in its sole discretion, cancel, rescind, suspend, withhold, or otherwise limit or restrict this Award, and/or recover any gains realized by the Participant in connection with this Award, in the event of any actions by the Participant are determined by the Committee to (a) constitute a conflict of interest with Linde, (b) be prejudicial to Linde’s interests, or (c) violate any non-compete agreement or obligation of the Participant to Linde, any confidentiality agreement or obligation of the Participant to Linde, Linde’s applicable policies, or the Participant’s terms and conditions of employment.
d.
Clawback . This Award shall be subject to the clawback or recapture policy, if any, that Linde may adopt from time to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that this Award be repaid to Linde after it has been distributed or paid to the Participant.
e.
Governing Law . This Award shall be governed by and construed in accordance with the laws of Connecticut, without giving effect to principles of conflict of laws.
f.
No Third Party Beneficiaries . Except as expressly provided in the Plan or herein, neither the Plan nor this Award will confer on any person other than Linde and the Participant any rights or remedies under the Plan or hereunder.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its proper officer hereunto duly authorized, as of the day and year first hereinabove written.
Linde plc
 
By
 
 
David Strauss
Chief Human Resources Officer
 
 


1
Standard Officer


RESTRICTED STOCK UNIT AWARD
UNDER THE
AMENDED AND RESTATED 2009 PRAXAIR, INC.
LONG TERM INCENTIVE PLAN
Effective as of (insert date) (the “Grant Date”), «Legal_First_Name» «Last_Name» (the “Participant”) is hereby granted the following Restricted Stock Unit (“RSU”) Award under the Amended and Restated 2009 Praxair, Inc. Long Term Incentive Plan, as assumed by Linde plc (the “Plan”), subject to the terms and conditions of the Plan, which are incorporated herein by reference, and those set forth below. The Plan shall control in the event of any conflict between the terms and conditions of the Plan and those set forth in this Award.

This Award has been conveyed and will be managed online, and the Participant’s online acceptance and acknowledgement of this Award constitutes his or her acceptance of all of the terms and conditions of the Plan and this Award. A copy of the Plan has been made available to the Participant, and the Participant hereby acknowledges that he or she has read and understands the Plan and this Award.
Capitalized terms used herein and not defined shall have the meanings set forth in the Plan, as the same may be amended from time to time. For purposes of this Award, Linde plc (the “Company”) and its Subsidiaries are collectively referred to herein as “Linde.”
1.
Award of Restricted Stock Units. The Participant is hereby granted an award of (insert #) notional RSUs (the “Award”). Each RSU represents a bookkeeping entry which is equal in value to a single Share.
2.
Vesting of Award; Treatment upon Termination of Service or Change in Control.
a.
Vesting Generally . Except as otherwise provided in this Section 2, this Award shall vest on (insert date) , if the Participant has remained continuously employed by Linde at all times from the Grant Date through (insert date) (a Participant who is employed by a Subsidiary shall be deemed to have terminated employment by action of Linde other than for cause for purposes of this Award at such time as the employing entity ceases to be a Subsidiary), and as soon as practicable thereafter, shall be settled by payment to the Participant of a number of Shares equal to the number of RSUs subject to this Award.
b.
Death or Disability . Notwithstanding any provision of this Section 2 to the contrary, if after the Grant Date but prior to (insert date) :
(i)
the Participant’s employment with Linde terminates by reason of the Participant’s death; or
(ii)
the Participant becomes Totally and Permanently Disabled while employed by Linde,
this Award shall become immediately vested as to a number of Shares equal to the number of RSUs subject to this Award, multiplied by a fraction having a numerator equal to the number of days elapsed from the Grant Date through the date the Participant’s death or Total and Permanent Disability (as applicable), and a denominator equal to (insert # of days in vesting period) ,and settled as soon as practicable thereafter by payment to the Participant such resulting Shares. For purposes of this Award, a Participant shall be “Totally and Permanently Disabled” if the Participant is determined by Linde to be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
c.
Termination by Action of Linde Other than for Cause, or Termination After Attaining Certain Age and Service Requirements . Notwithstanding any provision of this Section 2 to the contrary, in the event the Participant’s employment with Linde terminates on or after the first anniversary of the Grant Date, but prior to (insert date) , by reason of the Participant’s:
(i)
termination of employment by action of Linde other than for cause and not due to the Participant’s Total and Permanent Disability; or
(ii)
termination of employment with Linde other than for cause and not due to the Participant’s Death or Total and Permanent Disability, after: (a) attaining age 65; or (b) attaining age 55 and completing at least ten (10) years of employment with Linde,
this Award shall become immediately vested and shall be settled on (insert date) by payment to the Participant of a number of Shares equal to the number of RSUs subject to this Award. For purposes of this Award, the Participant’s termination by action of Linde for cause, shall include, but not be limited to, the Participant’s termination by action of Linde for violation of Linde’s Code of Business Integrity (or any superseding integrity policy) or poor performance.
d.
Change in Control . Notwithstanding any provision of this Section 2 to the contrary, in the event the Participant’s employment with Linde or any successor thereto is terminated (a) by action of Linde other than for Cause or (b) by the Participant with Good Reason, in each case, within two (2) years following the Change in Control but prior to (insert date) , this Award shall become immediately vested (y) if the effective date of such termination is prior to the first anniversary of the Grant Date, as to (insert fraction) of the RSUs subject to this Award (rounded down in the event of fractional Shares), and the remaining RSUs shall be immediately forfeited, or (z) if the effective date of such termination is on or after the first anniversary of the Grant Date, as to all of the RSUs subject to this Award, and as soon as practicable thereafter, shall be settled by payment to the Participant of a number of Shares (or such other form of payment having an equivalent value as may be authorized by the Committee in its sole discretion) equal to the number of RSUs vesting under this Award.
(i)
For purposes of this Section 2.d., “Cause” shall have the meaning set forth in the Participant’s employment agreement or severance compensation agreement, in either case, as in effect immediately before the Change in Control, provided, however, that in the absence of any such agreement or in the event that such agreement does not contain a definition of “Cause,” Cause shall include, but not be limited to, violation of Linde’s Code of Business Integrity (or any superseding integrity policy) or poor performance.
(ii)
For purposes of this Section 2.d., “Good Reason” shall have the meaning set forth in the Participant’s employment agreement or severance compensation agreement, in either case, as in effect immediately before the Change in Control, provided, however, that in the absence of such any such agreement or in the event that such agreement does not contain a definition of “Good Reason,” Good Reason shall mean, without the Participant’s express written consent, (a) a reduction in the annual rate of base salary as in effect immediately prior to the date of the Change in Control or as the same may be increased from time to time thereafter, unless such reduction is part of a policy, program or arrangement that is applicable on a nondiscriminatory basis to the Participant and other similarly situated executives employed by Linde or its successors or (b) the assignment of any duties or responsibilities or diminution of duties or responsibilities which in the Participant’s reasonable judgment are inconsistent with the Participant’s status or position with Linde in effect immediately prior to the Change in Control, provided, however, that Good Reason shall not exist unless the Participant provides Linde with a notice of termination not later than 60 days after the occurrence of the event giving rise to Good Reason and Linde fails to remedy such condition to the Participant’s reasonable satisfaction within 30 days of such notice.
e.
Forfeiture of Award . In the event the Participant’s employment with Linde terminates for any reason other than those specifically set forth in Sections 2.b., c. or d. prior to (insert date) , this Award shall be immediately forfeited. In the event this Award is forfeited for any reason, no payment shall be made in settlement of the Award.
3.
Other Terms and Conditions. It is understood and agreed that the Award of RSUs evidenced hereby is subject to the following terms and conditions:
a.
Rights of Participant . Except as provided in Section 3.d., the Participant shall have no right to transfer, pledge, hypothecate or otherwise encumber the Award. Prior to the payment of Shares in satisfaction of this Award, the Participant shall have none of the rights of a stockholder of the Company with respect to the Award, including, but not limited to, voting rights and the right to receive or accrue dividends or dividend equivalents. Notwithstanding any provision of the Plan or this Award to the contrary, Shares delivered in satisfaction of this Award shall be subject to applicable Linde policies as from time to time in effect, including but not limited to, Linde’s insider trading and Executive Stock Ownership policies.
b.
No Right to Continued Employment . This Award shall not confer upon the Participant any right with respect to continuance of employment by Linde nor shall this Award interfere with the right of Linde to terminate the Participant’s employment.
c.
No Right to Future Awards . The selection of recipients of RSUs and other Awards under the Plan is determined annually on the basis of several factors, including job responsibilities and anticipated future job performance. The Participant’s selection to receive this Award shall in no way entitle him/her to receive, or otherwise obligate Linde to provide the Participant, any future RSUs or other awards under the Plan or otherwise.
d.
Transferability . This Award is not transferable other than:
(i)
in the event of the Participant’s death, in which case this Award shall be transferred to the Participant’s executor, administrator, or legal representative; or
(ii)
pursuant to a domestic relations order.
Any transfer of this Award, in whole or in part, is subject to acceptance by the Company in its sole discretion and shall be affected according to such procedures as the Company’s Chief Human Resources Officer may establish. The provisions of this Award, relating to the Participant, shall apply to this Award notwithstanding any transfer to a third party.
e.
Cancellation of Award . Notwithstanding any other provision of this Award, the Committee may, in its sole discretion, cancel, rescind, suspend, withhold, or otherwise limit or restrict this Award, and/or recover any gains realized by the Participant in connection with this Award, in the event any actions by the Participant are determined by the Committee to (i) constitute a conflict of interest with Linde, (ii) be prejudicial to Linde’s interests, or (iii) violate any non-compete agreement or obligation of the Participant to Linde, any confidentiality agreement or obligation of the Participant to Linde, Linde’s applicable policies, or the Participant’s terms and conditions of employment.
f.
Clawback . This Award shall be subject to the clawback or recapture policy, if any, that Linde may adopt from time to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that this Award be repaid to Linde after it has been distributed or paid to the Participant.
4.
Tax Withholding. Upon the date of payment of the Award, Linde will deduct from the number of Shares (or other form of payment, if applicable) otherwise due the Participant, Shares (or other form of payment, if applicable) having a Fair Market Value (or fair market value in the event of payment other than in Shares) sufficient to discharge all applicable federal, state, city, local or foreign taxes of any kind required to be withheld with respect to such payment, provided that, if Shares are so withheld, they shall be withheld only up to the minimum required tax withholding rates or such other rate that will not trigger a negative accounting impact on Linde. In the alternative, Linde shall have the right to require the Participant to pay cash to satisfy any applicable withholding taxes as a condition to the payment of the Award. Notwithstanding the foregoing, to the extent any employment or other taxes are due in respect of the Award prior to the payment of the Award, Linde shall have the right to require the value of such taxes to either be withheld by deducting Shares underlying the Award (as described above) or by requiring the Participant to pay cash to satisfy such applicable withholding.
5.
References. References herein to rights and obligations of the Participant shall apply, where appropriate, to the Participant’s legal representative or estate without regard to whether specific reference to such legal representative or estate is contained in a particular provision of this Award.
6.
Governing Law. This Award shall be governed by and construed in accordance with the laws of Connecticut, without giving effect to principles of conflict of laws.
7.
No Third Party Beneficiaries. Except as expressly provided in the Plan or herein, neither the Plan nor this Award will confer on any person other than Linde and the Participant any rights or remedies under the Plan or hereunder

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its proper officer hereunto duly authorized, as of the day and year first hereinabove written.

Linde plc
 
By
 
 
David Strauss
Chief Human Resources Officer
 
 


1
OFFICER ROC

PERFORMANCE SHARE UNIT AWARD
UNDER THE
AMENDED AND RESTATED 2009 PRAXAIR, INC.
LONG TERM INCENTIVE PLAN
Effective as of (insert date) (the “Grant Date”), «Legal_First_Name» «Last_Name» (the “Participant”) is hereby granted the following Performance Share Unit Award under the Amended and Restated 2009 Praxair, Inc. Long Term Incentive Plan, as assumed by Linde plc (the “Plan”), subject to the terms and conditions of the Plan, which are incorporated herein by reference, and those set forth below. The Plan shall control in the event of any conflict between the terms and conditions of the Plan and those set forth in this Award.
This Award has been conveyed and will be managed online, and the Participant’s online acceptance and acknowledgement of this Award constitutes his or her acceptance of all of the terms and conditions of the Plan and this Award. A copy of the Plan has been made available to the Participant, and the Participant hereby acknowledges that he or she has read and understands the Plan and this Award.
Capitalized terms used herein and not defined shall have the meanings set forth in the Plan, as the same may be amended from time to time. For purposes of this Award, Linde plc (the “Company”) and its Subsidiaries are collectively referred to herein as “Linde.”
1.
Award of Performance Share Units, Performance Measure and Performance Period. The Participant is hereby granted an Award of (insert #) notional “Performance Share Units” (the “Award”). A Performance Share Unit is a bookkeeping entry which is intended to be equal in value to a single Share. For purposes of this Award, (insert #) Performance Share Units are considered the Participant’s “Target Amount.” Except as otherwise provided herein, the payment due in settlement of the Participant’s vested Award shall be made in the form of Shares, with the number of Shares payable determined by reference to the Company’s average annual return on capital (“ROC”) for the three-year period commencing on January 1, 20 xx and ending on December 31, 20 xx (the “Performance Period”) as set forth below. For purposes of this Award, ROC shall mean the Company’s after-tax return on capital as reported in its quarterly and annual Consolidated Financial Statements and the related Notes, which may be adjusted in the discretion of the Committee as it deems appropriate to eliminate the after-tax effects of any acquisition, divestiture, restructuring, other corporate transaction, accounting charges or any other extraordinary, unusual or non-recurring item, in each case, occurring during the Performance Period.
2.
Vesting of Award; Treatment upon Termination of Service; Change in Control.
a.
Vesting Generally . Except as otherwise provided in this Section 2, this Award shall vest on (insert date) , provided that: (i) the Participant has remained continuously employed by Linde at all times from the Grant Date through (insert date) (a Participant who is employed by a Subsidiary shall be deemed to have terminated employment by action of Linde other than for cause for purposes of this Award at such time as the employing entity ceases to be a Subsidiary); and (ii) the Company’s average annual ROC for the Performance Period meets the minimum threshold Performance Goal for payout set forth in Section 3.a. Payment with respect to such vested Award shall be determined and made in accordance with Section 3.a.
b.
Death or Disability . Notwithstanding any provision of this Section 2 to the contrary, if after the Grant Date, but prior to (insert date) :
(i)
the Participant’s employment with Linde terminates by reason of the Participant’s death; or
(ii)
the Participant becomes Totally and Permanently Disabled while employed by Linde;
this Award shall become immediately vested and payment with respect to such vested Award shall be determined and made in accordance with Section 3.b. For purposes of this Award, a Participant shall be “Totally and Permanently Disabled” if the Participant is determined by Linde to be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
c.
Termination by Action of Linde Other than for Cause, or Termination After Attaining Certain Age and Service Requirements . Notwithstanding any provision of this Section 2 to the contrary, in the event the Participant’s employment with Linde terminates on or after (insert date) , but prior to (insert date) , by reason of the Participant’s:
(i)
termination of employment by action of Linde other than for cause and not due to the Participant’s Total and Permanent Disability; or
(ii)
termination of employment with Linde, other than for cause and not due to the Participant’s death or Total and Permanent Disability, after: (a) attaining age 65; or (b) attaining age 55 and completing at least ten (10) years of employment with Linde,
this Award shall vest on (insert date) , provided that the Company’s average annual ROC for the Performance Period meets the minimum threshold Performance Goal for payout set forth in Section 3.a. Payment with respect to such vested Award shall be determined and made in accordance with Section 3.a. For purposes of this Award, the Participant’s termination by action of Linde for cause, shall include, but not be limited to, the Participant’s termination by action of Linde for violation of Linde’s Code of Business Integrity (or any superseding integrity policy) or poor performance.
d.
Change in Control . Notwithstanding any provision of this Section 2 to the contrary, in the event of a Change in Control occurring prior to (insert date) , payment with respect to this Award shall be determined and made in accordance with Section 3.c. and this Award shall be subject to time-based vesting through (insert date) , provided, however, that in the event the Participant’s employment with Linde or any successor thereto is terminated (a) by action of Linde other than for Cause or (b) by the Participant with Good Reason, in each case, within two (2) years following the Change in Control, this Award, to the extent not previously vested, shall become immediately vested.
(i)
For purposes of this Section 2.d., “Cause” shall have the meaning set forth in the Participant’s employment agreement or severance compensation agreement, in either case, as in effect immediately before the Change in Control, provided, however, that in the absence of any such agreement or in the event that such agreement does not contain a definition of “Cause,” Cause shall include, but not be limited to, violation of Linde’s Code of Business Integrity (or any superseding integrity policy) or poor performance.
(ii)
For purposes of this Section 2.d., “Good Reason shall have the meaning set forth in the Participant’s employment agreement or severance compensation agreement, in either case, as in effect immediately before the Change in Control, provided, however, that in the absence of such any such agreement or in the event that such agreement does not contain a definition of “Good Reason,” Good Reason shall mean, without the Participant’s express written consent, (a) a reduction in the annual rate of base salary as in effect immediately prior to the date of the Change in Control or as the same may be increased from time to time thereafter, unless such reduction is part of a policy, program or arrangement that is applicable on a nondiscriminatory basis to the Participant and other similarly situated executives employed by Linde or its successors or (b) the assignment of any duties or responsibilities or diminution of duties or responsibilities which in the Participant’s reasonable judgment are inconsistent with the Participant’s status or position with Linde in effect immediately prior to the Change in Control, provided, however, that Good Reason shall not exist unless the Participant provides Linde with a notice of termination not later than 60 days after the occurrence of the event giving rise to Good Reason and Linde fails to remedy such condition to the Participant’s reasonable satisfaction within 30 days of such notice.
e.
Forfeiture of Award .
(i)
In the event the Participant’s employment with Linde terminates for any reason other than those specifically set forth in Sections 2.b. or 2.c. prior to (insert date) and before the occurrence of a Change in Control, this Award shall be immediately forfeited.
(ii)
Absent the occurrence of a Change in Control occurring prior to (insert date) , and to the extent not previously forfeited pursuant to Section 2.e.(i), this Award shall be immediately forfeited as of the end of the Performance Period if the Company’s average annual ROC for the Performance Period does not meet the minimum threshold Performance Goal for payout set forth in Section 3.a.
(iii)
In the event this Award is forfeited for any reason, no payment shall be made in settlement of the Award.
3.
Payment of Vested Award.
a.
Performance Goal and Determination of Amount of Payment . Except as otherwise provided in this Section 3, the number of Shares payable in settlement of the Participant’s vested Award shall be determined by reference to the Linde plc’s average annual ROC for the Performance Period in accordance with the table below, and may range from 0% to 200% of the Participant’s Target Amount. Each Performance Share Unit is equivalent to one Share. Payouts will be interpolated if the average annual ROC attained for the Performance Period falls between the Threshold and Maximum percentages specified in the table, and will be rounded down to the nearest whole number of Shares. The payment of Shares pursuant to this Section 3.a. will be made as soon as practicable after the date the Award becomes vested, but in no event later than December 31, 20 xx .

Average Annual ROC For Performance Period
Payout as Percentage of Target Amount
Less than XX%
0%
XX% (Threshold)
50%
XX% (Target)
100%
XX% or More (Maximum)
200%

b.
Determination of Amount of Payment Following Death or Total and Permanent Disability . In the event the Participant becomes vested in this Award by reason of his or her death or Total and Permanent Disability in accordance with Section 2.b., this Award shall be settled by payment of a number of Shares equal to the product of (i) the Participant’s Target Amount, times (ii) a fraction having a numerator equal to the number of days elapsed from the Grant Date through the date the Participant’s death or Total and Permanent Disability (as applicable), and a denominator equal to (insert # of days in vesting period) , as soon as practicable following the date the Award becomes vested, but in no event later than March 15 th of the year following the year in which the Award becomes vested.
c.
Determination of Amount of Payment Following a Change in Control . In the event of a Change in Control occurring prior to (insert date) , the amount payable in settlement of this Award shall be the Participant’s Target Amount, or if greater, the percentage of the Participant’s Target Amount determined based on the achievement of the applicable performance goals as of the effective date of the Change in Control, as determined by the Committee in its sole discretion, and this Award shall vest in accordance with Section 2.d. Payment will be made as soon as practicable following the earlier of (i) the date the Participant’s employment is terminated by action of Linde other than for Cause or by Participant with Good Reason or (ii) (insert date) . Notwithstanding any provision of this Award to the contrary, any amounts paid in settlement of this Award pursuant to this Section 3.c. shall be paid in Shares or such other form having a value equivalent to the Award amount payable, as may be authorized by the Committee in its sole discretion. All references to the Committee in this Section 3.c. shall mean the Committee as constituted immediately before the Change in Control.
4.
Other Terms and Conditions. It is understood and agreed that the Award evidenced hereby is subject to the following terms and conditions:
a.
Rights of Participant . Except as provided in Section 4.d., the Participant shall have no right to transfer, pledge, hypothecate or otherwise encumber the Award. Prior to the payment of Shares in satisfaction of this Award, the Participant shall have none of the rights of a stockholder of the Company with respect to the Award, including, but not limited to, voting rights and the right to receive or accrue dividends or dividend equivalents. Notwithstanding any provision of the Plan or this Award to the contrary, Shares delivered in satisfaction of this Award shall be subject to applicable Linde policies as from time to time in effect, including but not limited to, Linde’s insider trading and Executive Stock Ownership Policies.
b.
No Right to Continued Employment . This Award shall not confer upon the Participant any right with respect to continuance of employment by Linde nor shall this Award interfere with the right of Linde to terminate the Participant’s employment.
c.
No Right to Future Awards . The selection of recipients of Awards under the Plan is determined annually on the basis of several factors, including job responsibilities and anticipated future job performance. The Participant’s selection to receive this Award shall in no way entitle him/her to receive, or otherwise obligate Linde to provide the Participant, any future Performance Share Unit Award or other award under the Plan or otherwise.
d.
Transferability . This Award is not transferable other than:
(i)
in the event of the Participant’s death, in which case this Award shall be transferred to the Participant’s executor, administrator, or legal representative, or
(ii)
pursuant to a domestic relations order.
Any transfer of this Award, in whole or in part, is subject to acceptance by the Company in its sole discretion and shall be affected according to such procedures as the Company’s Chief Human Resources Officer may establish. The provisions of this Award, relating to the Participant, shall apply to this Award notwithstanding any transfer to a third party.
e.
Cancellation of Award . Notwithstanding any other provision of this Award, the Committee may, in its sole discretion, cancel, rescind, suspend, withhold, or otherwise limit or restrict this Award, and/or recover any gains realized by the Participant in connection with this Award, in the event any actions by the Participant are determined by the Committee to (i) constitute a conflict of interest with Linde, (ii) be prejudicial to Linde’s interests, or (iii) violate any non-compete agreement or obligation of the Participant to Linde, any confidentiality agreement or obligation of the Participant to Linde, Linde’s applicable policies, or the Participant’s terms and conditions of employment.
f.
Clawback . This Award shall be subject to the clawback or recapture policy, if any, that Linde may adopt from time to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that this Award be repaid to Linde after it has been distributed or paid to the Participant.
5.
Tax Withholding. Upon the date of payment of the Award, Linde will deduct from the number of Shares (or other form of payment, if applicable) otherwise due the Participant, Shares (or other form of payment, if applicable) having a Fair Market Value (or fair market value in the event of payment other than in Shares) sufficient to discharge all applicable federal, state, city, local or foreign taxes of any kind required to be withheld with respect to such payment, provided that, if Shares are so withheld, they shall be withheld only up to the minimum required tax withholding rates or such other rate that will not trigger a negative accounting impact on Linde. In the alternative, Linde shall have the right to require the Participant to pay cash to satisfy any applicable withholding taxes as a condition to the payment of the Award.
6.
References. References herein to rights and obligations of the Participant shall apply, where appropriate, to the Participant’s legal representative or estate without regard to whether specific reference to such legal representative or estate is contained in a particular provision of this Award.
7.
Governing Law. This Award shall be governed by and construed in accordance with the laws of Connecticut, without giving effect to principles of conflict of laws.
8.
No Third Party Beneficiaries. Except as expressly provided in the Plan or herein, neither the Plan nor this Award will confer on any person other than Linde and the Participant any rights or remedies under the Plan or hereunder.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its proper officer hereunto duly authorized, as of the day and year first hereinabove written.
Linde plc
 
By
 
 
David Strauss
Chief Human Resources Officer
 
 


1
OFFICER TSR

PERFORMANCE SHARE UNIT AWARD
UNDER THE
AMENDED AND RESTATED 2009 PRAXAIR, INC.
LONG TERM INCENTIVE PLAN
Effective as of (insert date) (the “Grant Date”), «Legal_First_Name» «Last_Name» (the “Participant”) is hereby granted the following Performance Share Unit Award under the Amended and Restated 2009 Praxair, Inc. Long Term Incentive Plan, as assumed by Linde plc (the “Plan”), subject to the terms and conditions of the Plan, which are incorporated herein by reference, and those set forth below. The Plan shall control in the event of any conflict between the terms and conditions of the Plan and those set forth in this Award.
This Award has been conveyed and will be managed online, and the Participant’s online acceptance and acknowledgement of this Award constitutes his or her acceptance of all of the terms and conditions of the Plan and this Award. A copy of the Plan has been made available to the Participant, and the Participant hereby acknowledges that he or she has read and understands the Plan and this Award.
Capitalized terms used herein and not defined shall have the meanings set forth in the Plan, as the same may be amended from time to time. For purposes of this Award, Linde plc (the “Company”) and its Subsidiaries are collectively referred to herein as “Linde.”
1.
Award of Performance Share Units, Performance Measure and Performance Period.
a.
Award . The Participant is hereby granted an Award of (insert #) notional “Performance Share Units” (the “Award”). A Performance Share Unit is a bookkeeping entry which is intended to be equal in value to a single Share. For purposes of this Award, (insert #) Performance Share Units are considered the Participant’s “Target Amount.” Except as otherwise provided herein, the payment due in settlement of the Participant’s vested Award shall be made in the form of Shares, with the number of Shares payable determined by reference to the Company’s Total Shareholder Return (“TSR”) relative to the TSR of the Peer Index (“Relative TSR”) over the three-year period commencing on January 1, 20 xx and ending on December 31, 20 xx (the “Performance Period”) as set forth below.
b.
Applicable Definitions . For purposes of this Award:
(i)
“Total Shareholder Return” or “TSR” shall mean the percentage equal to the appreciation in the underlying company’s stock price from the beginning to the end of the Performance Period plus the value of dividends paid on such stock during the Period (which shall be deemed to have been reinvested in the underlying company’s stock effective as of the “ex-dividend” date based on the then closing price of such company). The stock prices at the beginning and end of the Performance Period will be determined using the trailing average stock price over the 20 trading days prior to the beginning and end of the Performance Period, as applicable.
(ii)
“Relative TSR” shall mean the Company’s TSR for the Performance Period relative to that of the TSR for the Performance Period of each member company on the Peer Index, expressed as a percentile rank.
(iii)
“Peer Index” shall mean a weighted combination of the S&P 500 Index excluding Financial sector companies(weighted 67%) and the Eurofirst 300 (weighted 33%). For purposes of the Relative TSR determination, the companies that comprise the S&P 500 Index and the Eurofirst 300, respectively, on the first day of the Performance Period (each a “Peer Company” and collectively , the “Peer Companies”) will remain constant throughout the performance period. As a result, at the end of the Performance Period, the actual number of Peer Companies used to calculate Relative TSR is expected to be fewer than at the beginning of the Performance Period. In determining Relative TSR, the Committee may, in its discretion, make adjustments to the list of Peer Companies and assumptions with respect to any such Peer Company’s TSR to reflect events that occur during the Performance Period, including, but not limited to, acquisitions, divestitures, spin-offs, bankruptcy, insolvency and other extraordinary events.
2.
Vesting of Award; Treatment upon Termination of Service; Change in Control.
a.
Vesting Generally . Except as otherwise provided in this Section 2, this Award shall vest on (insert date) , provided that: (i) the Participant has remained continuously employed by Linde at all times from the Grant Date through (insert date) (a Participant who is employed by a Subsidiary shall be deemed to have terminated employment by action of Linde other than for cause for purposes of this Award at such time as the employing entity ceases to be a Subsidiary); and (ii) the Company’s Relative TSR meets the minimum threshold Performance Goal for payout set forth in Section 3.a. Payment with respect to such vested Award shall be determined and made in accordance with Section 3.a.
b.
Death or Disability . Notwithstanding any provision of this Section 2 to the contrary, if after the Grant Date, but prior to (insert date) :
(i)
the Participant’s employment with Linde terminates by reason of the Participant’s death; or
(ii)
the Participant becomes Totally and Permanently Disabled while employed by Linde;
this Award shall become immediately vested and payment with respect to such vested Award shall be determined and made in accordance with Section 3.b. For purposes of this Award, a Participant shall be “Totally and Permanently Disabled” if the Participant is determined by Linde to be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
c.
Termination by Action of Linde Other than for Cause, or Termination After Attaining Certain Age and Service Requirements . Notwithstanding any provision of this Section 2 to the contrary, in the event the Participant’s employment with Linde terminates on or after (insert date) , but prior to (insert date) , by reason of the Participant’s:
(i)
termination of employment by action of Linde other than for cause and not due to the Participant’s Total and Permanent Disability; or
(ii)
termination of employment with Linde, other than for cause and not due to the Participant’s death or Total and Permanent Disability, after: (a) attaining age 65; or (b) attaining age 55 and completing at least ten (10) years of employment with Linde,
this Award shall vest on (insert date) , provided that the Company’s Relative TSR meets the minimum threshold Performance Goal for payout set forth in Section 3.a. Payment with respect to such vested Award shall be determined and made in accordance with Section 3.a. For purposes of this Award, the Participant’s termination by action of Linde for cause, shall include, but not be limited to, the Participant’s termination by action of Linde for violation of Linde’s Code of Business Integrity (or any superseding integrity policy) or poor performance.
d.
Change in Control . Notwithstanding any provision of this Section 2 to the contrary, in the event of a Change in Control occurring prior to (insert date) , payment with respect to this Award shall be determined and made in accordance with Section 3.c. and this Award shall be subject to time-based vesting through (insert date) , provided, however, that in the event the Participant’s employment with Linde or any successor thereto is terminated (a) by action of Linde other than for Cause or (b) by the Participant with Good Reason, in each case, within two (2) years following the Change in Control, this Award, to the extent not previously vested, shall become immediately vested.
(i)
For purposes of this Section 2.d., “Cause” shall have the meaning set forth in the Participant’s employment agreement or severance compensation agreement, in either case, as in effect immediately before the Change in Control, provided, however, that in the absence of any such agreement or in the event that such agreement does not contain a definition of “Cause,” Cause shall include, but not be limited to, violation of Linde’s Code of Business Integrity (or any superseding integrity policy) or poor performance.
(ii)
For purposes of this Section 2.d., “Good Reason shall have the meaning set forth in the Participant’s employment agreement or severance compensation agreement, in either case, as in effect immediately before the Change in Control, provided, however, that in the absence of such any such agreement or in the event that such agreement does not contain a definition of “Good Reason,” Good Reason shall mean, without the Participant’s express written consent, (a) a reduction in the annual rate of base salary as in effect immediately prior to the date of the Change in Control or as the same may be increased from time to time thereafter, unless such reduction is part of a policy, program or arrangement that is applicable on a nondiscriminatory basis to the Participant and other similarly situated executives employed by Linde or its successors or (b) the assignment of any duties or responsibilities or diminution of duties or responsibilities which in the Participant’s reasonable judgment are inconsistent with the Participant’s status or position with Linde in effect immediately prior to the Change in Control, provided, however, that Good Reason shall not exist unless the Participant provides Linde with a notice of termination not later than 60 days after the occurrence of the event giving rise to Good Reason and Linde fails to remedy such condition to the Participant’s reasonable satisfaction within 30 days of such notice.
e.
Forfeiture of Award .
(i)
In the event the Participant’s employment with Linde terminates for any reason other than those specifically set forth in Sections 2.b. or 2.c. prior to (insert date) and before the occurrence of a Change in Control, this Award shall be immediately forfeited.
(ii)
Absent the occurrence of a Change in Control occurring prior to (insert date) , and to the extent not previously forfeited pursuant to Section 2.e.(i), this Award shall be immediately forfeited as of the end of the Performance Period if the Company’s Relative TSR does not meet the minimum threshold Performance Goal for payout set forth in Section 3.a.
(iii)
In the event this Award is forfeited for any reason, no payment shall be made in settlement of the Award.
3.
Payment of Vested Award.
a.
Performance Goal and Determination of Amount of Payment . Except as otherwise provided in this Section 3, the number of Shares payable in settlement of the Participant’s vested Award shall be determined by reference to the Linde plc’s Relative TSR in accordance with the table below, and may range from 0% to 200% of the Participant’s Target Amount. Each Performance Share Unit is equivalent to one Share. Payouts will be interpolated if the Relative TSR attained falls between the Relative TSR Rank percentiles specified in the table, and will be rounded down to the nearest whole number of Shares. The payment of Shares pursuant to this Section 3.a. will be made as soon as practicable after the date the Award becomes vested, but in no event later than December 31, 20 xx .

Relative TSR Rank By Percentile
Payout as Percentage of Target Amount
Less than XX%
0%
XX% (Threshold)
25%
XX% (Target)
100%
XX% or More (Maximum)
200%

b.
Determination of Amount of Payment Following Death or Total and Permanent Disability . In the event the Participant becomes vested in this Award by reason of his or her death or Total and Permanent Disability in accordance with Section 2.b., this Award shall be settled by payment of a number of Shares equal to the product of (i) the Participant’s Target Amount, times (ii) a fraction having a numerator equal to the number of days elapsed from the Grant Date through the date the Participant’s death or Total and Permanent Disability (as applicable), and a denominator equal to (insert # of days in vesting period) , as soon as practicable following the date the Award becomes vested, but in no event later than March 15 th of the year following the year in which the Award becomes vested.
c.
Determination of Amount of Payment Following a Change in Control . In the event of a Change in Control occurring prior to (insert date) , the amount payable in settlement of this Award shall be the Participant’s Target Amount, or if greater, the percentage of the Participant’s Target Amount determined based on the achievement of the applicable performance goals as of the effective date of the Change in Control, as determined by the Committee in its sole discretion, and this Award shall vest in accordance with Section 2.d. Payment will be made as soon as practicable following the earlier of (i) the date the Participant’s employment is terminated by action of Linde other than for Cause or by Participant with Good Reason or (ii) (insert date) . Notwithstanding any provision of this Award to the contrary, any amounts paid in settlement of this Award pursuant to this Section 3.c. shall be paid in Shares or such other form having a value equivalent to the Award amount payable, as may be authorized by the Committee in its sole discretion. All references to the Committee in this Section 3.c. shall mean the Committee as constituted immediately before the Change in Control.
4.
Other Terms and Conditions. It is understood and agreed that the Award evidenced hereby is subject to the following terms and conditions:
a.
Rights of Participant . Except as provided in Section 4.d., the Participant shall have no right to transfer, pledge, hypothecate or otherwise encumber the Award. Prior to the payment of Shares in satisfaction of this Award, the Participant shall have none of the rights of a stockholder of the Company with respect to the Award, including, but not limited to, voting rights and the right to receive or accrue dividends or dividend equivalents. Notwithstanding any provision of the Plan or this Award to the contrary, Shares delivered in satisfaction of this Award shall be subject to applicable Linde policies as from time to time in effect, including but not limited to, Linde’s insider trading and Executive Stock Ownership Policies.
b.
No Right to Continued Employment . This Award shall not confer upon the Participant any right with respect to continuance of employment by Linde nor shall this Award interfere with the right of Linde to terminate the Participant’s employment.
c.
No Right to Future Awards . The selection of recipients of Awards under the Plan is determined annually on the basis of several factors, including job responsibilities and anticipated future job performance. The Participant’s selection to receive this Award shall in no way entitle him/her to receive, or otherwise obligate Linde to provide the Participant, any future Performance Share Unit Award or other award under the Plan or otherwise.
d.
Transferability . This Award is not transferable other than:
(i)
in the event of the Participant’s death, in which case this Award shall be transferred to the Participant’s executor, administrator, or legal representative, or
(ii)
pursuant to a domestic relations order.
Any transfer of this Award, in whole or in part, is subject to acceptance by the Company in its sole discretion and shall be affected according to such procedures as the Company’s Chief Human Resources Officer may establish. The provisions of this Award, relating to the Participant, shall apply to this Award notwithstanding any transfer to a third party.
e.
Cancellation of Award . Notwithstanding any other provision of this Award, the Committee may, in its sole discretion, cancel, rescind, suspend, withhold, or otherwise limit or restrict this Award, and/or recover any gains realized by the Participant in connection with this Award, in the event any actions by the Participant are determined by the Committee to (i) constitute a conflict of interest with Linde, (ii) be prejudicial to Linde’s interests, or (iii) violate any non-compete agreement or obligation of the Participant to Linde, any confidentiality agreement or obligation of the Participant to Linde, Linde’s applicable policies, or the Participant’s terms and conditions of employment.
f.
Clawback . This Award shall be subject to the clawback or recapture policy, if any, that Linde may adopt from time to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that this Award be repaid to Linde after it has been distributed or paid to the Participant.
5.
Tax Withholding. Upon the date of payment of the Award, Linde will deduct from the number of Shares (or other form of payment, if applicable) otherwise due the Participant, Shares (or other form of payment, if applicable) having a Fair Market Value (or fair market value in the event of payment other than in Shares) sufficient to discharge all applicable federal, state, city, local or foreign taxes of any kind required to be withheld with respect to such payment, provided that, if Shares are so withheld, they shall be withheld only up to the minimum required tax withholding rates or such other rate that will not trigger a negative accounting impact on Linde. In the alternative, Linde shall have the right to require the Participant to pay cash to satisfy any applicable withholding taxes as a condition to the payment of the Award.
6.
References. References herein to rights and obligations of the Participant shall apply, where appropriate, to the Participant’s legal representative or estate without regard to whether specific reference to such legal representative or estate is contained in a particular provision of this Award.
7.
Governing Law. This Award shall be governed by and construed in accordance with the laws of Connecticut, without giving effect to principles of conflict of laws.
8.
No Third Party Beneficiaries. Except as expressly provided in the Plan or herein, neither the Plan nor this Award will confer on any person other than Linde and the Participant any rights or remedies under the Plan or hereunder.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its proper officer hereunto duly authorized, as of the day and year first hereinabove written.
Linde plc
 
By
 
 
David Strauss
Chief Human Resources Officer
 
 


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THE LinDE GROUP CONVENIENCE TRANSLATION page 7, Plan Conditions, Tranche 2016 (2) The adjustment pursuant to § 5 para. 1 shall be calculated by Linde. Linde shall announce the adjusted Option Ratio, the adjusted number of Self-Financed Investment Shares and the reference date from which only the adjusted Option Ratio shall apply, in accordance with § 13. (3) Fractions of shares shall not be delivered. In the event that the aforementioned adjustment results in frac- tions of shares, the number of Linde Shares to be granted shall be determined by rounding based on com- mercial principles. Fractions of shares not taken into account shall neither be compensated in cash nor otherwise. (4) Linde shall have the right to terminate the Option Rights with six months notice if Linde pursues another legal form, merges with another Company, transfers all or substantially all of its assets to another Company or otherwise undergoes substantial restructuring measures. The same applies if a shareholder or a group of shareholders of Linde gains control of Linde within the meaning of sec. 29 para. 2 in conjunction with sec. 30 of the German Securities Acquisition and Takeover Act (Wertpopiererwerbs- und Übernahmegesetz WpÜG). Upon such termination the Option Beneficiary shall be entitled to a cash compensation per Option Right the amount of which shall be determined in good faith (nach billigem Ermessen) by Linde. In such de- termination, the degree of the achievement of the Performance Targets as per the date of termination, the elapsed time of the Waiting Period up to the ter ination notice, the market capitalization and the business prospects of Linde, as they where expected to develop without taking into consideration the circumstances triggering the termination shall be taken into consideration. (5) The provisions of this § 5 shall apply to Matching Shares Rights mutatis mutandis provided that the number of Self-financed Investment Shares for which Matching Shares Rights shall be granted shall be adjusted in the same ratio as the Option Ratio pursuant to § 5 para 1, regardless of the number of Linde Shares the Op¬ tion Beneficiary holds as self-financed Investment. § 6 Preconditions for Exercise I: Waiting Period and Exercise Period (1) The Option Rights may be exercised, subject to § 7 below, at the earliest four years after they have been issued, i.e. at the earliest on 1 June 2020 ("Waiting Period ). (2) The Option Rights may be exercised within a period of twelve months after the end of the Waiting Period ("Exercise Period"). Thus, the last date on which the Option Rights can be exercised is 31 May 2021. The Option Beneficiaries may not exercise the options during the lock-up periods: 30 calendar days before through one day after the publication of quarterly results or results for the first six months, the last two weeks before the end of a financial year through one day after the publication of the results of the respec- tive financial year and the period starting 14 weeks before through the third banking day after the annual general meeting of Linde. The periods between the lock-up periods where the Option Beneficiary may ex¬ ercise the Option Rights are the "Exercise Times . (3) Regardless of the lock-up periods (§ 6 para 2), the Option Beneficiaries shall obey potential statutory or Linde internal prohibitions or Statements (in particular with respect to insider information) when exercising the Option Rights. ,

 

 

 

 

 

 

 

 

 

 

 

 
THE LinDE GROUP STRICTLYCONFIDENTIAL Convenience translation - the German Version is the only legally binding Version PLAN CONDITIONS for the Option Rights and the Matching Shares of the Long Term Incentive Plan 2012 of Linde AG, Tranche 2017 ("LTIP 2012") Content § 1 Option Beneficiaries, Transfer 2 § 2 Precondition for Participation, Self-financed Investment, Matching Shares 3 § 3 Option Rights 5 § 4 Issue Conditions, Exercise Price 5 § 5 Adjustment of Plan Conditions; Termination of Option Rights and Matching Shares Rights 6 § 6 Preconditions for Exercise I: Waiting Period and Exercise Period 7 § 7 Preconditions for Exercise II: Performance Targets 8 § 8 Determination of the Number of Exercisable Option Rights 10 § 9 Lapse of Option Rights and Matching Shares Rights in the Event of a Termination of the Employment Relationship 10 § 10 Exercising Option Rights, Granting of Matching Shares 12 § 11 Option Office 13 § 12. Costs 14 § 13 Announcements 14 § 14Taxes, Charges 14 § 15 Liability and Risks 15 § 16 Personal Data 16 § 17 Concluding Provisions 16 ANNEX to the Linde Group Plan Conditions for the LTIP 2012 18

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 2, Plan Conditions, Tranche 2017 Preamble (1) On 4 May 2012, the Annual General Meeting (ordentliche Hauptversammlung) of Linde Aktiengesellschaft, with headquarters in Munich ("Linde"), has authorised the Executive Board (Vorstand) and, with respect to the issuance in favour of the members of the Executive Board of Linde, the Supervisory Board (Aufsichts¬ rat) to issue subscription rights (Bezugsrechte) to members of the Executive Board of Linde, to members of anagement bodies of affiliated Companies within the meaning of sec. 15 et. seg. of the German Stock Corporation Act (Aktiengesetz) ( Affiliated Companies ) in Germany and abroad and to selected execu- tives of Linde and Affiliated Companies in Germany and abroad. In order to enable Linde to fulfil its obliga- tions corresponding to such subscription rights the Annual General Meeting has resolved to create a condi- tional Capital. The conditional Capital has been registered with the commercial register of Linde on 22 May 2012. (2) On 4 May 2012, the Annual General eeting of Linde has further authorised the Executive Board and, with respect to the issuance in favour of the members of the Executive Board of Linde, the Supervisory Board to acquire treasury shares and to use such treasury shares, amongst others, to fulfil Linde s obligations under the LTIP 2012. (3) On the basis of the aforesaid resolutions, the Option Beneficiaries (as defined in § 1 para. 1) shall be grant- ed Option Rights (as defined in § 3 para. 1) and Matching Shares Rights (as defined in § 2 para. 10) relating to no-par value bearer shares (auf den Inhaber lautende Stückaktien) of Linde. The following plan condi¬ tions shall apply to such Option Rights and Matching Shares Rights of the tranche 2017. They shall be inte¬ gral part of the individual agreements on Option Rights and Matching Shares Rights between Linde and the respective Option Beneficiary. § 1 Option Beneficiaries, Transfer (1) Forthe purpose of these Plan Conditions, "Option Beneficiaries" constitute those members of Linde s Exec¬ utive Board who have been granted Option Rights (as defined in §3 para. 1) and/or Matching Shares Rights (as defined in § 2 para. 10) by the Supervisory Board as well as those members of the management bodies of Affiliated Companies in Germany and abroad and those selected executives of Linde in Germany and abroad who have been granted Option Rights and/or Matching Shares Rights by Linde's Executive Board. (2) The Option Rights shall not be transferable nor shall they be used as collateral. The exercise of the Option Rights pursuantto § 10 shall remain unaffected thereby. (3) The granting of Option Rights and Matching Shares Rights and the granting of Matching Shares (as defined in § 2 para. 10) in favour of the Option Beneficiaries shall be made on a mere voluntary basis by Linde. Even the repeated granting of Option Rights, Matching Shares, atching Shares Rights or similar benefits under the LTIP 2012 or other programmes does not provide a Claim for being granted Option Rights, Matching Shares and Mat hing Shares Rights, similar or comparable benefits in the future.

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 3, Plan Conditions, Tranche 2017 § 2 Precondition for Participation, Self-financed Investment, Matching Shares (1) Precondition for the participation in the LTIP 2012 is (a) the opening, and maintenance, of a separate Secu¬ rities account by the Option Beneficiary (the "LTIP 2012 Securities Account") during the term of the plan with an account bank nominated by Linde and engaged with the administration (the "Account Bank") and (b) the acceptance of Option Rights for the Tranche 2017 as well as the consent to these plan conditions. In addition to the LTIP 2012 Securities Account the Account Bank shall open, and maintain during the term of the plan, a Clearing account relating to the LTIP 2012 Securities Account for the participants. Those Par- ticipants who already have a Clearing account with the Account Bank can use the existing MIP or the LTIP Clearing account. (2) For Option Beneficiaries who belong to Linde Band 5 and higher on the Issue Date, i.e., 7 June 2017 (as defined in § 3 para. 2), the participation in the LTIP 2012 further requires a self-financed investment in a certain number of no-par value bearer shares of Linde (the "Self-financed Investment Shares") (the shares of Linde also the Linde Shares"). The definite number of Self-financed Investment Shares to be held sub- ject to an adjustment pursuant to § 5 para. 1 shall be notified to the respective Option Beneficiary by way of an individual award letter. The Option Beneficiaries shall be obliged to transfer the Self-financed In¬ vestment Shares to the LTIP 2012 Securities Account. The Self-financed Investment Shares shall be locked- up until expiry of the Waiting Period, Le. 6 June 2021, (as defined in § 6 para. 1) and may not be sold or otherwise transferred during such period. The self-financed invest ent in Linde Shares shall be made within four months following the Issue Date, i.e. by 6 October 2017, (the Investment Period") and the Self-financed Investment Shares shall be transferred to the LTIP 2012 Securities Account during the In¬ vestment Period. Any and all shareholder rights of the Option Beneficiaries pertaining to the Self-financed Investment Shares shall exist during the Waiting Period too, the Self-financed Investment Shares shall in particular be entitled to dividend payments during the Waiting Period. Dividend payments on Self- financed Investment Shares shall be credited to the Clearing account relating to the LTIP 2012 Securities Account; the Option Beneficiary shall be entitled to dispose of any such credits at any time at its own dis- cretion. (3) Option Beneficiaries who belong to Linde Band 4 on the Issue Date can acquire Matching Shares Rights (as defined in § 2 para. 10) by way of a voluntary self-financed investment in Linde Shares; for these Option Beneficiaries the self-financed investmentshall not be a precondition for the participation in the LTIP 2012 nor a precondition for the granting of Option Rights. The definite number of voluntarily acquirable Self- financed Investment Shares for which Matching Shares Rights shall be granted shall be notified to the re¬ spective Option Beneficiaries by way of an individual award letter. In case of such voluntary acquisition of Self-financed Investment Shares, the self-financed investment in Linde Shares shall be made and the shares shall be transferred to the LTIP 2012 Securities Account within the Investment Period. (4) For making the self-financed investment under the LTIP 2012 the Option Beneficiary can use a portfolio of Linde Shares already held by him/her unless these shares are already locked-up for the purposes of a pre- vious Long Term Incentive Plans or other forms of remuneration or are otherwise precondition for the granting and/or the continuity of such forms of remuneration. In this case the respective number of Linde Shares shall be transferred to the LTIP 2012 Securities Account within the Investment Period. The aforesaid possibility shall apply likewise to an obligatory self-financed investment pursuant to § 2 para. 2 and a vol¬ untary self-financed investment pursuant to § 2 para. 3. , .

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 4, Plan Conditions, Tranche 2017 (5) In case the number of exercisable Option Rights pursuant to § 8 para. 2 and/or para. 3 is reduced and in the cases of § 9 para. 4 (a), the number of the Self-financed Investment Shares to be held pursuant to § 2 pa¬ ra. 2 shall be reduced as well, pro rata to the ratio of exercisable Option rights reduced pursuant to § 8 pa¬ ra. 2 and/or para. 3 to the number of the exercisable Option rights pursuant to § 8 para. 1 (without reduc- tion). The Option Beneficiary can freely dispose of any Linde Shares in excess thereof at any time. The Op¬ tion Beneficiary shall be granted Matching Shares Rights (as defined in § 2 para. 10) only with respect to the reduced number of Self-financed Investment Shares pursuant to sentence 1, regardless of whether the Option Benefic ary has disposed of non-locked-up Self-financed Investment Shares or whether he/she still holds them. The provisions of this § 2 para. 5 sentences 1 through 3 shall apply to Self-financed Investment Shares held voluntarily pursuant to § 2 para. 3 mutatis mutandis. (6) The Option Beneficiary who has made a self-financed Investment shall be obliged, at any time up on re- quest of Linde, to provide evidence of the Option Beneficiary s self-financed Investment by submitting a bank Statement showing the Self-financed Investment Shares relating to the self-financed Investment. The bank Statement shall confirm that the Self-financed Investment Shares were held by the Option Bene¬ ficiary from the day following the Investment Period (00:00 h) until the expiry of the Waiting Period re- spectively the day the bank Statement has been prepared. Notwithstanding the foregoing, Linde may de- cide that the Account Bank shall grant Linde insight into the LTIP 2012 Securities Account and, if necessary, provide further information relating thereto. In particular the Account Bank shall inform Linde if it becomes aware of a disposition by any participant before the expiry of the Waiting Period. To the extent it becomes aware thereof the Account Bank shall further inform Linde about any third party enforcement measures with respect to the LTIP 2012 Securities Account. The Account Bank shall include the respective declaration of consent of the Option Beneficiary in its account documentation. (7) The Self-financed Investment Shares shall be transferred to the LTIP 2012 Securities Account free of any third party rights. The Option Beneficiary shall not pledge the Self-financed Investment Shares nor shall he/she enter into any hedging arrangements or back-to-back-transactions by which the price risk pertain- ing to the Self-financed Investment Shares is fully or partially economically hedged. The Option Benefi¬ ciary shall further not grant any sub-participations in the Self-financed Investment Shares nor agree on any trust relationship relating to Self-financed Investment Shares if the Option Beneficiary acts as a trus- tee. (8) If the Option Beneficiary does not comply with his/her obligations pertaining to the Self-financed Invest¬ ment Shares pursuant to § 2 para. 2 and para. 4 through 7, any and all Option Rights of the Option Benefi¬ ciary shall lapse without replacement or compensation. This does not apply to a voluntary self-financed In¬ vestment pursuant to § 2 para. 3. (9) In acquiring Self-financed Investment Shares the respective Option Beneficiary shall ensure that he/she does not violate mandatory insider trading restrictions. If an Option Beneficiary for this reason is not al- lowed to make the self-financed Investment within the Investment Period, the Investment Period shall be extended by that period during which mandatory law interdicts such acquisition. In these cases, the end of the Investment Period shall be announced by Linde. If the acquisition and/or the holding of Self-financed Investment Shares by the Option Beneficiary is, or becomes, inadmissible pursuant to mandatory law or if the fulfilment of the mandatory law requirements in connection with the Self-financed Investment Shares requires disproportionate efforts by Linde and/or the Option Beneficiary, e.g. the preparation of a pro- spectus or the involvement of an intermediate, Linde shall, with respect to the respective Option Benefi¬ ciary, be entitled to waive the self-financed Investment as precondition for the participation in the plan. In such case, Linde may agree with the respective Option Beneficiary on an individual basis.

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 5, Plan Conditions, Tranche 2017 (10) For each Investment Share which is held at the end of the Waiting Period, Linde shall, in accordance with the following conditions and subject to an adjustment pursuant to § 2 para. 5 and/or § 5 para. 5 grant the Option Beneficiary one Linde Share (the "Matching Shares Right") (the Linde Shares which are granted pursuant to a Matching Shares Right are hereinafter referred to as Matching Shares ): (a) the Self-financed Investment Shares have been transferred into the LTIP 2012 Securities Account in accordance with the provisions set forth in § 2 paras. 2 and 3 above within the Investment Period, (b) the Option Beneficiary has not violated the provisions under § 2 para. 4 and 7, (c) the Self-financed Investment Shares have been held in the LTIP 2012 Securities Account by the Option Beneficiary permanently until the end of the Waiting Period and (d) at the end of the Waiting Period the respective Option Beneficiary has an employment or Service con- tract with Linde or any Affiliated Company which has not been terminated. If the employment or Ser¬ vice contract is terminated prior to the expiry of the Waiting Period, § 9 shall apply to Matching Shares Rights mutatis mutandis. (11) For the fulfilment of its obligations under the Matching Shares Rights Linde intends to use treasury shares. Flowever, Linde shall, instead of granting Matching Shares, be entitled to make a cash payment to the re¬ spective Option Beneficiary the amount of which shall be calculated based on the number of Matching Shares to be granted pursuant to § 2 para. 10 multiplied by the average of the closing prices of the Linde Share in the Xetra trading (or a comparable successor System) on the Frankfurt Stock Exchange within the last 60 trading days of the Waiting Period. § 3 Option Rights (1) Linde shall grant Option rights to the Option Beneficiary which confer the right to subscribe to new no-par value bearer shares of Linde as set forth in these Plan Conditions ("Option Rights"). (2) The Option Rights are deemed to be issued on 7 June 2017 ("Issue Date"). The term of the Option Rights amounts to five years, counted as from the Issue Date, unless the Option Rights lapse ahead of schedule pursuant to these Plan Conditions. Option rights which are not exercised or could not be exercised by the end of the term shall lapse without replacement or compensation. (3) The Option rights will not be documented in any form of a certificate. A Claim for certification does not exist. § 4 Issue Conditions, Exercise Price (1) Fach Option Right shall entitle the Option Beneficiary to subscribe to one share of Linde ("Option Ratio") at the Exercise Price pursuant to these Plan Conditions. The "Exercise Price" shall be equal to the lowest issue price (geringsterAusgabebetrag) from time to time, at present EUR 2.56.

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 6, Plan Conditions, Tranche 2017 (2) Shares which are issued following the exercise of Option Rights shall for the first time be entitled to profit participation for that financial year for which a resolution on the appropriation of the profits does not exist at the point in time in which the shares are issued. (3) Linde may, at its sole discretion at any time prior to the Exercise Period (as defined in § 6 para. 2), choose to (a) deliver treasury Linde Shares instead of new Linde Shares from the conditional Capital created for this purpose, in which case no Exercise Price shall be payable, or (b) to fulfil the Obligation to deliver Linde Shares by cash payment the amount of which per Linde Share shall be the difference between (i) the closing price of Linde Shares in the Xetra trading (or a compa- rable successor system) on the Frankfurt Stock Exchange on the Exercise Date (as defined in § 10 pa¬ ra. 4) and (ii) the Exercise Price (cash settlement). The decision on any of these alternatives shall be announced to the Option Beneficiaries in the form as set forth in § 13 prior to the Start of the Exercise Period. § 5 Adjustment of Plan Conditions; Termination of Option Rights and Match- ing Shares Rights (1) Insofar as Linde performs corporate actions during the term of the Option Rights, the number of Linde Shares per Option Right shall be adjusted as follows. Objective of the adjustment is to avoid or minimize any alteration of the economical value of the Option Rights. The Exercise Price shall in all cases be equal to the lowest issue price. (a) In the event of an increase of the number of shares without change in the share Capital (share split) or a Capital increase from corporate funds through the issuance of new shares, the number of shares per individual Option Right shall be increased in the ratio of the number of Linde Shares after the Capital measure to the number of shares prior to such Capital measure. The number of shares to be delivered when the options are exercised shall remain unchanged provided that the share Capital is increased through corporate funds and the number of shares issued in this context is not altered. (b) In the event of a reduction of Linde's share Capital, the Exercise Price and the Option Ratio shall remain unchanged provided that, as a result of the Capital reduction, the number of shares remains un¬ changed or the Capital reduction is linked to a Capital repayment or an acquisition of treasury shares against payment. In the event of a Capital reduction through the amalgamation of shares without a Capital repayment or acquisition of treasury shares against payment and in the event of a consoiida- tion of shares without a change in the share Capital, the Option Ratio shall be adjusted in such way that the number of Linde Shares which can be acquired for one Option Right at the Exercise Price shall be reduced in the ratio of the number of Linde Shares after such Capital measure to the number of shares prior to such Capital measure. The number of shares to be held as Self-Financed Investment Shares pursuant to § 2 para. 2 shall be ad¬ justed in the same ratio as the Option Ratio pursuant to subparagraphs (a) and (b) above. /

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 7, Plan Conditions, Tranche 2017 (2) The adjustment pursuant to §5 para. 1 shall be calculated by Linde. Linde shall announce the adjusted Option Ratio, the adjusted number of Self-Financed Investment Shares and the reference date from which only the adjusted Option Ratio shall apply, in accordance with § 13. (3) Fractions of shares shall not be delivered. In the event that the aforementioned adjustment results in frac- tions of shares, the number of Linde Shares to be granted shall be determined by rounding based on com- mercial principles. Fractions of shares not taken into account shall neither be compensated in cash nor otherwise. (4) Linde shall have the right to terminale the Option Rights within six months after Linde pursues another legal form, merges with another Co pany, transfers all or substantially all of its assets to another Company or otherwise undergoes substantial restructuring measures. The same applies if a shareholder or a group of shareholders of Linde gains control of Linde within the meaning of sec. 29 para. 2 in conjunction with sec. 30 of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz - WpÜG). Upon such termination the Option Beneficiary shall be entitled to a cash co pensation per Option R ght the amount of which shall be determined in good faith (nach billigem Ermessen) by Linde. In such de- termination, the degree of the achievement of the Performance Targets as per the date of termination, the elapsed time of the Waiting Period up to the termination notice, the market capitalization and the business prospects of Linde, as they where expected to develop without taking into consideration the circumstances triggering the termination shall be taken into consideration. (5) The provisions of this § 5 shall apply to Matching Shares Rights mutatis mutandis provided that the number of Self-financed Investment Shares for which Matching Shares Rights shall be granted shall be adjusted in the same ratio as the Option Ratio pursuant to § 5 para 1, regardless of the number of Linde Shares the Op¬ tion Beneficiary holds as self-financed investment. § 6 Preconditions for Exercise I: Waiting Period and Exercise Period (1) The Option Rights may be exercised, subject to § 7 below, at the earliest four years after they have been issued, i.e. at the earliest on 7 June 2021 ("Waiting Period"). (2) The Option Rights may be exercised within a period of twelve months after the end of the Waiting Period ("Exercise Period"). Thus, the last date on which the Option Rights can be exercised is 6 June 2022. The Op¬ tion Beneficiaries may not exercise the options during the lock-up periods: 30 calendar days betöre through one day after the publication of quarterly results or results for the first six months, the last two weeks betöre the end of a financial year through one day after the publication of the results of the respec- tive financial year and the period starting 14 weeks before through the third banking day after the annual general meeting of Linde. The periods between the lock-up periods where the Option Beneficiary may ex¬ ercise the Option Rights are the "Exercise Ti es". (3) Regardless of the lock-up periods (§ 6 para 2), the Option Beneficiaries shall obey potential statutory or Linde internal prohibitions or Statements (in particular with respect to insider information) when exercising the Option Rights.

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 8, Plan Conditions, Tranche 2017 § 7 Preconditions for Exercise II: Performance Targets (1) Options Rights may only be exercised if and to the extent at least one of the Performance Targets as set forth below in this § 7 is reached. (2) The Performance Targets consist of the development of (i) the Earnings Per Share (as defined in § 7 para. 4) and (ii) the Relative Total Shareholder Return (as defined in § 7 para. 5), each and all as determined in accordance with the following provisions. (3) With respect to any and all Options Rights granted to one particular Option Beneficiary on the same Issue Date, the Earnings Per Share" Performance Target shall have a weighting of 50 percent and the "Relative Total Shareholder Return" Performance Target li ewise a weighting of 50 percent. Within the two afore- mentioned Performance Targets there shall be a "minimum target" which must be reached to be able to exercise Option Rights and a "Stretch target". Upon reaching the Stretch target, all Option Rights may be exercised within the limits of the weighting of the respective Performance Target. (4) "Earnings Per Share" Performance Target (a) The minimum target for the Earnings Per Share performance target shall be reached, when the dilut- ed earnings per share of the Company, adjusted for special items, for the financial year ending before expiry of the waiting period, i. e. 2020, compared to the diluted earnings per share, adjusted for spe¬ cial items, for the financial year ending before the issue of the subscription rights, i. e. 2016, reaches a compound average growth rate (Compound Average Growth Rate, CAGR) of 6 percent annually. (b) The "Earnings Per Share" Stretch target shall be reached, when the diluted earnings per share of the Company, adjusted for special ite s, for the financial year ending before the expiry of the waiting pe¬ riod , i. e. 2020, compared to the adjusted diluted earnings per share, adjusted for special items, for the financial year ending before issue of the subscription rights, i. e. 2016, reaches a compound aver¬ age growth rate of at least 11 percent annually. (c) Whether and to what extent the "Earnings Per Share performance target has been reached shall be determined on the basis of the diluted earnings per share, adjusted for special items, as shown in the audited Consolidated financial Statements of the Linde Group for the respective financial year; if no ad- justment for special items has been made in the respective financial Statements, the diluted earnings per share as shown in the financial Statements shall be decisive. Special items are such effects which, due to their nature, their scope and/or their frequency can, positively or negatively, influence the sig- nificance of the diluted earnings per share with regard to the sustainability of the profitability of the Linde Group. Objective of the adjustment for special items is to increase the transparency of the sus¬ tainability of the Linde Group s profitability (d) If the minimum target is reached, 12.5 percent of all subscription rights of the respective tranche shall be exercisable. If the Stretch target is reached, 50 percent of the subscription rights of the respective tranche, i. e. the total number of subscription rights corresponding to the weighting of this perfor¬ mance target, shall be exercisable. If the minimum target is exceeded, but the Stretch target is not reached, that percentage, between 12.5 percent and 50 percent, of the subscription rights of the re¬ spective tranche shall be exercisable, which corresponds to the amount by which the minimum target is exceeded in relation to the Stretch target. A linear division shall be assumed in this respect. If such

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 9, Plan Conditions, Tranche 2017 calculation does not result in an integer percentage, the percentage shall be determined by rounding to the first decimal piace based on commercial principle (5) Relative Total Shareholder Return" Performance Target (a) The minimum target for the "Relative Total Shareholder Return" performance target shall be reached, when the Total Shareholder Return per Linde Share in the period between the Issue Date and the Start of the Exercise Period exceeds the median of values for the Total Shareholder Return of the Reference Group (as defined below). If the Reference Group is made up of an even number of values, the aver¬ age of the two values lying in the middle shall be relevant. (b) The Stretch target for the "Relative Total Shareholder Return" performance target shall be reached, when the Total Shareholder Return per Linde Share in the period between the Issue Date and the Start of the Exercise Period at least reaches the upper quartile (third quartile) of values for the Total Share- holder Return of the Reference Group. (c) The Total Shareholder Return per Linde Share shall consist of the absolute amount by which the price of a Linde Share rises (or declines) compared to the Initial Value (as defined below) on the one hand, and the amount of the dividends paid out per Linde Share and the value of any statutory subscription rights allocated to a Linde Share (because of a Capital increase), in each case during the period between the Issue Date inclusive and the third to last stock exchange trading day in the Xetra trading (or a comparable successor System) on the Frankfurt Stock Exchange (in each case including) before the Start of the Exercise Period, on the other hand. The absolute amount of the rise (or decline) in the price of the Linde Share shall be the difference between the average of the closing prices (or a compa¬ rable successor value) of the Linde Share between the 62nd and the third to last stock exchange trad¬ ing day in the Xetra trading (or a comparable successor System) on the Frankfurt Stock Exchange (in each case inclusive) before the Exercise Period (the "End Value") and the Initial Value. In determining the Total Shareholder Returns, the "Initial Value" shall be the average of the closing prices (or a com¬ parable successor value) for the Linde Share on the last 60 stock exchange trading days in the Xetra trading (or a comparable successor System) on the Frankfurt Stock Exchange before the Issue Date of the Option Rights. The value of a statutory subscription right shall, for the purpose of these Plan Condi- tions, correspond to the average closing prices in that period in which the subscription rights are trad- ed in the Xetra trading (or a comparable successor System) on the Frankfurt Stock Exchange. (d) The "Reference Group" includes the respective DAX 30 Companies with the exception of Linde. Com¬ panies which withdraw from or enter the DAX 30 during the period decisive for determining the Total Shareholder Return will not be taken into consideration. In calculating the respective Total Sharehold¬ er Return of the shares of the Reference Group, Linde can use data provided by recognized independ¬ ent providers for financial data. If with respect to a Company in the Reference Group, shares of differ¬ ent classes or shares with varying profit entitlements are traded on stock exchanges, solely the shares forming the basis for the determination of the DAX 30 value shall be taken into consideration. (e) If the minimum target is reached 12.5 percent of all Option Rights issued on the same Issue Date shall be exercisable. If the Stretch target is reached, 50 percent of the Option Rights issued on the same Is¬ sue Date, i.e. the full number of Option Rights corresponding the weighting of this Performance Target shall be exercisable. If the inimum target is exceeded but the Stretch target is not reached, that per¬ centage, between 12.5 percent and 50 percent, of the Option Rights issued on the same Issue Date shall be exercisable as represented by the amount by which the minimum targets exceeded in relation

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 10, Plan Conditions, Tranche 2017 to the Stretch target. A linear division shall be assumed in this respect. If the calculation does not result in an integer percentage, the percentage shall determined by rounding to the first decimal place based on commercial principles. § 8 Determination of the Number of Exercisable Option Rights (1) The exercisable number of Option Rights issued on the same Issue Date shall be equivalent to the number of all Option Rights issued on the same Issue Date, multiplied by the percentage which results from the ag- gregate percentages arising from reaching one or both of the Performance Targets as set out in § 7 unless provided otherwise in the following provisions. (2) If the e ployment or Service contract of the Option Beneficiary terminates prior to the expiry of the Wart- ing Period due to any of the events mentioned in § 9 para. 2 or 3, the number of Option rights exercisable by the Option Beneficiary shall be (a) the number determined pursuant to para. 1 above, multiplied by (b) the number of months of employment or Service of the Option Beneficiary from and including the cal- endar months of the Issue Date up to and including the calendar month in which the Option Rights would have lapsed when not taking into consideration the provisions of § 9 para. 2 respectively 3, divided by (c) 48. (3) If the payment of any remuneration under the employment or Service of the Option Beneficiary for Linde or any affiliate has been suspended during the Waiting Period, e.g. due to parental leave or a sabbatical or unpaid holiday, the number of exercisable Option rights pursuant to para. 1 and 2 shall be reduced pro rata temporis in the ratio of the number of months during the Waiting Period without Suspension of payment to the aggregate number of months during the Waiting Period (i.e. 48 months). (4) If the determination of the number of exercisable Option rights does not result in an integer number of exercisable Option Rights, the number of exercisable Option Rights shall be determined by rounding based on commercial principles. Fractions of Option Rights shall not be taken into consideration. Fractions not taken into consideration will not be compensated, neither in cash nor otherwise. § 9 Lapse of Option Rights and Matching Shares Rights in the Event of a Ter¬ mination of the Employment Relationship (1) Option rights may only be exercised if the Option Beneficiary is in Service or employment with Linde or any Affiliated Company at the time of exercise and notice of termination has not been given by either party with regard to the Service or employment agreement. Save for any specific exemption set forth in these Plan Conditions Option Rights which may not be exercised pursuant to sentence 1 shall lapse without re- /

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 11, Plan Conditions, Tranche 2017 placement or compensation regardless of the reason for such termination (including death and occupa- tional disability). (2) The Option Rights shall not lapse, if (a) the termination of the employment or Service contract is brought about by Linde or by an Affiliated Company without cause (in particular in the event of termination for economical reasons, transfer of operations to another legal entity, take over of Linde or sale of shareholdings). This also applies if the Option Beneficiary personally terminates his/her employment relationship or Service contract pursuant to its terms following transfer of operations to another legal entity or sale of shareholdings. If the em¬ ployment or Service contract terminates before the expiry of the Waiting Period, the entitlement under the Option Rights will be adjusted pro rata temporis in accordance with § 8 para. 2. The adjust ent shall become effective upon the date the termination of the employment or Service contract becomes effective, provided that, if at such time any right of Linde to terminale the Option Right pursuant to § 5 para. 4 has not yet expired, the adjustment shall become effective upon expiry of the termination peri¬ od, unless Linde makes use of the termination right in time; or (b) the Option Beneficiary changes his/her employment relationshi or Service contract from Linde or an Affiliated Company to an Affiliated Company or Linde. (3) The Option Rights are retained if the Option Beneficiary retires, develops an occupational disability or be¬ comes incapable of seif Support, provided, however, if the employment or Service contract terminates be¬ fore the expiry of the Waiting Period, the entitlement under the Option Rights will be adjusted pro rata temporis in accordance with § 8 para. 2. (4) ln the event of the Option Beneficiaries death, Linde shall grant his/her heirs which have proven their entitlement vis-ä-vis Linde a cash compensation for the Option Rights which have lapsed in accordance with the following positions ("Heirs Compensation ): (a) In the event of the Option Beneficiary s death prior to the expiry of the Waiting Period, the amount of the Heirs Compensation shall be determined based on the number of the exercisable Option Rights pursuant to § 8 para. 2 multiplied by the average of the closing prices of the Linde Share in the Xetra trading (or a comparable successor System) on the Frankfurt Stock Exchange within the first ten stock exchange trading days of the Exercise Period. (b) In the event of the Option Beneficiary s death after the expiry of the Waiting Period but within the Ex¬ ercise Period and prior to exercise of the Option Rights, the amount of the Heirs Compensation shall be determined based on the number of the exercisable Option Rights pursuant to § 8 para. 1 multiplied by the average closing prices of the Linde Shares in the Xetra trading (or a comparable successor System) on the Frankfurt Stock Exchange within such Exercise Time in which the Option Beneficiary dies or, in case the Option Beneficiary dies within a blocking period, within such Exercise Time which follows the respective blocking period. (c) If the Option Beneficiary has several heirs, Linde can pay the Heirs Compensation with debt- discharging effect to one of the heirs or, at its own discretion, deposit the amount in accordance with the provisions of the German Civil Code. /ü

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 12, Plan Conditions,Tranche2017 (5) In the event the employment or Service contract is terminated by way of a severance agreement, the Op¬ tion Rights shali.lapse unless the severance.agreement shall replace a termination of the employment or Service contract due to one of the reasons mentioned in para. 2. If the Option Rights do not lapse pursuant to this § 9 para. 5, the adjustment positions pursuant to § 9 para. 2 shall apply mutatis mutandis. (6) The provisions of § 9 para. 1 through 5 shall apply mutatis mutandis to Matching Shares Rights provided that in the event that the Matching Shares Rights do not lapse Matching Shares or, in the event of § 9 pa¬ ra. 4, the Heirs Compensation shall be granted solely for the number of Self-financed Investment Shares which has been reduced pursuant to § 2 para. 5, provided that the further preconditions of § 2 para. 10 are met. § 10 Exercising Option Rights, Granting of Matching Shares (1) The Exercise Notice may be submitted from the beginning of the Exercise Period with effect as of the re- spective Exercise Date. (2) In order to exercise Option Rights, the Option Beneficiaries ust submit to Linde an electronic exercise notice using the pre-printed forms available on the website for the LTIP 2012 ("Exercise Notice"). All Option Rights which may be exercised in a specific Exercise Period may only be exercised once in accordance with the provisions above. With the Exercise Notice the Option Office, to the extent specified in the forms avail¬ able from Linde, is authorized by the Option Beneficiary - by means of exemption from the legal re- strictions of self-dealing (§181 German Civil Code) - to make the necessary Statements and actions to sub- scribe to the new shares respectively acquire treasury shares of Linde (should Linde choose to deliver treasury shares pursuant to § 4 para. 3) in its own name, but for the account of the Option Beneficiary. The Exercise Notice may also be submitted in writing or by fax to the address or fax number designated by Linde. In the event of an exercise in writing or by fax, the receipt of the fax or the respective letter by the Option Office shall be decisive for the timely exercise within the meaning of § 10 para. 4 a). (3) In submitting the Exercise Notice the Option Beneficiary can choose between three different alternatives: (a) Exercise and Hold": exercising the Option Rights in order to acquire and transfer the Linde Shares into the LTIP 2012 Securities Account; (b) Exercise and Seil : exercising the Option Rights with the instruction to the Option Office to seil all Linde Shares on behalf of the Option Beneficiary over the stock exchange without limit at the best pos- sible price; or (c) "Exercise and Seil to Cover": exercising the Option Rights with the instruction to the Option Office to seil that many Linde Shares on behalf of the Option Beneficiary over the stock exchange without limit at the best possible price which are necessary to cover (i) the Exercise Price for all Linde Shares, (ii) all charges and costs arising from, or becoming payable due to, the exercising of the Option Rights or this instruction, and (iii) the advance payment on taxes and other charges (as described in § 10 pa¬ ra. 4) and to transfer the remaining Linde Shares into the LTIP 2012 Securities Account. (4) The exercising of Option Rights takes effect on the banking day ("Exercise Date") on which the following conditions have been fulfilled by 11:00 am CET:

 
THE LIRDE GROUP CONVENIENCE TRANSLATION page 13, Plan Conditions, Tranche 2017 (a) the Exercise Notice has been received by the Option Office and (b) only with respect to the alternative "Exercise and Hold (as described in § 10 para. 3 a), an amount des- ignated on the website for the LTIP 2012 comprising (i) the Exercise Price for all shares to be acquired by the Option Beneficiary, unless Linde decided to choose the exercise alternative pursuant to § 4 para. 3 (b), (ii) all costs and charges which become payable upon exercise of the Option Rights, and (iii) the advance payment on taxes and other charges (as described in § 14 para. 5), if applicable in the respective country, has been credited to the account of the Option Beneficiary with the Account Bank. The Option Beneficiary explicitly agrees that the amount mentioned above may be debited from his account with the Account Bank by the Option Office. (5) If the Option Beneficiary does not choose the exercise alternative "Exercise and seil" (§ 10 para. 3 b)), the shares to be delivered with respect to the exercise of the Option Rights shall be credited to the LTIP 2012 Securities Account of the Option Beneficiary as soon as possible after the Exercise Notice becoming effec- tive, generally within five banking days. Linde shall make arrangements with the Option Office to have the Option Office, with respect to the exercise alternatives "Exercise and Seil" and Exercise and Seil to Cover" (§ 10 para. 3 b) and c)) pre-fund the Exercise Price for the account of the Option Beneficiary and deduct (i) the prefunded Exercise Price, (ii) any fees and charges and (iii) the advance payment on taxes and other charges (as defined in § 10 para. 4) from the proceeds upon sale of the shares for the account of the Option Beneficiary and pass on the advance payment on taxes and other charges (as defined in § 10 para. 4) to Linde or the employer of the Option Beneficiary. The Option Beneficiary hereby agrees to such proceeding. (6) Matching Shares shall be credited to the LTIP 2012 Securities Account automatically within ten (10) bank¬ ing days after expiry of the Waiting Period if the requirements of § 2 para. 10 are met; an exercise of the Matching Shares Rights is not required. If Linde decides to pay a cash compensation pursuant to § 2 pa¬ ra. 11 instead of granting Matching Shares, this amount shall be automatically transferred to the Option Beneficiaries with payment of the next salary or remuneration. § 11 Option Office Linde is entitled to appoint at any time at its own choice employees of Linde or an Affiliated Company, a credit institute, a specialist share/option plan administrator or an accounting firm as Linde's Option Office ("Option Office"). Notwithstanding any other functions the employees of Linde or the Affiliated Company, the credit institute, the specialist share/option plan administrator or the accounting firm may otherwise have or exercise in relation to Linde or any Affiliated Company, for the purposes of these Plan Conditions the Option Office acts exclusively for the Option Beneficiary in exercising such Option Beneficiary s Option Rights.

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 14, Plan Conditions, Tranche 2017 § 12 Costs The Option Beneficiary bears the transaction costs arising out of the exercising of Option Rights and Matching Shares Rights, including any exercise Commission, any costs of selling the shares as well as any costs for his/her deposit account. Linde bears its internal costs. § 13 Announcements (1) Announcements and Statements by Linde concerning these Plan Conditions will be sent to the Option Ben¬ eficiaries by means of electronic data transmission. In exceptional cases the Statements can be sent in writingorby fax as well. (2) All Statements by the Option Beneficiary concerning the Option Rights or the Matching Shares Rights must be made in the German or English language by means of electronic data transmission (email) vis-ä-vis Linde to the (email) address of Linde mentioned in the letter to the Option Beneficiary concerning the granting of Option Rights, also if addressed to the Option Office. The Statements can be made in writing or by fax as well. (3) The Option Beneficiary is well aware of the risks related to the transmission via fax or electronic data transmission, in particular the possible technical failure of the transmission and the risk of misuse for want of original signatures. The decision to use fax or electronic data transmission is solely with the Option Ben¬ eficiary. All risks related thereto are therefore borne by the Option Beneficiary. § 14 Taxes, Charges (1) Any taxes, social security contributions or other expenses and public charges which accrue to the Option Beneficiary in conjunction with the issue of the Option Rights, the exercising of Option Rights, the delivery of shares and the issue of atching Shares Rights and the granting of Matching Shares are to be borne by the Option Beneficiary. The same applies if Linde chooses to fulfil the Option Beneficiaries' Claims by way of cash settlement. (2) In case Option Beneficiaries are obliged to pay taxes in Germany, the income tax and any other taxes and compulsory social security contributions on the non-cash benefit obtained by the Option Beneficiary from the granting or exercising of options and the granting of Matching Shares will be retained from the Option Beneficiary s salary/payments in accordance with legal provisions applicable from time to time ("With- holding of Income Tax") unless, due to the exercising alternative chosen by the Option Beneficiary (§ 10 para. 3), an advance payment on taxes and other charges has already been made. This may lead to a com- plete reduction of the Option Beneficiary's salary/payments in a certain month. If the Withholding of In¬ come Tax exceeds the Option Beneficiary s salary/payments from which taxes and other charges may be withheld, Linde or the employing Company is entitled to debit the difference by means of a direct debit from the Option Beneficiary s salary account subject to sufficient prior written notification. In this case, the Option Beneficiary must ensure that the account has sufficient funds, otherwise a notification on the insuf- ficient payment will be sent to the competent revenue authorities of taxes and charges. /

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 15, Plan Conditions, Tranche 2017 (3) In case of Option Beneficiaries who are subject to tax outside Germany, Linde or any employing Company may withhold such amount and make such arrangements as it considers necessary to meet any liability to taxation, social security or other charges in respect of the Option Rights, the Matching Shares Rights, the Matching Shares and the shares granted upon exercising the Option Rights unless, due to the exercising al¬ ternative chosen by the Option Beneficiary (§ 10 para. 3), an advance payment on taxes and other charges has already been made. These arrangements may include the withholding of the Option Beneficiary's sala- ry/payments, the sale or reduction in number of any shares, or for the cash Settlement a deduction from that payment, unless the Option Beneficiary discharges his/her respective liability to pay taxes, social se¬ curity contributions or other charges himself, and provides evidence thereof, to the satisfaction of Linde or the employing Com any. (4) To the extent an advance payment on taxes and other charges due to the exercising alternative chosen by the Option Beneficiary (§ 10 para. 3 and 4) exceeds the amount to be withheld pursuant to this § 14 para. 2 or 3, the Option Beneficiary shall be reimbursed for the excess amount by Linde or the employing Company via his/her salary/payments account. (5) The advance payment on taxes and other charges shall be calculated as follows: in the event the Option Beneficiary subscribes to new shares, by multiplying the number of shares subscribed to with (i) the difference between the closing price of the Linde Share in the Xetra trading (or a similar successor System) on the Frankfurt Stock Exchange on the last stock exchange trading day prior to the exercise and the Exercise Price and (ii) the maximum tax rate; if Linde decides to choose the exercise alternative pursuant to § 4 para. 3 (a) and delivers treasury shares, by multiplication of the number of shares subscribed to with (i) the closing price of the Linde Share in the Xetra trading (or a similar successor System) on the Frankfurt Stock Exchange on the last stock exchange trading day prior to the exercise and (ii) the maximum tax rate. § 15 Liability and Risks (1) Linde does not accept any responsibility for general market developments and the price development of the Linde Share. For this reason, there is in particular no guarantee that the Option Beneficiary can exercise Option Rights, gains economic benefits from the granting of Option Rights, the issue of Linde Shares or the granting of Matching Shares Rights or Matching Shares or be in a position to make a profit on the sale of Linde Shares. The acceptance and exercise of Option Rights as well as the acquisition of Self-financed In¬ vestment Shares as precondition of the participation in the LTIP 2012 (from Band 5 onwards) or, on a vol- untary basis, as precondition of the granting of Matching Shares Rights (Band 4) are therefore carried out solely at the individual Option Beneficiary s risk. The Option Beneficiary in particular bears the price risk and the risk to lose its self-financed Investment relating to Self-financed Investment Shares. (2) Linde also does not accept responsibility for the legal treatment of taxes and charges, especially that taxes and charges to be retained or taxes and charges to be paid by the Option Beneficiary only accrue to the dif¬ ference between the Exercise Price and the current stock exchange price when Option Rights are exercised or to an actually generated profit from a sale or another specific amount when shares, including Matching Shares, are delivered. It is recommended that Option Beneficiaries consult a tax expert. The respective Op¬ tion Beneficiary shall bear the cost of such tax consultation.

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 16, Plan Conditions, Tranche 2017 (3) In case of a Submission by fax, Linde can determine the authenticity of Orders only via the incoming fax Order since the original is not availabie for review. In principle, Linde cannot see from the fax whether an order was falsified (e.g. by affixing a Signat re from another document). The Option Beneficiary authorises Linde hereby to carry out fax Orders received by it provided that these, from its surface, carry the Signatare of the Option Beneficiary. Linde does not accept any responsibility and iiability for the availability, func- tioning, stability and reliability of the telecommunication network and the timely and complete transmis- sion. (4) The technical and organisational measures carried out by Linde in order to ensure the functioning of the website and the security of data are in line with up to date customary Standards. The availability, function¬ ing, stability and reliability of the website can, according to current techniques, be subject to disturbance and dysfunction. Linde does not accept any responsibility and Iiability for the availability, functioning, sta¬ bility and reliability of the telecommunication network, any internet provider and third party network ele- ments as well as for the access to Linde's website and the timely and complete transmission. Linde further does not accept any responsibility for defects or flaws of the hard- and Software used for the website, in- cluding those of Service providers, provided that this does not apply in case of intent or gross negligence. Linde reserves the right to Interrupt or dose down the website without any announcement, e.g. due to safety reasons following unauthorised third party impact. (5) Linde's Iiability shall be limited to wilful misconduct and gross negligence provided that this does not relate to Cardinal obligations. § 16 Personal Data (1) By participating in the LTIP 2012, the Option Beneficiary agrees to the collection, storage, usage and Pro¬ cessing of his/her personal data by Linde, his/her employer, any Affiliated Company, the Option Office and other third parties, in particular Service providers, in relation to the issuance of the Option Rights and the granting of Matching Shares Rights, the administration and implementation of the LTIP 2012. (2) The Option Beneficiary is responsible for keeping his/her address and other personal communication data availabie to Linde and/or the Affiliated Company he/she is (or was last) employed with up to date at any time. (3) in case of doubt, Linde and the Affiliated Company the Option Beneficiary is (or was last) employed with is entitled to verify the Option Beneficiary s identity and/or request adequate evidence. § 17 Concluding Provisions (1) The Option Beneficiary is obliged to observe legal provisions, in particular the prohibition on insider trading and any insider trading guidelines by Linde as well as any applicable obligations to report director s deal- ings at all times when exercising his/her rights arising out of the Option Rights and/or in the case of a sale of Issuer shares, which were acquired due to Option Rights or as Matching Shares and which were held as Self-financed Investment Shares. (2) The issuance of shares and any payments, including, but not limited to a Cash Settlement, under these Plan Conditions is not part of the employment and the remuneration under the employment agreement and will

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 18, Plan Conditions, Tranche 2017 ANNEX to the Linde Group Plan Conditions for the LTIP 2012, Tranche 2017 NOTE: In addition to or in deviation from the Plan Conditions, certain specific provisions may apply to Option Beneficiaries resident in certain jurisdictions at the Issue Date. For All Jurisdictions, the following applies: OfferStrictly Private The offer to acquire Option Rights and the granting of Matching Shares Rights is addressed only to directors, officers and employees of Companies belonging to the rinde Group. Accordingly, the Option Rights are issued, and the Matching Shares Rights are granted, to the Option Benefi¬ ciaries on a strictly private and personal basis. This means that the Option Rights are offered to those individual Option Beneficiaries only who are the addressees of the award letter. No other person is the addressee of the award letter and thus of the offer made thereby and the offer may not be taken up by any other person. The addressee is not allowed to transfer the right to accept the offer to any other person. No Copying or Distribution Also, you must not copy or distribute the award letter or the Plan Conditions nor any other document or infor- mation given in relation to the LTIP 2012. No Registration with or Approval by Securities or Regulatory Authority Neither the Option Rights nor the Matching Shares Rights have been registered or are currently envisaged to be registered with any Securities or Regulatory Authority or approved by any such Authority or admitted for trad- ing in anyjurisdiction. No Review of Documents by Securities or Regulatory Authority Also, neither the contents of the award letter nor the contents of the Plan Conditions or the additional infor- mation (in particularany brochure) have been reviewed by any Securities or Regulatory Authority in anyjuris¬ diction. If you are in doubt about any of the contents of this document, you should obtain independent Profes¬ sional advice. Financial Statements of Linde AG The Consolidated annual report of Linde AG for the business year2016 as well as the Consolidated report of Linde AG for the first quarter of 2017 are available on Linde s website at http://www.linde.com. Option Bene¬ ficiaries can obtain a free copy of these financial Statements by contacting info@linde.de.

 
THE LinDE GROUP CONVENIENCE TRANSLATION page 17, Plan Conditions, Tranche 2017 not form part of an Option Beneficiary s remuneration for the purpose of determining entitlement to any benefit of employment including any pension or retirement benefit, life assurance, health Insurance or other similar benefit, whether existing orsubsequently introduced. (3) In addition to or in deviation from the Plan Conditions certain specific provisions may apply to Option Bene¬ ficiaries resident in certain jurisdictions at the Issue Date or upon Exercise. (4) The Option Rights, the Matching Shares Rights and these Plan Conditions are subject to the laws of the Federal Republic of Germany, excluding the conflict of law rules. (5) Place of performance is the corporate seat of Linde (6) The Jurisdiction for all legal conflicts arising out of matters provided for in these Plan Conditions is the cor¬ porate seat of Linde unless the Option Beneficiary has a place of general Jurisdiction in Germany. (7) Should one of the provisions of these Plan Conditions be or become ineffective or unfeasible either in whole or in part, the remaining provisions shall remain unaffected. As far as iegally possible, a Provision shall replace an ineffective Provision corresponding to the sense and purpose of these Plan Conditions at the time the Option Rights are granted. Should a legal gap arise as a result of ineffectiveness or unfeasibil- ity or should these Plan Conditions prove to be incomplete for any other reason, the legal gap is to be recti- fied by means of a supplementary contractual interpretation corresponding to the sense and purpose of these Plan Conditions, by taking into account the legitimate interests of the parties concerned. (8) Only the German language Version of these Plan Conditions is Iegally binding. Munich, 7June 2017

 
NON-BINDING CONVENIENCE TRANSLATION ONLY 1 JUNE 2017 AMENDMENT AGREEMENT RELATING TO THE SERVICE AGREEMENT AND TO THE LTIP PLAN CONDITIONS between Linde Aktiengesellschaft [●] - "Linde" - and [●] [●] - "Counterparty" or "Executive Board Member" –

 
2 NON-BINDING CONVENIENCE TRANSLATION ONLY WHEREAS, A. The Counterparty and Linde Aktiengesellschaft ("Linde AG", "Linde" or the "Company"), represented by the chairman of the supervisory board, entered into a service agreement dated [■■■] (the "Service Agreement"). By resolution of the supervisory board dated [■■■], the Counterparty was appointed as member of the executive board[, chairman of the executive board and human recources director (Arbeitsdirektor)] of the Company for the period from [■■■]. B. By shareholders' resolution dated 4 May 2012 the general meeting of Linde AG resolved to create a conditional capital to grant subscription rights to members of the executive board of Linde, to executives of affiliated companies in Germany and abroad as well as to selected senior level employees of Linde and its affiliated companies (jointly the "Participants") under the so-called Long Term Incentive Plan 2012 ("LTIP"). At the same time, the general meeting authorized the executive board and – as regards the granting of subscription rights to the members of the executive board – the supervisory board of the Company to grant subscription rights to the Participants in annual tranches (each a "Tranche") and subject to certain specified conditions. The conditional capital was registered with the commercial register of the Company on 22 May 2012. C. The terms under which Linde grants subscription rights to the Participants are specified for each Tranche in plan conditions that are part of the agreements concluded with the individual Participants in connection with their participation in LTIP. The plan conditions for the Tranches granted from 2012 through 2016 (jointly the "Plan Conditions") are substantially (other than with respect to dates etc.) identical. The plan conditions for the subscription rights to be granted in 2017 (the "Plan Conditions 2017") will presumably also be substantially identical to the Plan Conditions. D. The Plan Conditions provide, and the Plan Conditions 2017 will presumably provide, that the Participants be granted option rights to subscribe for newly issued stock of Linde AG for a strike price equal to the nominal value of each share (being the legally permissible minimum strike price) (the "Options"). The Options of a Tranche are in principle granted as of 1 June of the calendar year during which the respective Tranche is issued (the "Grant Date"). They can be exercised after expiry of a period of four years after the Grant Date for the respective Tranche (the "Waiting Period") and have to be exercised within twelve months after the Waiting Period for the respective Tranche has expired. For the Options to be exercisable, one of two performance targets has to be achieved (performance target "earnings per share" and performance target "relative total shareholder return"), and the Options must not have been forfeited.

 
3 NON-BINDING CONVENIENCE TRANSLATION ONLY E. In addition, the Participants who belong to the bands 5 and above of the Linde remuneration system – including the members of the executive board of Linde AG – are obliged to acquire Linde stock with their own funds and to continue to hold such shares until the end of the applicable Waiting Period (such self-financed shares the "Investment Shares") without disposing over such Investment Shares; if such disposal occurs, the relevant Options of such Participant are forfeited. For each Investment Share Linde AG grants to the relevant Participant at the end of the applicable Waiting Period one Linde share for free (the "Matching Shares" and the right to receive Matching Shares under the Plan Conditions the "MSA" or "Matching Share Rights"). F. The service agreements of the members of the executive board of Linde AG also provide that each executive board member is required to re-invest 40% of his annual bonus after deduction of taxes in Linde stock and to keep the shares thus acquired for a waiting period of four years (the "Deferral Component" within the meaning of the service agreements and the shares thus acquired and held the "Deferral Shares", and the relevant provisions of the service agreements the "Deferral Share Provisions"). G. Linde AG is currently planning a merger with Praxair, Inc. ("Praxair"), a U.S. listed company (the "Transaction"). In the course of the Transaction, a newly established corporation to be incorporated presumably under Irish law ("New Holdco") is to make a public takeover offer within the meaning of §§ 29 et. seq. of the German Takeover Act (WpÜG) for all outstanding Linde shares in exchange for 1.54 New Holdo shares for each Linde share (the "Exchange Ratio") to the shareholders of Linde (the "Exchange Offer"). The Exchange Offer shall provide for (inter alia) a minimum acceptance level of 75% of all shares of Linde AG. Accordingly, New Holdco would hold the majority of shares of Linde AG if the Exchange Offer closes successfully. As regards Praxair, it is currently envisaged to merge Praxair into a wholly-owned subsidiary of New Holdco. H. Depending on the actual acceptance level reached with the Exchange Offer, it is possible that following the closing of the Exchange Offer, additional reorganization measures will be implemented as between New Holdco and Linde to further integrate the Linde group with the entire newly established group. Such post-closing reorganization measures may consist of the conclusion of a domination – and profit transfer agreement between New Holdco as dominating entity and Linde AG as dominated entity, a squeeze out of minority shareholders of Linde AG, or a legal integration (Eingliederung) of Linde AG into Now Holdco or one of its subsidiaries (any such measure the "Post-Closing Reorganization"). I. The parties to the Transaction assume that it will be an important signal to the markets supporting the case for a successful closing of the Exchange Offer if the executives of Linde, but in any event the members of the Company's executive board, tender their

 
4 NON-BINDING CONVENIENCE TRANSLATION ONLY respectively held Linde shares in the Exchange Offer in accordance with the terms of this agreement. In addition, it would be conducive for the expeditious and seamless integration of the Linde group and the Praxair group if the stock-based remuneration components of the members of the executive board of Linde were linked to the economic success of the entire newly established group going forward. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: § 1 Investment Shares, Deferral Shares and other Linde shares (a) As of today, the Executive Board Member holds ___________ Investment Shares; ___________ Deferral Shares; and ___________ other Linde shares. The Executive Board Members shall accept the Exchange Offer (i) for the aforementioned Investment Shares, Deferral Shares and other Linde shares within five (5) days after the beginning of the acceptance period and (ii) for all other Linde shares that the Executive Board Member receives prior to the last day of the acceptance period, without undue delay and in any event on the last day of the acceptance period the latest, and shall to such effect instruct his depository bank accordingly (jointly the "Tender"). The foregoing shall not apply if and to the extent the Executive Board Member is prohibited from tendering his shares under Article 19 of Regulation (EU) Nr. 596/2014 (market abuse regulation). (b) In deviation from § 2 para. (8) in connection with § 2 para. (2) and paras. (4) through (7) of the Plan Conditions for the individual Tranches as well as the corresponding provisions of the Plan Conditions 2017, the Options of the Executive Board Member shall neither be forfeited in consequence of the Tender nor of the closing of the Exchange Offer. (c) As of the time of closing of the Exchange Offer, the term "Investment Share" used in the Plan Conditions as well as the rights and obligations set forth in the Plan Conditions in relation thereto shall refer and relate to the New Holdco shares that the Executive Board Member receives upon closing of the Exchange Offer in exchange for its tendered Investment Shares. (d) The rights and obligations set forth in the Deferral Share Provisions of the Service Agreement shall as of the time of closing of the Exchange Offer apply to the New Holdco shares that the Executive Board Member receives in exchange for his tendered Deferral

 
5 NON-BINDING CONVENIENCE TRANSLATION ONLY Shares, provided that the Executive Board Member shall as of closing of the Exchange Offer acquire New Holdco shares (rather than Linde shares) to fulfill his obligations under the Deferral Share Provisions. The provisions of the Service Agreement shall apply mutatis mutandis to such New Holdco shares and shall otherwise remain in full force and effect. § 2 Termination Rights (a) If New Holdco acquires control (within the meaning of §§ 29 para. 2, 30 German Takeover Act (WpÜG)) over the Company, the Company shall be entitled to exercise its termination right pursuant to §§ 5 para. (4), (5) of the Plan Conditions, which applies in the event of a change of control of the Company, within eighteen months after the closing of the Exchange Offer, provided that at the time of termination the Post-Closing Reorganization has become effective. (b) If New Holdco acquires control (within the meaning of §§ 29 para. 2, 30 German Takeover Act (WpÜG)) of the Company in the course of the Exchange Offer, the Executive Board Member shall not exercise any right to terminate a Tranche or LTIP in case of a change of control of Linde as such Executive Board Member and Linde may have individually agreed on. § 3 Cash settlement and cash compensation (a) If the Company terminates LTIP pursuant to §§ 5 paras. (4), (5) of the Plan Conditions in connection with § 2 (a) of this agreement, the Executive Board Member shall be entitled to a cash compensation for the outstanding Options and Matching Share Rights, which cash compensation shall be determined by Linde, acting in good faith (nach billigem Ermessen), with respect to the time of closing of the Exchange Offer (in particular considering the elapsed portion of the applicable Waiting Periods as at such time) and otherwise in accordance with §§ 5 paras. (4), (5) of the Plan Conditions. (b) If the Executive Board Member exercises Options before the expiry of a period of eighteen months after the closing of the Exchange Offer, the Company shall settle such Option in cash in accordance with § 4 para. (3) lit. b) of the Plan Conditions. (c) Matching Share Rights that are to be settled after the last point in time by which the Exchange Offer can be accepted, but before the expiry of a period of eighteen months after the closing of the Exchange Offer, will be settled in cash in accordance with § 2 para. (11) of the Plan Conditions.

 
6 NON-BINDING CONVENIENCE TRANSLATION ONLY (d) If the Company has not terminated LTIP in accordance with § 2 para. (a) of this agreement vis-a-vis the Executive Board Member within a period of eighteen months after the closing of the Exchange Offer, the foregoing paragraphs of this § 3 shall not apply. § 4 Miscellaneous (a) Unless explicitly agreed otherwise in this agreement, the terms of the Service Agreement as well as the LTIP Plan Conditions shall continue to apply unchanged as between the Executive Board Member and the Company. (b) § 15 of the Service Agreement shall apply mutatis mutandis to this agreement. ................................................................ ................................................................ (Place, Date) (Place, Date) ................................................................ ................................................................ (Chairman of the supervisory board) (Executive Board Member)

 
First Copy (Date) Long Term Incentive Plan 2012 (LTIP 2012) Tranche 2015 - 2017 Award Letter for Option Rights Dear Mr/Mrs , On 4 May 2012, the Annual General Meeting of Linde AG has resolved on the implementation of a Long Term Incentive Plan (LTIP 2012). As member of Linde AG's Executive Board we hereby invite you to participate in the LTIP 2012/Tranche (year). You are offered to participate in Tranche (year) of the LTIP 2012 with (number) Option Rights pursuant to the attached Plan Conditions and the conditions of this Award Letter. The Option Rights are deemed to be issued on (Date) for all purposes of the LTIP 2012/Tranche (year). The Plan Conditions together with this Award Letter constitute the binding agreement for your participation in the LTIP 2012/Tranche (year). 1. Acquisition of Self-financed Investment Shares Precondition for your participation in the LTIP 2012/Tranche (year) is a self-financed investment in (number) non-par value bearer shares in Linde AG (LTIP Self-financed Investment Shares). You are required to acquire the LTIP (year) Self-finance Investment Shares and transfer such shares to the LTIP 2012 Securities Account within four months after the Issue Date, i.e. until (date). Alternatively, you may use a portfolio of Linde Shares already held by you unless the respective shares are already locked-up for other purposes or are a precondition for the granting of other forms of remuneration. In this case, the respective number of Linde Shares must be trans- ferred to the LTIP 2012 Securities Account by (date). (Tranche 2017: Separately you have agreed to tender any and all shares of Linde AG that you hold at a point of time before the last day of the acceptance period of the public Exchange offer, that Linde PLC will make to the shareholders of Linde AG in the context of the exchange offer, whereby your obligation according to the Plan conditions to hold investment shares continues to be valid for the tendered Linde shares and after closing of the exchange offer for the then therefore received shares in Linde PLC. If applicable, in accord- ance with this you therefore are obliged to tender your LTIP 2017 investment shares (including LTIP 2017 investment shares still to be acquired) in the context of the exchange offer.) The LTIP (year) Self-financed Investment Shares shall be locked-up until the expiry of the four years of the Wait- ing Period, i.e. until date) and may not be sold or otherwise transferred, pledged or hedged against price risks in this period. Any and all shareholder rights pertaining to the LTIP (year) Self-financed Investment Shares will also exist during the Waiting Period. Dividend payments on LTIP (year) Self-financed Investment Shares are credited to your clearing account relating to the LTIP 2012 Securities Account; you may dispose of any such credits at any time at your own discretion. If you do not comply with your obligations with respect to the LTIP (year) Self-financed Investment Shares pursuant to § 2 of the Plan Conditions and separately agreed, any and all of your Option Rights of the re- spective Tranche shall lapse without replacement or compensation. When acquiring LTIP (year) Self-financed Investment Shares you must ensure that you do not violate man- datory insider trading restrictions. Please, therefore, do not acquire Self-financed Investment Shares if you have inside information within the meaning of section 7 of the European Union regulation 596/2014 ( Market Abuse Regulation), thus, not publicly known precise information, that relates to the Linde AG or Linde shares und that, if it would be publicly known, would influence the share price of Linde AG or derivatives asso- ciated therewith significantly. In addition to this, please conside Pursuant to article 19 section 11 MAR a person who discharges managerial responsibilities at an issuer of financial instru- ments is not permitted, either directly nor indirectly, to conduct transactions on its own account or for third parties in connection with shares or debt instruments of the issuer or derivatives associated therewith or other

 
Page 2, Award Letter LTIP 2012/Tranche (year) financial instruments associated therewith during a closed period of 30 calendar days prior to the publication of an interim report or an annual report, which the issuer of financial instruments is under an obligation to publish. If you are for this reason not allowed to make the self-financed investment by (date), we will announce an extended period in which the self-financed investment is to be made. Please further note that the acquisition of Linde Shares for purposes of the self-financed investment just like any other acquisition of Linde Shares must be notified to Linde AG as well as to the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) within three business days. 2. Additional Provisions complementing the Plan Conditions In addition to the provisions of the Plan Conditions you agree to the following provisions when participating in the LTIP 2012/Tranche (year): The Supervisory Board is, at its sole discretion, entitled to limit the rights granted to you in regard to the Option Leis- tungsbestimmun 315 BGB). 3. Processing of Personal Data Linde AG will collect, store, use and process your personal data as required for the implementation of the LTIP 2012. Personal data in particular include your name, address, bank details and the rights granted to you. Such personal data will also be transmitted to the Option Office (as defined in § 11 of the Plan Conditions) and to other service providers which will process the data for purposes of issue the Option Rights, implement and administer the LTIP 2012 as well as the exercise of Option Rights and granting of Matching Shares. It will be ensured that all service providers will process personal data on instruction of Linde AG only and within the scope specified above. The responsibility for processing of personal data solely lies with Linde AG. If you have any questions regarding the processing of your personal data as well as in regard to any information rights and claims for amendment or deletion of your personal data please contact REQI , Corporate Office of Linde AG, Klosterhofstrasse 1, 80331 Munich, Germany. 4. Participation in the LTIP 2012/Tranche (year) To accept the invitation to participate in the LTIP 2012/Tranche 2017 and to receive the Option Rights on the terms set out in this Award Letter and the attached Plan Conditions, please sign the Participation Form on the attached second copy of this Award Letter and return it to the Corporate Office of Linde AG. The signed Partici- pation Form must be received no later than (date). Please note that if the signed Participation Form is not re- ceived by the Corporate Office of Linde AG in time you will not be granted any Option Rights and you are not entitled to participate in the LTIP 2012/Tranche (year). If you have any questions or need further information please contact (name) (Mail: xy@linde.com, phone: +49 89 35757-xxxx).

 
Page 3, Award Letter LTIP 2012/Tranche (year) Yours sincerely Linde AG represented by the Supervisory Board Professor Dr Wolfgang Reitzle Chairman of the Supervisory Board Encl. - Plan Conditions for the Option Rights and the Matching Shares of the LTIP 2012/Tranche (year) of Linde AG (binding German version and convenience translation) - Second copy of this Award Letter Participation Form I herewith accept the grant of the Option Rights pursuant to the LTIP 2012 and agree to the Plan Conditions of the LTIP 2012/Tranche (year) as well as to the content of this Award Letter, including the collection and pro- cessing of my personal data as described under 3. above. ________________ _________________________ (Place) (Date) ____________________________________________ (Signature)

 

 

 

 

 

 

 

 

 

 

 

 

 
Convenience Translation I. Claim Requirements 1. An Executive Board member shall have a claim for payments pursuant to section II if the company is taken over by means of 1.1 a Company shareholder giving notice pursuant to § 21 of the German Securities Trading Act (WpHG) that he, including any votes which are attributable to him under § 22 of the German Securities Trading Act, owns more than 50 % of the voting rights in the Company; or 1.2 a shareholder acquiring a share of the voting rights in the Company which, along with the voting rights attributable to him under § 22 of the German Securities Trading Act, gives him a majority of votes equalling more than 50 % of the entitled votes represented by the share capital of the Company attending an annual shareholder meeting or would have represented a majority of votes in the last annual shareholder meeting; or 1.3 a control agreement pursuant to § 291 of the German Stock Corporation Act (AktG) being concluded with the Company as the subsidiary ; or 1.4 the Company becoming integrated into another company pursuant to §§ 319 et seq. of the German Stock Corporation Act; or 1.5 the Company being merged pursuant to § 2 of the German Reorganization Act (UmwG) with another legal entity unless the value of the other legal entity as shown by the agreed exchange ratio is less than 50 % of the Compan and the Employment Agreement of the Executive Board member is prematurely terminated due to the fact that within nine months following a takeover under

 
Page 2 Protection in the Event of a Takeover circumstances set out in nos. 1.1 through 1.5 the Employment Agreement is mutually agreed to be terminated or the term of the Employment Agreement expires and is not renewed or the Executive Board member terminates the Employment Agreement pursuant to no. 2. 2. An Executive Board member is entitled to give notice of termination of his Employment Agreement in writing up within nine months following a takeover pursuant to no. 1. Such notice shall have a period of six months expiring at the end of the month. This right to give notice of termination does not apply if the office of the Executive Board member is not materially affected by the takeover. The Executive Board member shall carry the burden of proof for factual circumstances which render his office as materially affected by the takeover. Termination of the Employment Agreement is only valid if the terminated Executive Board member also resigns from his Executive Board office effective as of termination of the Employment Agreement. II. Payments If the Employment Agreement of an Executive Board member is terminated under section I, the following applies: 1. The Executive Board member is entitled to the settlement payment pursuant to § 14 (1) of the Employment Agreement. 2. In addition, the Executive Board member shall be entitled to an additional settlement payment, which shall amount to one annual compensation as calculated in accordance with the calculation method set out in § 14 (2) (b) of the Employment Agreement. Such additional settlement payment shall not be granted if at the time of the termination of the Employment Agreement the Executive Board member did not hold office for at least three years or if, upon termination of his Employment Agreement, he was not 52 years old or was 63 years or more than 63 years old. Any compensation payment owed in accordance with § 11 (2) of the Employment Agreement shall be offset against such additional settlement payment.

 
Page 3 Protection in the Event of a Takeover 3. If the Executive Board member receives any compensation directly or indirectly in connection with the takeover from the majority shareholder, the controlling company, or the other legal entity, the full amount of such compensation shall be offset against payments under this section II. III. Share Option Program As to the participation in a Long Term Incentive Plan adopted by the Company, in the event of a takeover of the Company the rights of the Executive Board members will be based on the respective plan conditions. ......................, ..................... ....................., . ..................... (City) (Date) (City) (Date) Supervisory Board Chairman Contractual Partner of Linde Aktiengesellschaft

 


SUBSIDIARIES OF LINDE PLC
Linde plc and Subsidiaries
EXHIBIT 21.01

The following is a list of the Linde plc's subsidiaries as of December 31, 2018.
 
Linde plc Subsidiaries
Place of Incorporation
Zamalight Holdco LLC
USA
Zamalight Subco, Inc.
USA
Linde Holding GmbH
Germany
Linde Intermediate Holding AG
Germany

Praxair, Inc. Subsidiaries
Place of Incorporation
10 Riverview Drive LLC
Delaware
Acetylene Oxygen Company
Texas
Almacenes Geneva S.A.
Panama
Argyle Welding Supply Company, Inc.
New Mexico
Beijing Praxair Huashi Carbon Dioxide Co., Ltd.
China
Beijing Praxair, Inc.
China
Coatec Gesellschaft fϋr Oberflächenveredelung mbH
Germany
Consultora Rynuter S.A.
Uruguay
Dablioeme Participacoes Ltda.
Brazil
Distribuciones Invegas S.C.A.
Venezuela
Famex Comercio Atacadista de Gas Carbonico Ltda.
Brazil
Gama Gases Especiais Ltda.
Brazil
Gases de Ensenada S.A.
Argentina
Gases Industriales, S.A.
Panama
Gases Tachira S.A.
Venezuela
GNC Matao Compressao de Gas Natural Ltda.
Brazil
GNL Gemini Comercializacao e Logistica de Gas Ltda.
Brazil
Great Lakes Street, Inc.
Delaware
Helium Centre Pte Ltd.
Singapore
Industria Venezoelana de Gas INVEGAS, S.C.A.
Venezuela
Inpagas S.R.L.
Paraguay
Ipes Industria de Produtos e Equipamentos de Solda Ltda.
Brazil
Joint Stock Company "Volgograd Oxygen Plant"
Russia
Kelvin Finance Company Limited
Ireland
Kosmoid Finance Unlimited Company
Ireland
Kunshan Praxair Co., Ltd.
China
Limited Liability Company Praxair Azot Togliatti
Russia
Limited Liability Company Praxair Rus
Russia
Limited Liability Company Praxair Titanium Valley
Russia
Limited Liability Company Praxair Volgograd
Russia
Liquid Carbonic Corporation
Delaware
Liquid Carbonic del Paraguay S.A.
Paraguay
Liquido Carbonico Colombiana S.A.
Colombia
Madco Welding Supply Co., Inc.
California
Madison Gas LLC
Delaware
Malaysian Industrial Gas Company Sdn. Bhd.
Malaysia
Mastercrio Transportes Ltda.
Brazil




Medical Gases SRL
Argentina
Nanjing Praxair Nanlian Industrial Gases Co., Ltd.
China
Nitropet, S.A. de C.V.
Mexico
NoxBox Ltd
United Kingdom
NuCo2 Inc.
Delaware
NUCO2 LLC
Delaware
NuCO2 Management LLC
Delaware
NuCO2 Supply LLC
Delaware
Old Danford S.A.
Uruguay
Oxigenos de Colombia Ltda.
Colombia
Oxygene Industriel Girardin, Inc.
Canada
PG Technologies Pte Ltd.
Singapore
Praxair Holdings International, Inc.
Delaware
Praxair (Anhui) Industrial Gases Co., Ltd.
China
Praxair (Beijing) Industrial Gases Co., Ltd.
China
Praxair (Beijing) Semiconductor Gases Co., Ltd.
China
Praxair (China) Investment Co., Ltd.
China
Praxair (Guangxi) Gases Co., Ltd.
China
Praxair (Guangzhou) Industrial Gases Co., Ltd.
China
Praxair (Hainan) Industrial Gases Co., Ltd.
China
Praxair (Hefei) Industrial Gases Co., Ltd.
China
Praxair (Huizhou) Industrial Gases Limited
China
Praxair (Jiaxing) Industrial Gases Co., Ltd.
China
Praxair (Jining) Industrial Gases Co., Ltd.
China
Praxair (Nanjing) Carbon Dioxide Co. Ltd.
China
Praxair (Shanghai) Co., Ltd.
China
Praxair (Shanghai) Electronic Gases Co., Ltd.
China
Praxair (Shanghai) Industrial Gases Co., Ltd.
China
Praxair (Shanghai) Semiconductor Gases Co., Ltd.
China
Praxair (Taiwan) Co., Ltd.
Taiwan
Praxair (Thailand) Company Limited
Thailand
Praxair (Wuhan), Inc.
China
Praxair (Yangzhou) Application Technology Co., Ltd.
China
Praxair (Yangzhou) Industrial Gases Co., Ltd.
China
Praxair (Zhengjing) Industrial Gas Co. Ltd.
China
Praxair Argentina S.r.l.
Argentina
Praxair Asia, Inc.
Delaware
Praxair Bahrain B.S.C.
Kingdom of Bahrain
Praxair Bolivia Srl
Bolivia
Praxair Canada Inc.
Canada
Praxair Chemax Semiconductor Materials Co.
Taiwan
Praxair Chile Gases Limitada
Chile
Praxair Chile Ltda.
Chile
Praxair Colonia Limitada
Uruguay
Praxair Consultoria y Administracion S de RL de CV
Mexico
Praxair Costa Rica S.A.
Costa Rica
Praxair Distribution, Inc.
Delaware
Praxair do Brasil Ltda.
Brazil
Praxair Euroholding, BV
Netherlands
Praxair Fray Bentos S.C.A.
Uruguay




Praxair Gases Industriales Ltda.
Colombia
Praxair Gulf Industrial Gases LLC
Abu Dhabi
Praxair Holding Latinoamerica SARL
Luxembourg
Praxair Holdings International, Inc.
Delaware
Praxair Huayi (Chongqing) Industrial Gases Co. Ltd.
China
Praxair Hydrogen Supply, Inc.
Delaware
Praxair India Private Limited
India
Praxair International Finance Unlimited Company
Ireland
Praxair Inversiones SRL
Peru
Praxair Investments B.V.
Netherlands
Praxair K.K.
Japan
Praxair Korea Company Limited
South Korea
Praxair Latin America Holdings LLC
Delaware
Praxair Luxembourg S.a.r.L.
Luxembourg
Praxair Meishan (Nanjing) Industrial Gases Co., Ltd.
China
Praxair Mexico, S. de R.L. de C.V.
Mexico
Praxair MRC S.A.S.
France
Praxair Offshore Services Limited
United Kingdom
Praxair Pacific Ltd.
Mauritius
Praxair Partnership
Partnership
Praxair Peru S.R.L.
Peru
Praxair PHP S.A.S.
France
Praxair Plainfield, Inc.
Delaware
Praxair Puerto Rico B. V.
Netherlands
Praxair Puerto Rico LLC
Delaware
Praxair Qingdao Co., Ltd.
China
Praxair Republica Domincana, SRL
Dominican Republic
Praxair S.r.l.
Italy
Praxair S.T. Technology, Inc.
Delaware
Praxair Samara LLC
Russia
Praxair Services (UK) Limited
United Kingdom
Praxair Services Canada Inc.
Canada
Praxair Services, Inc.
Texas
Praxair Shanghai Meishan Inc.
China
Praxair Shaogang Co., Ltd.
China
Praxair Ship II AS
Norway
Praxair Surface Technologies (Changzhou) Co. Ltd.
China
Praxair Surface Technologies (Europe) S.A.
Switzerland
Praxair Surface Technologies Co., Ltd.
Korea
Praxair Surface Technologies do Brasil Ltda.
Brazil
Praxair Surface Technologies G.m.b.h.
Germany
Praxair Surface Technologies K.K.
Japan
Praxair Surface Technologies Limited
United Kingdom
Praxair Surface Technologies Montreal L.P.
New Brunswick
Praxair Surface Technologies Pte Ltd.
Singapore
Praxair Surface Technologies S.A.S.
France
Praxair Surface Technologies, Inc.
Delaware
Praxair Switzerland GmbH
Switzerland
Praxair Technology, Inc.
Delaware
Praxair Uruguay Ltda.
Uruguay




Production Praxair Canada Inc.
Canada
Sermatech International Canada Corp.
Delaware
Sermatech International Canada GP LLC
Delaware
Sermatech Korea Ltd.
Korea
Shanghai Praxair Baoshan Inc.
China
Shanghai Praxair-Yidian, Inc.
China
Tecnogas S/A
Peru
Thai Carbonic Company Ltd.
Thailand
The Welding Center, Inc.
Illinois
Tongling Praxair Co., Ltd.
China
Topaz Consultora S.A.
Uruguay
Vision Energy Group LLC
Oklahoma
Westair Cryogenics Company
Delaware
Westair Gas and Equipment, L.P.
Texas
White Martins e White Martins Comércio e Servicos SARL
Luxembourg
White Martins Gases Industriais do Nordeste Limitada.
Brazil
White Martins Gases Industriais do Norte Limitada
Brazil
White Martins Gases Industriais Ltda.
Brazil
White Martins Pecem Gases Industriais Ltda.
Brazil
WM Transporte de Gases Ltda.
Brazil
Wyandotte Welding Supply, Inc.
Michigan
Yateem Oxygen W.L.L.
Bahrain

Linde AG Subsidiaries
Place of Incorporation
177470 CANADA INC.
Canada
177472 CANADA INC.
Canada
44001 ONTARIO LIMITED
Canada
AB Held
Sweden
Abelló Linde, S.A.U.
Spain
African Oxygen Limited
South Africa
AFROX - África Oxigénio, Limitada
Angola
AFROX (LESOTHO) (PTY) LTD
Lesotho
AFROX (PROPRIETARY) LIMITED
South Africa
AFROX AFRICAN INVESTMENTS (PTY) LIMITED
South Africa
AFROX GAS & ENGINEERING SUPPLIES (BOTSWANA) (PTY) LIMITED
Botswana
AFROX INTERNATIONAL LIMITED
Mauritius
Afrox Malawi Limited
Malawi
Afrox Moçambique, Limitada
Mozambique
AFROX PROPERTIES (PTY) LIMITED
South Africa
AFROX ZAMBIA LIMITED
Zambia
AGA A/S
Denmark
AGA Aktiebolag
Sweden
AGA AS
Norway
AGA Fastighet Göteborg AB
Sweden
AGA Gas Aktiebolag
Sweden
AGA Industrial Gas Engineering Aktiebolag
Sweden
AGA International Investment Aktiebolag
Sweden
AGA Medical Aktiebolag
Sweden
AGA S.A.
Uruguay




AGA SIA
Latvia
Agatronic AB
Sweden
Agua y Gas de Sillunchi S.A.
Ecuador
AHP Alliance of Columbia
South Carolina
AHP Delmarva, LLP
Maryland
AHP Home Care Alliance of Gainesville
Florida
AHP Home Care Alliance of Tennessee
Tennessee
AHP Home Care Alliance of Virginia
Virginia
AHP Home Medical Equipment Partnership of Texas
Texas
AHP Knoxville Partnership
Tennessee
AHP-MHR Home Care, LLP
Nebraska
AIRCO COATING TECHNOLOGY LIMITED
United Kingdom
ALBOC (JERSEY) LIMITED
Jersey
ALLWELD INDUSTRIAL AND WELDING SUPPLIES LIMITED
United Kingdom
ALPHA RESPIRATORY INC.
Delaware
AMALGAMATED GAS AND WELDING (PTY) LIMITED
South Africa
AMALGAMATED WELDING AND CUTTING HOLDINGS (PROPRIETARY) LIMITED
South Africa
American HomePatient Arkansas Ventures, Inc.
Delaware
American HomePatient Delaware Ventures, Inc.
Delaware
American HomePatient of Kingstree, LLC
South Carolina
American HomePatient of New York, Inc.
New York
American HomePatient of Sanford, LLC
North Carolina
American HomePatient of Texas, LLC
Texas
American HomePatient of Unifour, LLC
North Carolina
American HomePatient Tennessee Ventures, Inc.
Delaware
American HomePatient Ventures, Inc.
Tennessee
AMERICAN HOMEPATIENT, INC.
Delaware
American HomePatient, Inc.
Delaware
American HomePatient, Inc. (f/k/a AHP NV Corp.)
Nevada
Anhui JuLan Industrial Gases Co., Ltd.
China
AO "Linde Gas Rus"
Russia
AO "Linde Uraltechgaz"
Russia
Aries 94 s.r.o.
Slovakia
AS Eesti AGA
Estonia
ASIA UNION (SHANGHAI) ELECTRONIC CHEMICAL COMPANY LIMITED
China
ASIA UNION ELECTRONIC CHEMICAL CORPORATION
Taiwan
ASIA UNION ELECTRONIC CHEMICALS - RENO, INC.
Nevada
AUECC (BVI) HOLDINGS LIMITED
British Virgin Islands
AUECC Shanghai (Baoshan) Co. Ltd.
China
AUECC Shanghai (Fengxian) Co. Ltd.
China
AUSCOM HOLDINGS PTY LIMITED
Australia
AWCE (PROPRIETARY) LIMITED
South Africa
B.V. Nederlandse Pijpleidingmaatschappij
Netherlands
Baptist Ventures - AHP Homecare Alliance of Montgomery
Alabama
BATAAN INDUSTRIAL GASES, INC.
Philippines
Blue LNG Beteiligungsgesellschaft mbH
Germany
Blue LNG GmbH & Co. KG
Germany
Blue Ridge Home Care
North Carolina
BOC (China) Holdings Co., Ltd.
China
BOC (PHILS.) HOLDINGS, INC.
Philippines




BOC (TRADING) LIMITED
Ireland
BOC AIP Limited Partnership
Australia
BOC Australia Pty Limited
Australia
BOC AUSTRALIAN FINANCE LIMITED
Jersey
BOC CHILE HOLDINGS LIMITED
United Kingdom
BOC CUSTOMER ENGINEERING PTY LTD
Australia
BOC de Chile S.A.
Chile
BOC DISTRIBUTION SERVICES LIMITED
United Kingdom
BOC DUTCH FINANCE
United Kingdom
BOC Europe Holdings B.V.
Netherlands
BOC Gases (Suzhou) Co., Ltd.
China
BOC Gases (Tianjin) Company Limited
China
BOC GASES ARUBA N.V.
Aruba
BOC GASES DE MEXICO, S.A. DE C.V.
Mexico
BOC GASES FINANCE LIMITED
Australia
BOC GASES IRELAND HOLDINGS LIMITED
Ireland
BOC Gases Ireland Limited
Ireland
BOC GASES LIMITED
United Kingdom
BOC GASES MOZAMBIQUE LIMITED
Mozambique
BOC Gases Nigeria Plc
Nigeria
BOC GASES SOLOMON ISLANDS LIMITED
Solomon Islands
BOC GIST INC
Philippines
BOC GROUP PTY LIMITED
Australia
BOC HEALTHCARE LIMITED
United Kingdom
BOC HELEX
United Kingdom
BOC HOLDINGS
United Kingdom
BOC Intressenter AB
Sweden
BOC INVESTMENT HOLDING COMPANY (IRELAND) LIMITED
Ireland
BOC INVESTMENT HOLDINGS LIMITED
United Kingdom
BOC INVESTMENTS (LUXEMBOURG) LIMITED
United Kingdom
BOC Investments Ireland Unlimited Company
Ireland
BOC INVESTMENTS NO.1 LIMITED
United Kingdom
BOC INVESTMENTS NO.5
United Kingdom
BOC INVESTMENTS NO.7
United Kingdom
BOC JAPAN
United Kingdom
BOC Kenya plc
Kenya
BOC KOREA HOLDINGS LIMITED
United Kingdom
BOC LIENHWA (BVI) HOLDING Co., Ltd.
British Virgin Islands
BOC Limited
Australia
BOC LIMITED
New Zealand
BOC LIMITED
United Kingdom
BOC LUXEMBOURG FINANCE
United Kingdom
BOC NETHERLANDS HOLDINGS LIMITED
United Kingdom
BOC NEW ZEALAND HOLDINGS LIMITED
New Zealand
BOC NO. 1 LIMITED
Guernsey
BOC NO. 2 LIMITED
Guernsey
BOC NOMINEES LIMITED
United Kingdom
BOC Papua New Guinea Limited
Papua New Guinea
BOC PENSION SCHEME TRUSTEES LIMITED
United Kingdom
BOC PENSIONS LIMITED
United Kingdom




BOC PREFERENCE LIMITED
Jersey
BOC RSP TRUSTEES LIMITED
United Kingdom
BOC SEPS TRUSTEES LIMITED
United Kingdom
BOC SERVICES LIMITED
United Kingdom
BOC Tanzania Limited
Tanzania
BOC Uganda Limited
Uganda
BOC Zimbabwe (Private) Limited
Zimbabwe
BOCLH Industrial Gases (Chengdu) Co., Ltd
China
BOCLH Industrial Gases (DaLian) Co., Ltd.
China
BOCLH Industrial Gases (Shanghai) Co., Ltd.
China
BOCLH Industrial Gases (Songjiang) Co., Ltd.
China
BOCLH Industrial Gases (Suzhou) Co., Ltd.
China
BOCLH Industrial Gases (Waigaoqiao) Co., Ltd.
China
BOCLH Industrial Gases (Xiamen) Co., Ltd.
China
BOGGY CREEK PTY LIMITED
Australia
BOTSWANA OXYGEN COMPANY (PTY) LIMITED
Botswana
BOTSWANA STEEL ENGINEERING (PTY) LIMITED
Botswana
BRITISH INDUSTRIAL GASES LIMITED
United Kingdom
BRITISH OXYGEN (HONG KONG) LIMITED
Hong Kong
CARING RESPONDERS LLC
Delaware
Catholic Health Home Respiratory, LLC
New York
Ceylon Oxygen Ltd.
Sri Lanka
CIGC CORPORATION
Philippines
Coastal Home Care
South Carolina
Colorado Home Medical Equipment Alliance, LLC
Colorado
Commercium Immobilien- und Beteiligungs-GmbH
Germany
Compañía de Nitrógeno de Cantarell, S.A. de C.V.
Mexico
Compañía de Operaciones de Nitrógeno, S.A. de C.V.
Mexico
Complete Infusion Services, LLC
Michigan
CONFEDERATE TECHNOLOGY COMPANY LIMITED
Taiwan
CONVACARE SERVICES, INC.
Indiana
COOPER CRYOSERVICE LIMITED
Ireland
CPAP SUPPLY USA LLC
Delaware
CRYO Aktiebolag
Sweden
CRYO INDUSTRIAL GASES, INC.
Philippines
CRYOGENIC MEDICAL GASES, A LTD. LIABILITY CO.
Colorado
Cryostar Cryogenic Equipments (Hangzhou) Co. Ltd.
China
Cryostar do Brasil Equipamentos Rotativos & Criogenicos Ltda.
Brazil
CRYOSTAR LIMITED
United Kingdom
CRYOSTAR SAS
France
Cryostar Singapore Pte Ltd
Singapore
Cryostar USA LLC
Delaware
DAVAO OXYGEN CORPORATION
Philippines
Designated Companies, Inc.
New York
DeVine Products, Inc.
Delaware
DME Supply USA, LLC
Delaware
EHVIL DISSENTIENTS LIMITED
United Kingdom
ELGAS AUTOGAS PTY LIMITED
Australia
ELGAS LIMITED
Australia
ELGAS LIMITED
New Zealand




ELGAS RETICULATION PTY LIMITED
Australia
Eurogaz-Gdynia Sp. z o.o.
Poland
EXPRESS INDUSTRIAL & WELDING SUPPLIES LIMITED
United Kingdom
FAR EASTERN INDUSTRIAL GASES COMPANY LIMITED
Taiwan
Flaskgascentralen i Malmö Aktiebolag
Sweden
FLUOROGAS LIMITED
United Kingdom
FUTURE INDUSTRIAL AND WELDING SUPPLIES LTD.
United Kingdom
Fuzhou Linde Lienhwa Gases Co., Ltd
China
G.L BAKER (TRANSPORT) LIMITED
United Kingdom
GAFFNEY INDUSTRIAL & WELDING SUPPLIES LTD
United Kingdom
Gamma Acquisition Inc.
Delaware
GAS & GEAR LIMITED
United Kingdom
Gas & More GmbH
Germany
Gas Pentru Gaze Si Aparatura S.R.L.
Romania
General Gases of the Virgin Islands, Inc.
Virgin Islands, U.S.
GI/LINDE ALGERIE SPA
Algeria
Gist Containers B.V.
Netherlands
Gist Distribution Limited
Ireland
GIST FRANCE S.A.R.L.
France
Gist Holding B.V.
Netherlands
GIST LIMITED
United Kingdom
Gist Nederland B.V.
Netherlands
Gist Österreich GmbH
Austria
Gist USA LLC
Delaware
GISTRANS Czech Republic s.r.o.
Czech Republic
GRANDPLAINS PROPERTIES, INC.
Philippines
Grupo Linde Gas Argentina S.A.
Argentina
HANDIGAS (BOTSWANA) (PTY) LIMITED
Botswana
HANDIGAS LIMITED
United Kingdom
HANDIGAS SWAZILAND (PTY) LIMITED
Swaziland
Hangzhou Linde International Trading Co., Ltd.
China
HEALTH CARE SOLUTIONS AT HOME INC.
Delaware
HealthCare Solutions IV LLC
Delaware
HEAT GAS (PTY) LIMITED
Botswana
HICK, HARGREAVES AND COMPANY LIMITED
United Kingdom
HKO DEVELOPMENT COMPANY LIMITED
Hong Kong
Holox Inc.
Georgia
HOME-CARE EQUIPMENT NETWORK INC.
Delaware
Homelink Home Health Care
Arkansas
Hydromotive GmbH & Co. KG
Germany
Hydromotive Verwaltungs-GmbH
Germany
IGL (PTY) LIMITED
Namibia
IGL PROPERTIES (PTY) LIMITED
Namibia
INDONESIA POWER HOLDINGS LIMITED
United Kingdom
INDUSTRIAL & WELDING SUPPLIES (NORTH WEST) LIMITED
United Kingdom
INDUSTRIAL AND WELDING MANAGEMENT LIMITED
United Kingdom
INDUSTRIAL SUPPLIES & SERVICES LIMITED
United Kingdom
ISAGA ehf.
Iceland
ISAS TRUST
South Africa
ITO Industries International SA
Romania




IWS (INDUSTRIAL & WELDING SUPPLIES) LIMITED
United Kingdom
Jianyang Linde Medical Gases Company Limited
China
KEY PROOF INVESTMENTS LIMITED
British Virgin Islands
KIDDO INVESTMENTS (PTY) LIMITED
Botswana
Kiinteistö Oy Karakaasu
Finland
Kiinteistö Oy Karaportti
Finland
KTPV (THAILAND) LIMITED
Thailand
KunShan Asia Union Electronic Chemical Corp. Co., Ltd.
China
LAG Methanol LLC
Delaware
LANSING GROUP LIMITED
United Kingdom
LEEN GATE INDUSTRIAL & WELDING SUPPLIES (SCOTLAND) LIMITED
United Kingdom
LEENGATE INDUSTRIAL & WELDING SUPPLIES (LINCOLN) LIMITED
United Kingdom
LEENGATE INDUSTRIAL & WELDING SUPPLIES (NORTH EAST) LIMITED
United Kingdom
LEENGATE INDUSTRIAL & WELDING SUPPLIES (NOTTINGHAM) LIMITED
United Kingdom
LEENGATE INDUSTRIAL & WELDING SUPPLIES LIMITED
United Kingdom
LESOTHO OXYGEN COMPANY (PTY) LIMITED
Lesotho
LIEN CHIA INDUSTRIAL GASES COMPANY LIMITED
Taiwan
LIEN CHUAN INDUSTRIAL GASES COMPANY LIMITED
Taiwan
LIEN FUNG PRECISION TECHNOLOGY DEVELOPMENT CO., LTD
Taiwan
LIEN HWA COMMONWEALTH CORPORATION
Taiwan
LIEN HWA INDUSTRIAL GASES (HK) LIMITED
Hong Kong
LIEN HWA LOX CRYOGENIC EQUIPMENT CORPORATION
Taiwan
LIEN SHENG INDUSTRIAL GASES COMPANY LIMITED
Taiwan
LIEN TONG GASES COMPANY LIMITED
Taiwan
LIEN YANG INDUSTRIAL GASES COMPANY LIMITED
Taiwan
LINCARE EQUIPMENT LLC
Delaware
LINCARE HOLDINGS INC.
Delaware
LINCARE INC.
Delaware
LINCARE LEASING LLC
Delaware
LINCARE LICENSING INC.
Delaware
LINCARE OF CANADA ACQUISITIONS INC.
Delaware
LINCARE OF CANADA INC.
Ontario
LINCARE OF NEW YORK, INC.
New York
LINCARE PHARMACY SERVICES INC.
Delaware
LINCARE PROCUREMENT INC.
Delaware
LINCARE PULMONARY REHAB MANAGEMENT, LLC
Delaware
Lincare Pulmonary Rehab Services of Missouri, LLC
Missouri
LINCARE PULMONARY REHAB SERVICES OF OHIO, LLC
Ohio
Linde (Australia) Pty. Ltd.
Australia
Linde (Quanzhou) Carbon Dioxide Co. Ltd.
China
Linde (Thailand) Public Company Limited
Thailand
Linde Air Chemicals Limited
Thailand
Linde Aktiengesellschaft
Germany
Linde Arabian Contracting Co., Ltd.
Saudi Arabia
Linde Arooxy (Xi'an) Life Science Co., Ltd.
China
Linde Bangladesh Limited
Bangladesh
LINDE CANADA HOLDINGS LIMITED
United Kingdom




Linde Canada Limited
Canada
Linde Carbonic (Wuhu) Company Ltd.
China
Linde Carbonic Company Ltd., Shanghai
China
Linde Colombia S.A.
Colombia
LINDE CRYOGENICS LIMITED
United Kingdom
LINDE CRYOPLANTS LIMITED
United Kingdom
Linde Delaware Investments Inc.
Delaware
Linde Ecuador S.A.
Ecuador
Linde Electronics & Specialty Gases (Suzhou) Co Ltd.
China
Linde Electronics B.V.
Netherlands
Linde Electronics GmbH
Austria
Linde Electronics GmbH & Co. KG
Germany
LINDE ELECTRONICS SAS
France
Linde Electronics Verwaltungs GmbH
Germany
LINDE ELECTRONICS, S.L.
Spain
LINDE ENERGY SERVICES S.A.S. E.S.P.
Colombia
Linde Energy Services, Inc
Delaware
Linde Engineering (Dalian) Co. Ltd.
China
Linde Engineering (Hangzhou) Co. Ltd.
China
Linde Engineering (Malaysia) Sdn. Bhd.
Malaysia
Linde Engineering India Private Limited
India
Linde Engineering Middle East LLC
United Arab Emirates
Linde Engineering North America Inc.
Delaware
Linde Engineering South Africa (Pty) Ltd.
South Africa
Linde EOX Sdn. Bhd.
Malaysia
LINDE FINANCE
United Kingdom
Linde Finance B.V.
Netherlands
Linde France S.A.
France
Linde Gas (H.K.) Limited
Hong Kong
Linde Gas a.s.
Czech Republic
Linde Gas Algerie S.p.A.
Algeria
Linde Gas Asia Pte Ltd
Singapore
Linde Gas Belgium NV
Belgium
Linde Gas Benelux B.V.
Netherlands
LINDE GAS BITOLA DOOEL Skopje
The former Yugoslav Republic of Macedonia
Linde Gas Bulgaria EOOD
Bulgaria
Linde Gas Chile S.A.
Chile
Linde Gas Cryoservices B.V.
Netherlands
Linde Gas Curaçao N.V.
Curaçao
LINDE GAS DOMINICANA, S.R.L.
Dominican Republic
Linde Gas GmbH
Austria
LINDE GAS HOLDINGS LIMITED
United Kingdom
Linde Gas Italia S.r.l.
Italy
Linde Gas k.s.
Slovakia
LINDE GAS MIDDLE EAST LLC
United Arab Emirates
Linde Gas Ningbo Ltd.
China
Linde Gas North America LLC
Delaware
Linde Gas Perú S.A.
Peru
Linde Gas Products Malaysia Sdn. Bhd.
Malaysia
Linde Gas Produktionsgesellschaft mbH & Co. KG
Germany




Linde Gas Puerto Rico, Inc.
Puerto Rico
Linde Gas Shenzhen Ltd.
China
Linde Gas Singapore Pte. Ltd.
Singapore
Linde Gas Southeast (Xiamen) Ltd.
China
LINDE GAS SRBIJA Industrija gasova a.d. Bečej
Serbia
Linde Gas Therapeutics Benelux B.V.
Netherlands
Linde Gas Therapeutics GmbH
Germany
Linde Gas Tunisie S.A.
Tunisia
Linde Gas Verwaltungs GmbH
Germany
Linde Gas Vietnam Limited
Vietnam
Linde Gas Xiamen Ltd.
China
Linde Gas Zhenhai Ltd.
China
Linde Gases (Changzhou) Company Limited
China
Linde Gases (Chengdu) Co., Ltd.
China
Linde Gases (Fushun) Co., Ltd.
China
Linde Gases (Hefei) Co., Ltd.
China
Linde Gases (Huizhou) Co., Ltd.
China
Linde Gases (Langfang) Co., Ltd.
China
Linde Gases (Meishan) Co., Ltd.
China
Linde Gases (Nanjing) Company Limited
China
Linde Gases (Shanghai) Co., Ltd.
China
Linde Gases (Suzhou) Company Limited
China
Linde Gases (Taixing) Co., Ltd.
China
Linde Gases (Xuzhou) Company Limited
China
Linde Gases (Yantai) Co., Ltd.
China
Linde Gases (Zhangzhou) Co., Ltd.
China
Linde Gases Daxie Company Limited
China
Linde Gases Ltda.
Brazil
Linde Gases Moçambique, Limitada
Mozambique
Linde Gaz Anonim Şirketi
Turkey
Linde Gáz Magyarország Zrt.
Hungary
LINDE GAZ POLSKA Spółka z o.o.
Poland
LINDE GAZ ROMANIA S.R.L.
Romania
Linde Global IT Services s. r. o.
Slovakia
LINDE GLOBAL SERVICES PHILIPPINES, INC.
Philippines
LINDE GLOBAL SERVICES PORTUGAL, UNIPESSOAL LDA
Portugal
Linde Global Support Services Private Limited
India
LINDE HADJIKYRIAKOS GAS LIMITED
Cyprus
Linde Healthcare AB
Sweden
LINDE HEALTHCARE MIDDLE EAST LLC
United Arab Emirates
LINDE HELIUM HOLDINGS LIMITED
United Kingdom
LINDE HELIUM M E FZCO
United Arab Emirates
Linde Hellas Monoprosopi E.P.E.
Greece
Linde Hidrógeno, S.A. de C.V.
Mexico
Linde HKO Limited
Hong Kong
Linde Holdings Netherlands B.V.
Netherlands
Linde Holdings Netherlands No. 2 B.V.
Netherlands
Linde Holdings New Zealand Limited
New Zealand
Linde Holdings SAS
France
Linde Holdings, LLC
Delaware




Linde Homecare Belgium SPRL
Belgium
Linde Homecare Benelux B.V.
Netherlands
LINDE HOMECARE FRANCE SAS
France
Linde Huachang (Zhangjiagang) Gas Co. Ltd.
China
Linde HyCO Limited
Thailand
Linde HyCO LLC
Delaware
Linde Hydrogen Concepts GmbH
Germany
LINDE INDIA LIMITED
India
LINDE INDUSTRIAL GASES (MALAYSIA) SDN. BHD.
Malaysia
LINDE INVESTMENTS FINLAND OY
Finland
LINDE INVESTMENTS LLC
Delaware
LINDE INVESTMENTS No.1 LIMITED
United Kingdom
Linde Jubail Industrial Gases Factory LLC
Saudi Arabia
Linde Korea Co., Ltd.
Republic of Korea
Linde Kryotechnik AG
Switzerland
Linde Lienhwa China Holding Co., Ltd.
China
Linde Lienhwa Gases (BeiJing) Co., Ltd.
China
Linde Lienhwa Gases (Chengdu) Co., Ltd.
China
Linde Lienhwa Gases (Wuhan) Co., Ltd
China
Linde Lienhwa Industrial Gases (Xianyang) Co., Ltd.
China
LINDE LIENHWA INDUSTRIAL GASES CO. LTD.
Taiwan
Linde LLC
Delaware
LINDE MALAYSIA HOLDINGS BERHAD
Malaysia
LINDE MALAYSIA SDN. BHD.
Malaysia
Linde Médica, S.L.
Spain
LINDE MEDICALE Srl
Italy
LINDE MEDICINAL, S.L.
Spain
Linde Merchant Production, LLC
Delaware
Linde Nanjing Chemical Industrial Park Gases Co., Ltd.
China
LINDE NORTH AMERICA HOLDINGS LIMITED
United Kingdom
Linde North America, Inc.
Delaware
Linde Österreich Holding GmbH
Austria
LINDE PHILIPPINES (SOUTH), INC.
Philippines
LINDE PHILIPPINES, INC.
Philippines
LINDE PORTUGAL, LDA
Portugal
Linde Process Plants Canada Inc.
Canada
Linde Qiangsheng Gases (Nanjing) Co., Ltd.
China
LINDE ROC SDN. BHD.
Malaysia
Linde RSS LLC
Delaware
Linde Salud S.A.
Argentina
LINDE SAÚDE, LDA
Portugal
Linde Schweißtechnik GmbH
Germany
Linde Services LLC
Delaware
Linde Sokolovská s.r.o.
Czech Republic
LINDE TREASURY ASIA PACIFIC PTE.LTD.
Singapore
LINDE UK HOLDINGS LIMITED
United Kingdom
LINDE UK PRIVATE MEDICAL TRUSTEES LIMITED
United Kingdom
Linde Vietnam Limited Company
Vietnam
Linde Welding GmbH
Germany
LINDE WELDING PRODUCTS SDN. BHD.
Malaysia




LINDE-BOC GASES LIMITADA
Brazil
LindeGas Holding Sweden AB
Sweden
LINDE-SINOCHEM (QUANZHOU) GASES CO., LTD
China
LPM, S.A. de C.V.
Mexico
LUCK STREAM Co., Ltd.
Taiwan
mdINR, LLC
Delaware
MED 4 HOME INC.
Delaware
MediLink HomeCare, Inc.
New Jersey
MEDIMATICS LLC
Delaware
MEDISHIELD
United Kingdom
MEDISPEED
United Kingdom
MidSouth Distribution, Inc.
Texas
MIG Production Company Limited
Thailand
MRB ACQUISITION CORP.
Florida
MTA GmbH Medizin-Technischer-Anlagenbau
Germany
Murray Hill LLC
Delaware
Naamloze Vennootschap Linde Gas Benelux
Netherlands
NAMOX Namibia (PTY) LIMITED
Namibia
NASIONALE SWEISWARE (PTY) LTD
South Africa
Nauticor Beteiligungs-GmbH
Germany
Nauticor GmbH & Co. KG
Germany
NEW SINO GASES COMPANY LIMITED
Hong Kong
NICOWELD (PTY) LIMITED
South Africa
NORLIC AB
Sweden
Northeast Pennsylvania Alliance, LLC
Pennsylvania
Northwest Washington Alliance, LLC
Washington
OCAP CO2 B.V.
Netherlands
OCT Pharmacy, L.L.C.
Michigan
OOO "Linde Engineering Rus"
Russia
OPTIGEN, INC.
Florida
Oy AGA Ab
Finland
P.T. Gresik Gases Indonesia
Indonesia
P.T. Gresik Power Indonesia
Indonesia
P.T. Townsville Welding Supplies
Indonesia
PACIFIC ENGINEERING SUPPLIES PTY LIMITED
Australia
PanGas AG
Switzerland
Patient Support Services, Inc.
Texas
PENNINE INDUSTRIAL & WELDING SUPPLIES LIMITED
United Kingdom
Piedmont Medical Equipment
South Carolina
PREMIER MEDICAL CORPORATION
Colorado
PRIESTLEY COMPANY LIMITED
Bermuda
Private Joint Stock Company "Linde Gas Ukraine"
Ukraine
PROVISIS Gase & Service GmbH
Austria
PS Chem Co., Ltd.
Republic of Korea
PSG Co., Ltd.
Republic of Korea
PT. LINDE INDONESIA
Indonesia
PULMOREHAB LLC
Delaware
PURE QUALITY TECHNOLOGY LIMITED
British Virgin Islands
RAYONG ACETYLENE LIMITED
Thailand
Raytel Cardiac Services, Inc.
Delaware




RCS MANAGEMENT CORPORATION
Delaware
RCS MANAGEMENT HOLDING COMPANY
Delaware
RDC GASES & WELDING (DRL) LIMITED
The Democratic Republic of the Congo
REMEO HEALTHCARE LIMITED
United Kingdom
REMEO Medical Services S.A.S.
Colombia
REMEO MEDICALE SRL
Italy
REPTILE INVESTMENT NINE (PTY) LIMITED
Namibia
REPTILE INVESTMENT TEN (PTY) LIMITED
Namibia
ROCK INDUSTRIAL & WELDING SUPPLIES LIMITED
United Kingdom
Rodmir Expert SA
Romania
ROYAL SOUTHMEADOWS, INC.
Philippines
RRS (FEBRUARY 2004) LIMITED
United Kingdom
RYVAL GAS LIMITED
United Kingdom
Sam Kwang Gas Tech Co., Ltd.
Republic of Korea
Saudi Industrial Gas Company
Saudi Arabia
Selas-Linde GmbH
Germany
SERVICIOS DE OPERACIONES DE NITRÓGENO, S.A. DE C.V.
Mexico
Shanghai BOC Gases Co., Ltd.
China
Shanghai BOC Huayang Carbon Dioxide Co., Ltd.
China
Shanghai Linhua Gas Transportation Co., Ltd.
China
Shared Care of West Branch, LLC
Michigan
Shenzhen Feiying Industrial Gases Company Limited
China
SHINE SKY INTERNATIONAL COMPANY LIMITED
British Virgin Islands
SKTY (Thailand) Limited
Thailand
SKY WALKER GROUP LIMITED
British Virgin Islands
Sleepcair, Inc.
Kansas
SMS HOLDINGS (DELAWARE), INC.
Delaware
SMS HOLDINGS, INC.
Delaware
SOUTH PACIFIC WELDING GROUP PTY LIMITED
Australia
SPALDING HAULAGE LIMITED
United Kingdom
SPECIALIZED MEDICAL SERVICES, INC.
Delaware
Spectra Gases (Shanghai) Trading Co., LTD.
China
Spectra Gases Limited
United Kingdom
STORESHIELD LIMITED
United Kingdom
Svenska Aktiebolaget Gasaccumulator
Sweden
Svets Gas Aktiebolag
Sweden
SWAZI OXYGEN (PTY) LIMITED
Swaziland
T.I.G. TRADING LIMITED
Thailand
The BOC Group B.V.
Netherlands
THE BOC GROUP LIMITED
United Kingdom
The Boc Group S.A.S.
France
THE BRITISH OXYGEN COMPANY LIMITED
United Kingdom
The National Medical Rentals, Inc.
Arkansas
TIAMONT PTY LIMITED
Australia
TK-Teollisuuskaasut Oy
Finland
TOO Linde Gaz Kazakhstan
Kazakhstan
TOO Linde Technical Gases Temirtau
Kazakhstan
Total Home Care of East Alabama, L.L.C.
Alabama
TRANSHIELD
United Kingdom
TUNG BAO CORPORATION
Taiwan




UAB "AGA"
Lithuania
UNIGAS JOINT VENTURE PARTNERSHIP
Australia
UNIGAS TRANSPORT FUELS PTY LTD
Australia
UNITED INDUSTRIAL GASES COMPANY LIMITED
Taiwan
Unterbichler Gase GmbH
Germany
WELDER EQUIPMENT SERVICES LIMITED
United Kingdom
WELDING PRODUCTS HOLDINGS LIMITED
United Kingdom
WESSEX INDUSTRIAL & WELDING SUPPLIES LIMITED
United Kingdom
YUAN RONG INDUSTRIAL GASES COMPANY LIMITED
Taiwan
ZHENJIANG XINHUA INDUSTRIAL GASES CO., LTD.
China





Linde plc and Subsidiaries
EXHIBIT 23.01

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-228083 and No. 333-228084) of Linde plc of our report dated March 18, 2019 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
 
/s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
March 18, 2019





RULE 13a-14(a)/15d-14(a) CERTIFICATIONS
Linde plc and Subsidiaries
 
EXHIBIT 31.01
I, Stephen F. Angel, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Linde plc;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
March 18, 2019
 
By: /s/ Stephen F. Angel
 
 
 
 
 
 
 
Stephen F. Angel
 
 
 
Chief Executive Officer
 






RULE 13a-14(a)/15d-14(a) CERTIFICATIONS
Linde plc and Subsidiaries
 
EXHIBIT 31.02
I, Matthew J. White, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Linde plc;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
March 18, 2019
 
By: /s/ Matthew J. White
 
 
 
 
 
 
 
Matthew J. White

 
 
 
Chief Financial Officer
 






SECTION 1350 CERTIFICATION
Linde plc and Subsidiaries
 
EXHIBIT 32.01
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Linde plc (the “Company”), hereby certifies that the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
March 18, 2019
 
By: /s/ Stephen F. Angel
 
 
 
 
 
 
 
Stephen F. Angel
 
 
 
Chief Executive Officer
 
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.





SECTION 1350 CERTIFICATION
Linde plc and Subsidiaries
 
EXHIBIT 32.02
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Linde plc (the “Company”), hereby certifies that the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
March 18, 2019
 
By: /s/ Matthew J. White
 
 
 
 
 
 
 
Matthew J. White
 
 
 
Chief Executive Officer
 
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.