Horizon Global Corp (Form: 10-K, Received: 03/01/2018 15:21:57)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

__________________________________________________________________________________________________

Form 10-K



(Mark One)
x		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
Or
o		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 001-37427

__________________________________________________________________________________________________

HORIZON GLOBAL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)



Delaware (State or Other Jurisdiction of Incorporation or Organization)		47-3574483 (IRS Employer Identification No.)

2600 W. Big Beaver Road, Suite 555

Troy, Michigan 48084

(Address of Principal Executive Offices, Including Zip Code)

(248) 593-8820

(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:
Common stock, $0.01 par value		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 o No x

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 o No x

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, 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 and post such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) 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. x

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



Large accelerated filer o	Accelerated filer o	Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o	Emerging growth company x

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. Yes x No o

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

The aggregate market value of the common stock held by non-affiliates of the Registrant as of June 30, 2017 was approximately $352.3 million , based upon the closing sales price of the Registrant’s common stock, $0.01 par value, reported for such date on the New York Stock Exchange. For purposes of this calculation only, directors and executive officers are deemed to be affiliates of the Registrant.

As of February 26, 2018 , the number of outstanding shares of the Registrant’s common stock, $0.01 par value, was 24,950,906 shares.

Portions of the Registrant’s Proxy Statement for the 2018 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein.

Horizon Global Corporation

Index




		Forward-Looking Statements	3
Part I.
	Item 1.	Business	4
	Item 1A.	Risk Factors	11
	Item 1B.	Unresolved Staff Comments	21
	Item 2.	Properties	21
	Item 3.	Legal Proceedings	21
	Item 4.	Mine Safety Disclosures	21
	Supplementary Item.	Executive Officers of the Company	22

Part II.
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
	Item 6.	Selected Financial Data	25
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	40
	Item 8.	Financial Statements and Supplementary Data	41
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	78
	Item 9A.	Controls and Procedures	78
	Item 9B.	Other Information	78

Part III.
	Item 10.	Directors, Executive Officers and Corporate Governance	79
	Item 11.	Executive Compensation	79
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	79
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	79
	Item 14.	Principal Accountant Fees and Services	79

Part IV .
	Item 15.	Exhibits and Financial Statement Schedules	80
	Exhibit Index		II-1
	Item 16.	Form 10-K Summary	II-4
	Signatures		II-5

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Forward-Looking Statements

This Annual Report on Form 10-K may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made and give our current expectations or forecasts of future events. These forward-looking statements can be identified by the use of forward-looking words, such as “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan” or other comparable words, or by discussions of strategy that may involve risks and uncertainties.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties which could materially affect our business, financial condition or future results including, but not limited to, risks and uncertainties with respect to: the Company’s integration of the Westfalia Group (defined herein); the Company’s ability to successfully complete the acquisition of the Brink Group (defined herein); leverage; liabilities imposed by the Company’s debt instruments; market demand; competitive factors; supply constraints; material and energy costs; technology factors; litigation; government and regulatory actions; the Company’s accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company’s business and industry; and other risks that are discussed in, Part I, Item 1A, “ Risk Factors. ” The risks described in this Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deemed to be immaterial also may materially adversely affect our business, financial position and results of operations or cash flows.

The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We caution readers not to place undo reliance on the statements, which speak only as of the date of this Annual Report on Form 10-K. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect the occurrence of unanticipated events, except as otherwise required by law.

We disclose important factors that could cause our actual results to differ materially from our expectations implied by our forward-looking statements under Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” and elsewhere in this Annual Report on Form 10-K. These cautionary statements qualify all forward-looking statements attributed to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other conditions, results of operations, prospects and ability to service our debt.

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PART I

Item 1. Business

Overview

Horizon Global Corporation, which we refer to herein as “Horizon,” “Horizon Global,” “we” or the “Company,” became an independent, publicly traded company as the result of a spin-off, which we refer to herein as the “spin-off,” from TriMas Corporation, or “TriMas,” on June 30, 2015.

We are a leading designer, manufacturer and distributor of a wide variety of high-quality, custom-engineered towing, trailering, cargo management and other related accessory products on a global basis, serving the automotive aftermarket, retail and original equipment, or “OE,” channels.

The Company is organized into three reportable segments: Horizon Americas, Horizon Asia-Pacific, and Horizon Europe-Africa. Horizon Americas has operations in North and South America, and we believe has been a leader in towing and trailering-related products sold through retail, aftermarket, OE, e-commerce and industrial channels. Horizon Asia‑Pacific and Horizon Europe‑Africa focus their sales and manufacturing efforts outside of North and South America. Horizon Asia‑Pacific operates primarily in Australia, Thailand, and New Zealand, while Horizon Europe‑Africa operates primarily in Germany, France, the United Kingdom, Romania, and South Africa. We believe Horizon Asia‑Pacific and Horizon Europe‑Africa have been leaders in towing related products sold through the OE and aftermarket channels in their regions.

Our products are used in two primary categories across the world: commercial applications, or “Work,” and recreational activities, or “Play.” Some of the markets in our Work category include agricultural, automotive, construction, fleet, industrial, marine, military, mining and municipalities. Some of the markets in our Play category include equestrian, power sports, recreational vehicle, specialty automotive, truck accessory and other specialty towing applications. We believe that the primary brands we offer are among the most recognized in the markets we serve and are known for quality, safety and performance. Our products reach end consumers through many avenues, including independent installers, warehouse distributors, dealers, OE, retail stores and online retailers.

We believe no individual competitor serving the channels we participate in can match our broad product portfolio, which we categorize into the following four groups:


▪	Towing: This product category includes devices and accessories installed on a tow-vehicle for the purpose of attaching a trailer, camper, etc. such as hitches, fifth wheels, gooseneck hitches, weight distribution systems, wiring harnesses, draw bars, ball mounts, crossbars, towbars, security and other towing accessories;


▪	Trailering: This product category includes control devices and components of the trailer itself such as brake controls, jacks, winches, couplers, interior and exterior vehicle lighting and brake replacement parts;

▪

Cargo Management: This product category includes a wide variety of products used to facilitate the transportation of various forms of cargo, to secure that cargo or to organize items. Examples of these products are bike racks, roof cross bar systems, cargo carriers, luggage boxes, car interior protective products, rope, tie-downs, tarps, tarp straps, bungee cords, loading ramps and interior travel organizers; and


▪	Other: This product category includes a diverse range of items in our portfolio that do not fit into any of the previous three main categories. Items in this category include tubular push bars, side steps, sports bars, skid plates, and oil pans.

We have positioned our product portfolio to create a variety of options based on price-point, ranging from entry-level to premium-level products across most of our markets. We believe the brands we offer in our aftermarket channel have significant customer recognition, with the four most significant being Reese®, Hayman-Reese™, Draw-Tite® and Westfalia®. We believe all four have substantial market share and have been leading brands in the towing market for over 50 years. These brands provide the foundation of our market position based on worldwide commercial and consumer acceptance. We also maintain a collection of regionally recognized brands that include Aqua Clear™, Bulldog®, BTM, DHF, Engetran, Fulton®, Kovil, Parkside®, Reese Secure™, Reese Explorer™, Reese Power Sports, Reese Towpower™, ROLA®, Tekonsha®, Trojan®, WesBarg® and Witter Towbar Systems. In addition to these product brands, we historically marketed our products to our OE customers in the Asia-Pacific segment, and more recently in the Americas, under the name TriMotive.

For information pertaining to net sales and operating profit attributed to our reportable segments, refer to Note 15 , “ Segment Information ,” included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K.

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Our Industry

Our products are sold into a diverse set of end-markets; the primary applications relate to automotive accessories for light and recreational vehicles. Purchases of automotive accessory parts are discretionary and we believe demand is driven by macro-economic factors including (i) employment trends, (ii) consumer sentiment and (iii) fuel prices, among others.

We believe all of these metrics impact both our Work- and Play-related sales. In addition, we believe the Play-related sales are more sensitive to changes in these indices, given the Play-related sales tend to be more directly related to disposable income levels. In general, recent decreases in unemployment and fuel prices, coupled with increases in consumer sentiment, are positive trends for our businesses.

Aftermarket and Retail Channels

We sell our products in the aftermarket and retail channels to a wide range of customers, including national and regional distributors, installers, and both traditional brick and mortar and e-commerce merchants, including automotive, home hardware, farm and fleet, and mass merchants. More recent trends in the aftermarket and retail channels include:

▪

Channel Consolidation : In the more mature market of the United States, there has been increasing consolidation in distribution networks with larger, more sophisticated aftermarket distributors and retailers gaining market share. In kind, these distributors generally require larger, more sophisticated suppliers with product expertise, category management and supply chain services and capabilities, as well as a global manufacturing and services footprint. We provide customers in this category the opportunity to rationalize their supply base of vendors in our product lines by virtue of our broad offering and product expertise; and

▪

Growth of Online Capabilities : Reaching consumers directly through online capabilities, including e-commerce, is having an increasing impact on the global automotive aftermarket and retail channels. Establishment of a robust online presence is critical for suppliers regardless of whether or not they participate directly in e-commerce. We believe we are positioned well to take advantage of this continuing trend, given our established online presence. We support consumers by offering a wide range of information on our products and services, including installation videos, custom-fit guides and links to authorized dealers and both brick and mortar and e-commerce merchants.

OE Channels

The OE channel is comprised of automobile manufacturers and their dealer networks, referred to collectively as automotive OE, as well as non-automotive manufacturers of agricultural equipment, trailers, and other custom assemblies, collectively referred to as industrial OE. The two main components of this channel are original equipment manufacturers (“OEM”) and original equipment suppliers (“OES”). While OE demand is typically driven by planned production, suppliers also grow by increasing their product content on each unit produced through sales of existing product lines or expansion into new product line offerings. Given the consolidation and globalization throughout the automotive industry, suppliers combining a global presence with strong engineering, technology, manufacturing, supply chain and customer support will be best positioned to take advantage of automotive OE business opportunities.

More recent trends in the global OE supplier market include:

▪

Global Platform/Supplier Consolidation : Automotive OEs are adopting global vehicle platforms to decrease product development costs and increase manufacturing efficiency and profitability. As a result, automotive OEs are selecting suppliers that have the capacity to manufacture and deliver products on a worldwide basis as well as the flexibility to adapt products to local variations. Suppliers with a global supply chain and efficient manufacturing capabilities are best positioned to benefit from this trend. We believe we are uniquely positioned to take advantage of this trend as a result of our global manufacturing footprint, highly developed supply chain relationships and track record of success in solving application challenges in our product lines;

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▪

Outsourcing of Design and Manufacturing of Vehicle Parts and Systems : Automotive OEs continually strive to simplify their assembly processes, lower costs and reduce development times. As a result, they have increasingly relied on suppliers to perform many of the design, engineering, research and development and assembly functions traditionally performed by automotive OEs. Suppliers with extensive design and engineering capabilities are in the best position to benefit from this trend as they are able to offer value-added solutions with superior features and convenience. We believe certain automotive OEs have sought us out to assist with their engineering challenges to increase towing capacity and for the many solutions provided by our existing products; and

▪

Shorter Product Development Cycles : Due to frequent shifts in government regulations and customer preferences, OEs are requiring suppliers to continue to provide new designs and product innovations. These trends are prevalent in mature markets as well as, emerging markets, which are advancing rapidly towards the regulatory standards and consumer preferences of the more mature markets. Suppliers with strong technologies, robust engineering and development capabilities are best positioned to meet OE demands for rapid innovation. Our broad product offerings, product expertise, and global engineering footprint enables us to rapidly deploy solutions meeting the changing customer needs.

Competitive Strengths

We believe our reportable segments share and benefit from the following competitive strengths:

▪

Diverse Product Portfolio of Market Leading Brands . We believe we benefit from a diverse portfolio of high-quality and highly-engineered products sold under globally recognized and market leading brand names. By offering a wide range of products, we are able to provide a complete solution to satisfy our customers’ towing, trailering and cargo management needs, as well as serve diverse channels through effective brand management. Our brands are well-known in their respective product areas and channels. We believe that we are the leading supplier of towing products and among the leading suppliers of trailering products globally.

▪

Global Scale with Flexible Manufacturing Footprint and Supply Chain . We were built through internal growth and a series of acquisitions to become the only truly global automotive accessories company with the products we offer. We have the ability to produce low-volume, customized, quick-turn products in our global manufacturing facilities, while our sourcing arrangements with third-party suppliers provides us with the flexibility to manufacture or source high-volume products as end-market demand fluctuates. Our flexible manufacturing capability, low-cost manufacturing facilities and established supply chain allow us to quickly and efficiently respond to changes in end-market demand.

▪

Long-Term Relationships with a Diverse Customer Base . Our customers encompass a broad range of OEs, mass merchants, e-commerce websites, distributors, dealers, and independent installers, representing multiple channels to reaching the end consumer. Blue chip customers include Walmart, Ford Motor Company, FCA, Volkswagen, BMW, Mercedes-Benz, AutoZone, Amazon, Toyota, Canadian Tire, LKQ, U-Haul, Home Depot and Etrailer, among others. Our customer relationships are well established, with many exceeding 20 years. These strong partnerships can provide stability to our revenue base through economic cycles. We believe Horizon’s diverse product portfolio, global scale and flexible manufacturing capabilities enable us to provide a unique value proposition to customers.

▪

Globally Competitive Cost Structure. Since becoming an independent public company, we have focused on margin improvement activities, identifying and acting on projects to reduce our cost structure. With focused, identifiable projects under way or complete, we believe we will benefit from improved operating margins and cash flow that can then be deployed to high-value creation activities. The combination of our strong brand names, leading market position, flexible manufacturing and sourcing operations have historically resulted in significant cash flow generation.

▪

Experienced Management Team . Our management team is led by our Chief Executive Officer, Mark Zeffiro, who was a senior executive at TriMas for over seven years and has more than 25 years of financial, operational and business leadership experience with companies such as Black & Decker and General Electric Company. David Rice, our Chief Financial Officer, joined TriMas in 2005 and brings more than 30 years of financial, audit and leadership experience to the role. David was previously division finance officer of Cequent Performance Products. Carl Bizon, President of Horizon Americas , has over 23 years of experience, including nearly eight years as the President of Horizon’s international business, including both Europe-Africa and Asia-Pacific. The leadership team of Horizon Asia‑Pacific includes Jason Kieseker, who joined the Horizon business in 2001 and has held various leadership roles within our Horizon Asia‑Pacific business. The leadership team of Horizon Europe‑Africa includes Paul Caruso, who has over 30 years of experience in a variety of roles within the industrial and automotive markets.

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Key Business Priorities

Horizon Global established three strategic platforms for value creation focused on business improvement and transformation, supported by a company culture of continuous improvement.

▪

Margin Expansion. Our first priority is to drive the organization to a 10% operating margin level. We believe the investments made in our facilities and equipment over the past few years, along with our efforts to realign or operations, should provide the foundation for additional margin expansion. We are developing an organization in which all team members are focused on constantly improving the efficiency of all operations through the adoption of lean and continuous improvement practices.

▪

Capital Structure. Our second priority is to improve our capital structure. Our net leverage ratio, as defined in certain of the agreements covering our indebtedness, at December 31, 2017 was approximately 3.2 times (expected to be 5.0 times subsequent to the acquisition of Brink International B.V. (“Brink Group”), which is discussed below). Our long-term net leverage ratio target is less than 2 times. We aim to accomplish this goal through both margin improvement as well as paying down our fixed obligations, and should we decide to do so, we have a structure in place that allows us to prepay debt in addition to the amortization required under our term debt.


▪	Organic Growth. Our third priority is to grow the business 3% to 5% on an organic basis, annually. We have identified five broad areas of focused growth activities, involving geographic markets and sales channels, which we believe are particularly aligned with our competitive strengths.

Growth Strategies

Prior to becoming an independent public company, Horizon operated on a regional basis under separate management teams, with independent business decisions and resource allocations made by the Horizon Americas , Horizon Asia‑Pacific and Horizon Europe‑Africa leaders. As a public company, we are reorganizing our global operations to operate as a single combined entity. As a result, we believe that we have multiple opportunities to integrate, improve and grow our business, whether via organic initiatives or via acquisitions of new products or in new geographies, through the following strategies:

▪

Original Equipment . The global market for accessories and vehicle personalization is increasing and automotive manufacturers are looking for suppliers to partner with to create genuine accessories to meet this need. Historically, this has been a regional effort, but the growth of global automotive OE has increased the need for global suppliers. Our geographic footprint, existing customer relationships and the increase in global vehicle platforms align to present us with unique opportunities to grow with our automotive OE customers.

▪

E-commerce . We intend to leverage the breadth of our product portfolio and global manufacturing footprint to expand our presence in the high growth e-commerce channel. This strategy is applicable in our developed markets where a focus on content delivery and customer support drive growth. It is also a powerful tool as we look at developing new, less mature markets around the world, enabling a direct connection with the users of our product set.

▪

Latin American Markets . Since entering the Latin American market, we have witnessed a desire to accessorize vehicles among new entrants to the middle class. We expanded our global footprint and product portfolio in Brazil by acquiring DHF Soluções Automotivas Ltda and Engetran Engenharia, Indústria, e Comércio de Peças e Acessórios Veiculares Ltda, respectively, which are included in Horizon Americas . We believe these expansions into new geographies, as well as our manufacturing presence in Mexico, provide opportunities for growth, while supporting both new and existing global customers.

▪

Chinese Market. China is in the early stages of adoption for towing and trailering products. As this adoption rate increases, there is an opportunity for us to bring our experience in the safe use of these products into the market in a meaningful capacity. The rapidly growing middle class, in concert with a developing interest in an outdoor recreational lifestyle, is expected to result in incremental demand for our automotive aftermarket products and accessories. We intend to leverage our existing relationships with global automotive OEs and our global manufacturing and distribution network to expand our sales in this developing economy.


▪	Product Innovation. Our focus in multi-generational product planning is to formalize the process by which we integrate the feedback and needs of users into our product development engine. We look to move beyond simply responding to the feedback that we receive, to anticipating the functionality future products need to possess to enrich the lives of our users.

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Marketing, Customers and Distribution

Horizon employs a dedicated sales force in each of our primary channels. In serving our customers globally, we rely upon our strong historical customer relationships, custom engineering capability, brand recognition, broad product offerings, our established distribution network and varied merchandising strategies to bolster our towing, trailering, cargo management and accessory product sales. Significant Horizon customers include Ford Motor Company, Volkswagen, Toyota and General Motors/Holden in the OE channel; Walmart, Tractor Supply Company and Super Retail Group in the retail channel; and LKQ, U-Haul and Redneck Trailer Supplies in the aftermarket channel. No customer represented greater than 10% of total revenue during the years ended December 31, 2017 , 2016 or 2015 .

Competition

The competitive environment for automotive accessory products is highly fragmented and is characterized by numerous smaller suppliers, even the largest of which tend to focus in narrow product categories. We believe there is no individual competitor that has the breadth of product portfolio on a global basis in the markets we serve. Significant towing competitors include Curt Manufacturing, B&W Trailer Hitches, The Bosal Group, Brink Group, Buyers Products Company, Demco Products, PullRite, Westin Automotive Products and Camco. Significant trailering competitors include Pacific Rim, Dutton-Lainson, Shelby, Ultra-Fab, Sea-Sense and Atwood. In addition, competition in the cargo management product category primarily comes from Thule, Yakima, Bell, Masterlock and Saris.

Acquisition Strategy

We believe that our businesses have significant opportunities to grow through disciplined strategic acquisitions. We typically seek bolt-on acquisitions, in which we acquire another industry participant or adjacent product lines that enhance the strengths of our core businesses. When evaluating acquisition targets, we look for opportunities to expand our existing product offerings, gain access to new customers and end markets, add new early life cycle technologies, as well as add additional distribution channels, expand our geographic footprint and/or capitalize on scale and cost efficiencies.

Westfalia Acquisition

On October 4, 2016, we completed our previously announced acquisition of Westfalia-Automotive Holding GmbH and TeIJs Holding B.V., which we refer to collectively as the “ Westfalia Group ” or “Westfalia”. Pursuant to the purchase agreement, we acquired all of the outstanding equity interests of the Westfalia Group for cash consideration of approximately $99.2 million and the issuance to certain of the sellers of 2,704,310 shares of our common stock in a transaction exempt from registration requirements of the Securities Act of 1933, or the “Securities Act.” We funded the cash payment, as well as the repayment of certain of the Westfalia Group’s debt, through a combination of cash on hand and $152.0 million of incremental borrowings under our Term B Loan.

The Westfalia Group is a leading European towing company. Headquartered in Rheda-Wiedenbrück, Germany, with operating facilities in 11 countries, it manufactures towing and trailering products, including more than 1,700 different types of towbars, wiring kits and carrier systems for cars and light utility vehicles. It holds in excess of 300 issued patents and published patent applications protecting its unique line of towing and trailering products. The brands under which it markets its products include Westfalia, Terwa and Siarr.

The acquisition of the Westfalia Group positions us as a leading manufacturer of towing and trailering equipment in Europe and further complements our broad portfolio. We believe the acquisition will expand our opportunities for revenue and margin growth, increase our market share and augment our global OE footprint with access to new markets and customers.

Brink Group

On December 13, 2017, we entered into a definitive agreement to acquire the Brink Group, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals. We plan to finance the acquisition through new long-term debt and cash on hand. The Company expects to close the acquisition in the second quarter of 2018.

The Brink Group is an industry-leading innovator and manufacture of towbars, wiring kits, and towing accessories. Headquartered in Staphorst, Netherlands, with operations in eight countries, it manufactures towing and trailering solutions serving the automotive OE and aftermarket channels. This acquisition will strengthen our global platform and enhance our product portfolio.

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Materials and Supply Arrangements

We are sensitive to price movements in our raw materials supply base. Our largest material purchases are for steel, copper, and aluminum. We also consume a significant amount of energy via utilities in our facilities. Historically, when we have experienced increasing costs of steel, we have successfully worked with our suppliers to manage cost pressures and disruptions in supply. Price increases used to offset inflation or a disruption of supply in core materials have generally been successful, although sometimes delayed. Increases in price for these purposes represent a risk in execution.

Employees and Labor Relations

As of December 31, 2017 , we employed approximately 4,300 people, of which approximately 13% were located in the United States. In the United States, we have no collective bargaining agreements. Employee relations have generally been satisfactory.

On July 21, 2015, we announced the decision to close our manufacturing facility in Ciudad Juarez, Mexico along with our distribution warehouse in El Paso, Texas, within our Horizon Americas segment, impacting approximately 214 hourly and 47 salaried employees. During the second quarter of 2016, we vacated the El Paso, Texas and Juarez, Mexico sites.

Seasonality and Backlog

We experience some seasonality in our business. Sales of towing and trailering products in the northern hemisphere, where we generate the majority of our sales, are generally stronger in the second and third calendar quarters, as trailer OEs, distributors and retailers acquire product for the spring and summer selling seasons. Our growing businesses in the southern hemisphere are stronger in the first and fourth calendar quarters. We do not consider order backlog to be a material factor in our businesses.

Environmental Matters

We are subject to increasingly stringent environmental laws and regulations, including those relating to air emissions, wastewater discharges and chemical and hazardous waste management and disposal. Some of these environmental laws hold owners or operators of land or businesses liable for their own and for previous owners’ or operators’ releases of hazardous or toxic substances or wastes. Other environmental laws and regulations require the obtainment and compliance with environmental permits. To date, costs of complying with environmental, health and safety requirements have not been material. However, the nature of our operations and our long history of industrial activities at certain of our current or former facilities, as well as those acquired, could potentially result in material environmental liabilities.

While we must comply with existing and pending climate change legislation, regulation and international treaties or accords, current laws and regulations have not had a material impact on our business, capital expenditures or financial position. Future events, including those relating to climate change or greenhouse gas regulation could require us to incur expenses related to the modification or curtailment of operations, installation of pollution control equipment or investigation and cleanup of contaminated sites.

Intangible Assets

Our identified intangible assets, consisting of customer relationships, trademarks and trade names and technology, are recorded at approximately $90.2 million as of December 31, 2017 , net of accumulated amortization. The valuation of each of our identified intangibles was performed using broadly accepted valuation methodologies and techniques.

Customer Relationships. We have developed and maintained stable, long-term selling relationships with customer groups for specific branded products and/or focused market product offerings within each of our businesses. Useful lives assigned to customer relationship intangibles range from five to 25 years and have been estimated using historic customer retention and turnover data. Other factors considered in evaluating estimated useful lives include the diverse nature of focused markets and products of which we have significant share, how customers in these markets make purchases and these customers’ position in the supply chain. We also monitor and evaluate the impact of other evolving risks including the threat of lower cost competitors and evolving technology.

Trademarks and Trade Names. Each of our operating groups designs and manufactures products for focused markets under various trade names and trademarks. Our trademark/trade name intangibles are well-established and considered long-lived assets that require maintenance through advertising and promotion expenditures. Because it is our practice and intent to maintain and to continue to support, develop and market these trademarks/trade names for the foreseeable future, we consider our rights in these trademarks/trade names to have an indefinite life, except as otherwise dictated by applicable law. During the second quarter of 2016, we made a decision to simplify our brand offering in the Horizon Americas segment. This resulted in the impairment of trade names with an aggregate carrying value of $2.4 million . During the fourth quarter of 2016, we performed our annual assessment of indefinite-lived intangible assets. Based on this assessment, we determined that certain trade names with an aggregate carrying value of $6.9 million were impaired. This resulted in impairment charges of $6.2 million . No impairments were recorded in 2017.

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For additional information, refer to Note 6, “ Goodwill and Other Intangible Assets ,” included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K.

Technology. We hold a number of U.S. and foreign patents, patent applications, and proprietary product and process-oriented technologies. We have, and will continue to dedicate, technical resources toward the further development of our products and processes in order to maintain our competitive position in the industrial, commercial and consumer end markets that we serve. Estimated useful lives for our technology intangibles range from three to 15 years and are determined in part by any legal, regulatory or contractual provisions that limit useful life. Other factors considered include the expected use of the technology by the operating groups, the expected useful life of the product and/or product programs to which the technology relates, and the rate of technology adoption by the industry.

International Operations

Approximately 52.6% of our net sales for the year ended December 31, 2017 were derived outside of the United States. We may significantly expand our international operations through organic growth and acquisitions. In addition, approximately 94.9% of our consolidated property and equipment - net as of December 31, 2017 were located outside of the United States. We operate manufacturing facilities in Australia, Brazil, France, Germany, Romania, Mexico, New Zealand, South Africa, and Thailand. For information pertaining to the net sales and total assets attributed to our international operations, refer to Note 15 , “ Segment Information, ” included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K.

Website Access to Company Reports

We use our Investor Relations website, www.horizonglobal.com , as a channel for routine distribution of important information, including news releases, analyst presentations and financial information. We post filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC, including our annual, quarterly, and current reports on Forms 10-K, 10-Q and 8-K, our proxy statements and any amendments to those reports or statements. All such postings and filings are available on our Investor Relations website free of charge. The SEC also maintains a website, www.sec.gov , that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The content on any website referred to in this Annual Report on Form 10-K is not incorporated by reference into this Annual Report on Form 10-K unless expressly noted.

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Item 1A. Risk Factors

You should carefully consider each of the risks described below, together with information included elsewhere in this Annual Report on Form 10-K and other documents we file with the SEC. The risks that are highlighted below are not the only ones that we face. Some of our risks relate principally to our business and the industry in which we operate, while others relate principally to our spin-off from TriMas, to the securities markets in general and ownership of our common stock. If any of the following risks actually occur, our business, financial condition or results of operations could be negatively affected.

Risks Relating to our Business and our Industry

Our businesses depend upon general economic conditions and we serve some customers in highly cyclical industries; as such, we may be subject to the loss of sales and margins due to an economic downturn or recession.

Our financial performance depends, in large part, on conditions in the markets that we serve in both the U.S. and global economies. Some of the industries that we serve are highly cyclical, such as the agricultural, automotive, construction, horse/livestock, industrial, marine, military, recreational, trailer and utility markets. We may experience a reduction in sales and margins as a result of a downturn in economic conditions or other macroeconomic factors. Lower demand for our products may also negatively affect the capacity utilization of our production facilities, which may further reduce our operating margins.

Many of the markets we serve are highly competitive, which could limit the volume of products that we sell and reduce our operating margins.

Many of our products are sold in competitive markets. We believe that the principal points of competition in our markets are product quality and price, design and engineering capabilities, product development, conformity to customer specifications, reliability and timeliness of delivery, customer service and effectiveness of distribution. Maintaining and improving our competitive position will require continued investment by us in manufacturing, engineering, quality standards, marketing, customer service and support of our distribution networks. We may have insufficient resources in the future to continue to make such investments and, even if we make such investments, we may not be able to maintain or improve our competitive position. We also face the risk of lower-cost foreign manufacturers located in China, Southeast Asia, India and other regions competing in the markets for our products, and we may be driven as a consequence of this competition to increase our investment overseas. Making overseas investments can be highly complicated and we may not always realize the advantages we anticipate from any such investments. Competitive pressure may limit the volume of products that we sell and reduce our operating margins.

We may be unable to successfully implement our business strategies. Our ability to realize our business strategies may be limited.

Our businesses operate in relatively mature industries and it may be difficult to successfully pursue our growth strategies and realize material benefits therefrom. Even if we are successful, other risks attendant to our businesses and the economy generally may substantially or entirely eliminate the benefits.

We may not achieve our strategic goals for margin expansion, capital structure improvement and organic growth; our past performance in these areas may not be indicative of future performance. Failure to achieve our strategic goals may adversely impact our results of operations.

Our strategic platforms for value creation and goals for margin expansion, capital structure improvement and organic growth are subject to risk and uncertainty and depend on general economic, credit, capital market and other conditions that are beyond our control and are subject to fluctuation. Our past performance with respect to margin expansion, capital structure improvement and organic growth, both before and after the spin-off, should be considered independent from, and may not be a reliable indicator of, future performance. These strategic goals may need to be revised or may not be met for a number of reasons, including changes in general economic conditions in the United States and abroad, changes in credit and capital market conditions, increased competition in the markets for our products, increases in raw material or energy costs and changes in technology and manufacturing techniques.

Increases in our raw material or energy costs or the loss of critical suppliers could adversely affect our profitability and other financial results.

We are sensitive to price movements in our raw materials supply base. Our largest material purchases are for steel, copper and aluminum. The prices for these products have historically been volatile, fluctuate with market conditions and may increase as a result of various factors, including: a reduction in the number of suppliers due to restructurings, bankruptcies and consolidations, declining supply due to mine or mill closures and other factors that adversely impact supplier profitability, including increases in supplier operating expenses caused by rising raw material and energy costs. We may be unable to completely offset the impact with price increases on a timely basis due to outstanding commitments to our customers, competitive considerations or our customers’ resistance to accepting such price increases and our financial performance may be adversely impacted by further price

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increases. A failure by our suppliers to continue to supply us with certain raw materials or component parts on commercially reasonable terms, or at all, could have a material adverse effect on us. To the extent there are energy supply disruptions or material fluctuations in energy costs, our margins could be materially adversely impacted.

Our products are typically highly engineered or customer-driven and we are subject to risks associated with changing technology and manufacturing techniques that could place us at a competitive disadvantage.

We believe that our customers rigorously evaluate their suppliers on the basis of product quality, price competitiveness, technical expertise and development capability, new product innovation, reliability and timeliness of delivery, product design capability, manufacturing expertise, operational flexibility, customer service and overall management. Our success depends on our ability to continue to meet our customers’ changing expectations with respect to these criteria. We anticipate that we will remain committed to product research and development, advanced manufacturing techniques and service to remain competitive, which entails significant costs. We may be unable to address technological advances, implement new and more cost-effective manufacturing techniques, or introduce new or improved products, whether in existing or new markets, so as to maintain our businesses’ competitive positions or to grow our businesses as desired.

We depend on the services of key individuals and relationships, the loss of which could materially harm us.

Our success will depend, in part, on the efforts of our senior management, including our Chief Executive Officer. Our future success will also depend on, among other factors, our ability to attract and retain other qualified personnel. The loss of the services of any of our key employees or the failure to attract or retain employees could have a material adverse effect on us.

A future impairment of our intangible assets or goodwill could have a material negative impact on our financial results.

At December 31, 2017 , our intangible assets and goodwill were approximately $90.2 million and $138.2 million , respectively. Intangibles and goodwill each represented approximately 14% and 21% of our total assets, respectively. If we experience declines in sales and operating profit or do not meet our current and forecasted operating budget, we may be subject to future impairment charges. Because of the significance of these assets, any future impairment could have a material adverse effect on our financial results.

We may face liability associated with the use of products for which patent ownership or other intellectual property rights are claimed.

We may be subject to claims or inquiries regarding alleged unauthorized use of a third party’s intellectual property. An adverse outcome in any intellectual property litigation could subject us to significant liabilities to third parties, require us to license technology or other intellectual property rights from others, require us to comply with injunctions to cease marketing or using certain products or brands, or require us to redesign, re-engineer, or re-brand certain products or packaging, any of which could affect our business, financial condition and operating results. If we are required to seek licenses under patents or other intellectual property rights of others, we may not be able to acquire these licenses on acceptable terms, if at all. In addition, the cost of responding to an intellectual property infringement claim, in terms of legal fees and expenses and the diversion of management resources, whether or not the claim is valid, could have a material adverse effect on our business, results of operations and financial condition.

We may be unable to adequately protect our intellectual property.

While we believe that our patents, trademarks and other intellectual property have significant value, it is uncertain that this intellectual property or any intellectual property acquired or developed by us in the future, will provide a meaningful competitive advantage. Our patents or pending applications may be challenged, invalidated or circumvented by competitors or rights granted thereunder may not provide meaningful proprietary protection. Moreover, competitors may infringe on our patents or successfully avoid them through design innovation. Policing unauthorized use of our intellectual property is difficult and expensive, and we may not be able to, or have the resources to, prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the United States. The cost of protecting our intellectual property may be significant and could have a material adverse effect on our financial condition and future results of operations.

We may incur material losses and costs as a result of product liability, recall and warranty claims that may be brought against us.

We are subject to a variety of litigation incidental to our business, including claims for damages arising out of use of our products, claims relating to intellectual property matters and claims involving employment matters and commercial disputes.

We currently carry insurance and maintain reserves for potential product liability claims. However, our insurance coverage may be inadequate if such claims do arise and any liability not covered by insurance could have a material adverse effect on our business. Although we have been able to obtain insurance in amounts we believe to be appropriate to cover such liability to date, our

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insurance premiums may increase in the future as a consequence of conditions in the insurance business generally or our situation in particular. Any such increase could result in lower net income or cause the need to reduce our insurance coverage. In addition, a future claim may be brought against us that could have a material adverse effect on us. Any product liability claim may also include the imposition of punitive damages, the award of which, pursuant to certain state laws, may not be covered by insurance. Our product liability insurance policies have limits that, if exceeded, may result in material costs that could have an adverse effect on our future profitability. In addition, warranty claims are generally not covered by our product liability insurance. Further, any product liability or warranty issues may adversely affect our reputation as a manufacturer of high-quality, safe products, divert management’s attention, and could have a material adverse effect on our business.

Our business may be materially and adversely affected by compliance obligations and liabilities under environmental laws and regulations.

We have a substantial amount of debt. To service our debt, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. If we cannot generate the required cash, we may not be able to make the necessary payments required under our debt.

At December 31, 2017 , we had total long-term debt of approximately $293.7 million (without giving effect to the equity component of our convertible senior notes or any debt discount). Our ability to make payments on our debt, fund our other liquidity needs, and make planned capital expenditures will depend on our ability to generate cash in the future. Our historical financial results have been, and we anticipate that our future financial results will be, subject to fluctuations. Our ability to generate cash, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot guarantee that our business will generate sufficient cash flow from our operations or that future borrowings will be available to us in an amount sufficient to enable us to make payments of our debt, fund other liquidity needs and make planned capital expenditures.

The degree to which we are currently leveraged could have important consequences for shareholders. For example, it could:


▪	require us to dedicate a substantial portion of our cash from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisition and other general corporate purposes;


▪	increase our vulnerability to adverse economic or industry conditions;


▪	limit our ability to obtain additional financing in the future to enable us to react to changes in our business; or


▪	place us at a competitive disadvantage compared to businesses in our industry that have less debt.

Additionally, any failure to comply with covenants in the instruments governing our debt could result in an event of default which, if not cured or waived, would have a material adverse effect on us.

Our borrowing costs may be impacted by our credit ratings developed by various rating agencies.

Two major ratings agencies, Standard & Poor’s and Moody’s, evaluate our credit profile on an ongoing basis and have each assigned ratings for our long-term debt. If our credit ratings were to decline, our ability to access certain financial markets may become limited, the perception of us in the view of our customers, suppliers and security holders may worsen and as a result, we may be adversely affected.

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We have significant operating lease obligations and our failure to meet those obligations could adversely affect our financial condition.

We lease many of our manufacturing facilities and certain capital equipment. Our rental expense in 2017 under these operating leases was approximately $20.0 million . A failure to pay our rental obligations would constitute a default allowing the applicable landlord to pursue any remedy available to it under applicable law, which would include taking possession of our property and, in the case of real property, evicting us. These leases are categorized as operating leases and are not considered indebtedness for purposes of our debt instruments.

We may be subject to further unionization and work stoppages at our facilities or our customers may be subject to work stoppages, which could seriously impact the profitability of our business.

As of December 31, 2017 , approximately 52% of our work force was unionized under several different unions. We are not aware of any present active union organizing drives at any of our other facilities. We cannot predict the impact of any further unionization of our workplace.

Many of our direct or indirect customers have unionized work forces. Strikes, work stoppages or slowdowns experienced by these customers or their suppliers could result in slowdowns or closures of assembly plants where our products are included. In addition, organizations responsible for shipping our customers’ products may be impacted by occasional strikes or other activity. Any interruption in the delivery of our customers’ products could reduce demand for our products and could have a material adverse effect on us.

Our healthcare costs for active employees and future retirees may exceed our projections and may negatively affect our financial results.

We provide healthcare benefits for active employees through comprehensive hospital, surgical and major medical benefit provisions, all of which are subject to various cost-sharing features. If our costs under our benefit programs for active employees exceed our projections, our business and financial results could be materially adversely affected. Additionally, foreign competitors and many domestic competitors provide fewer benefits to their employees, and this difference in cost could adversely impact our competitive position.

A significant portion of our sales is derived from international sources, which exposes us to certain risks which may adversely affect our business and our financial results.

We have extensive operations outside of the United States. Approximately 53% of our net sales for the year ended December 31, 2017 were derived from sales by our subsidiaries located outside of the United States. In addition, we may significantly expand our international operations through internal growth and acquisitions. International operations, particularly sales to emerging markets and manufacturing in non-U.S. countries, are subject to risks which are not present within U.S. markets, which include, but are not limited to, the following:


▪	volatility of currency exchange between the U.S. dollar and currencies in international markets;


▪	changes in local government regulations and policies including, but not limited to, foreign currency exchange controls or monetary policy, governmental embargoes, repatriation of earnings, expropriation of property, duty or tariff restrictions, investment limitations and tax policies


▪	political and economic instability and disruptions, including labor unrest, civil strife, acts of war, guerrilla activities, insurrection and terrorism;


▪	legislation that regulates the use of chemicals;


▪	disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act (“FCPA”);


▪	compliance with international trade laws and regulations, including export control and economic sanctions, such as anti-dumping duties;


▪	difficulties in staffing and managing multi-national operations;


▪	limitations on our ability to enforce legal rights and remedies;


▪	tax inefficiencies in repatriating cash flow from non-U.S. subsidiaries that could affect our financial results and reduce our ability to service debt;


▪	reduced protection of intellectual property rights;

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▪	increasingly complex laws and regulations concerning privacy and data security, including the European Union’s General Data Protection Regulation; and


▪	other risks arising out of foreign sovereignty over the areas where our operations are conducted.

We are also exposed to risks relating to U.S. policy with respect to companies doing business in foreign jurisdictions, particularly in light of the new U.S. presidential administration. Legislation or other changes in the U.S. tax laws could increase our U.S. income tax liability and adversely affect our after-tax profitability. In addition, the new U.S. presidential administration has introduced greater uncertainty with respect to future tax, trade regulations and trade agreements. Changes in tax policy, trade regulations or trade agreements, such as the disallowance of tax deductions on imported merchandise or the imposition of new tariffs on imported products, could have a material adverse effect on our business and results of operations.

In addition, we could be adversely affected by violations of the FCPA and similar worldwide anti-bribery laws as well as export controls and economic sanction laws. The FCPA and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business.

Our reputation, ability to do business, and results of operations may be impaired by improper conduct by any of our employees, agents, or business partners.

While we strive to maintain high standards, we cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by our employees, agents, or business partners that would violate U.S. and/or non-U.S. laws or fail to protect our confidential information, including the laws governing payments to government officials, bribery, fraud, anti-kickback and false claims rules, competition, export and import compliance, money laundering, and data privacy laws, as well as the improper use of proprietary information or social media. Any such allegations, violations of law or improper actions could subject us to civil or criminal investigations in the United States and in other jurisdictions, could lead to substantial civil or criminal, monetary and non-monetary penalties, and related shareholder lawsuits, could lead to increased costs of compliance, could damage our reputation and could have a material effect on our financial statements.

Our growth strategy includes acquisitions. If we are unable to identify attractive acquisition candidates, successfully integrate acquired operations or realize the intended benefits of our acquisitions, we may be adversely affected.

We may pursue strategic acquisition opportunities. Any acquisition will likely require integration expenses and actions that could negatively impact our results of operations, some of which we may not be able to fully anticipate beforehand. In addition, attractive acquisition candidates may not be identified and acquired in the future, financing for acquisitions may be unavailable on satisfactory terms and we may be unable to accomplish our strategic objectives in effecting a particular acquisition. We may encounter various risks in acquiring other companies, including the possible inability to integrate an acquired business into our operations, diversion of management’s attention and unanticipated problems or liabilities, some or all of which could materially and adversely affect our business strategy and financial condition and results of operations.

We may not realize the growth opportunities and cost synergies that are anticipated from acquisitions.

We completed the acquisition of the Westfalia Group in October 2016 and we expect to acquire the Brink Group in the second quarter of 2018. The benefits that are expected to result from these acquisitions will depend, in part, on our ability to realize the anticipated growth opportunities and cost synergies as a result of these acquisitions. Our success in realizing these growth opportunities and cost synergies, and the timing of this realization, depends on the successful integration of the Westfalia Group and the Brink Group. There is a significant degree of difficulty and management distraction inherent in the process of integrating acquisitions as sizable as the Westfalia Group and the Brink Group. The process of integrating operations could cause an interruption of, or loss of, momentum in ours and the Westfalia Group or the Brink Group’s activities. Members of our senior management may be required to devote considerable amounts of time to the integration process, which will decrease the time they will have to manage our business, service existing customers, attract new customers, and develop new products or strategies. If senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer. There can be no assurance that we will successfully or cost-effectively integrate the Westfalia Group or the Brink Group. The failure to do so could have a material adverse effect on our business, financial condition, and results of operations.

Even if we are able to integrate the Westfalia Group and the Brink Group successfully, this integration may not result in the realization of the full benefits of the growth opportunities and cost synergies that we currently expect from this integration, and we cannot guarantee that these benefits will be achieved within anticipated time frames or at all. For example, we may not be able to eliminate duplicative costs. Moreover, we may incur substantial expenses in connection with these integrations. While it is anticipated that certain expenses will be incurred to achieve cost synergies, such expenses are difficult to estimate accurately, and may exceed current estimates. Accordingly, the benefits from these acquisitions may be offset by costs incurred to, or delays in, integrating the businesses.

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Our acquisition agreements by which we have acquired companies include indemnification provisions that may not fully protect us and may result in unexpected liabilities.

Certain of the agreements related to the acquisition of businesses require indemnification against certain liabilities related to the operations of the company for the previous owner. We cannot be assured that any of these indemnification provisions will fully protect us, and as a result we may incur unexpected liabilities that adversely affect our profitability and financial position.

Increased information technology security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, and products.

Increased global information technology security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data and communications. While we attempt to mitigate these risks by employing a number of measures, monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks and products remain potentially vulnerable to advanced persistent threats. Depending on their nature and scope, such threats could potentially lead to the compromising of confidential information and communications, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions, which in turn could adversely affect our reputation, customer relationships, competitiveness and results of operations. We may be required to incur significant costs to remedy damages caused by these disruptions or security breaches or to protect against disruption or security breaches in the future.

A major failure of our information systems could harm our business.

We depend on integrated information systems to conduct our business. We may experience operating problems with our information systems as a result of system failures, viruses, computer hackers or other causes. Any significant disruption or slowdown of our systems could cause customers to cancel orders or cause standard business processes to become inefficient or ineffective.

The accounting method for convertible debt securities that may be settled in cash, such as our convertible senior notes, could have a material effect on our reported financial results.

Under Accounting Standards Codification (“ASC”) 470-20, “ Debt with Conversion and Other Options” , which we refer to as ASC 470-20, an entity must separately account for the liability and equity components of the convertible debt instruments (such as our convertible senior notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for our convertible senior notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of our convertible senior notes. As a result, we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of our convertible senior notes to their face amount over the term of the convertible senior notes. We will report lower net income in our financial statements because ASC 470-20 will require interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the convertible senior notes.

In addition, under certain circumstances, convertible debt instruments (such as our convertible senior notes) that may be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of our convertible senior notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of our convertible senior notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares issuable upon conversion of our convertible senior notes, then our diluted earnings per share would be adversely affected.

The conditional conversion features of our 2.75% Convertible Senior Notes due 2022, if triggered, may adversely affect our financial condition.

In the event the conditional conversion features of the Convertible Notes are triggered, holders of the Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock, we would be required to make cash payments to satisfy all or a portion of our conversion obligation based on the conversion rate, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which could result in a material reduction of our net working capital.

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The convertible note hedge and warrant transactions that we entered into in connection with the offering of the Convertible Senior Notes due 2022 may affect the value of the Convertible Notes and our common stock.

In connection with the offering of the Convertible Notes, we entered into convertible note hedge transactions with certain option counterparties. The Convertible Note Hedges are expected generally to reduce the potential dilution upon conversion of the Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Convertible Notes, as the case may be. We also entered into warrant transactions with each option counterparty. The Warrants could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the Warrants. In connection with establishing its initial hedge of the Convertible Note Hedges and Warrants, each option counterparty or an affiliate thereof may have entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the Convertible Notes. This activity could increase (or reduce the size of any decrease in) the market price of our common stock or the Convertible Notes at that time. In addition, each option counterparty or an affiliate thereof may modify its hedge position by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Convertible Notes (and is likely to do so during any observation period related to a conversion of the Convertible Notes). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Convertible Notes. In addition, if any such Convertible Note Hedges and Warrants fail to become effective, each option counterparty may unwind its hedge position with respect to our common stock, which could adversely affect the value of our common stock and the value of the Convertible Notes.

We are subject to counterparty risk with respect to the convertible note hedge transactions.

Each option counterparty to the Convertible Note Hedges is a financial institution, and we will be subject to the risk that it might default under the Convertible Note Hedges. Our exposure to the credit risk of an option counterparty will not be secured by any collateral. Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with the option counterparty. Our exposure will depend on many factors but, generally, the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of any option counterparty.

Risks Relating to the Spin-off

Our historical consolidated financial information is not necessarily indicative of our future financial condition, results of operations or cash flows nor do they reflect what our financial condition, results of operations or cash flows would have been as an independent public company during the periods presented.

Some of the historical consolidated financial information included in this Annual Report on Form 10-K does not reflect what our financial condition, results of operations or cash flows would have been as an independent public company during all periods presented and is not necessarily indicative of our future financial condition, future results of operations or future cash flows. This is primarily a result of the following factors:


▪	these historical consolidated financial results include allocations of expenses for services historically provided by TriMas, and those allocations may be significantly lower than the comparable expenses we would have incurred as an independent company;


▪	our working capital requirements and capital expenditures historically have been satisfied as a part of TriMas’ corporate-wide capital allocation and cash management programs; as a result, our debt structure and cost of debt and other capital may be significantly different from that reflected in our historical consolidated financial statements;


▪	the historical consolidated financial information may not fully reflect the increased costs associated with being an independent public company, including significant changes that have occurred in our cost structure, management, financing arrangements and business operations as a result of our spin-off from TriMas; and


▪	the historical consolidated financial information may not fully reflect the effects of certain liabilities that will be incurred or have been assumed by us and may not fully reflect the effects of certain assets and liabilities that have been retained by TriMas.

We remain subject to continuing contingent liabilities of TriMas following the spin-off.

There are several significant areas where the liabilities of TriMas may yet become our obligations. The separation and distribution agreement and employee matters agreement generally provide that we are responsible for substantially all liabilities that relate to

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our Horizon Americas and Horizon Asia‑Pacific business activities, whether incurred prior to or after the spin-off, as well as those liabilities of TriMas specifically assumed by us. In addition, under the Internal Revenue Code (the “Code”) and the related rules and regulations, each corporation that was a member of the TriMas consolidated tax reporting group during any taxable period or portion of any taxable period ending on or before the completion of the spin-off is jointly and severally liable for the federal income tax liability of the entire TriMas consolidated tax reporting group for that taxable period. In connection with the spin-off, we entered into a tax sharing agreement with TriMas that allocated the responsibility for prior period taxes of the TriMas consolidated tax reporting group between us and TriMas. However, if TriMas is unable to pay any prior period taxes for which it is responsible, we could be required to pay the entire amount of such taxes. Other provisions of federal law establish similar liability for other matters, including laws governing tax-qualified pension plans as well as other contingent liabilities.

Potential liabilities associated with certain assumed obligations under the tax sharing agreement cannot be precisely quantified at this time.

Under the tax sharing agreement with TriMas, we are responsible generally for certain taxes paid after the spin-off attributable to us or any of our subsidiaries, whether accruing before, on or after the spin-off. We have also agreed to be responsible for, and to indemnify TriMas with respect to, all taxes arising as a result of the spin-off (or certain internal restructuring transactions) failing to qualify as transactions under Sections 368(a) and 355 of the Code for U.S. federal income tax purposes (which could result, for example, from a merger or other transaction involving an acquisition of our shares) to the extent such tax liability arises as a result of any breach of any representation, warranty, covenant or other obligation by us or certain affiliates made in connection with the issuance of the tax opinion relating to the spin-off or in the tax sharing agreement. As described above, such tax liability would be calculated as though TriMas (or its affiliate) had sold its shares of common stock of our company in a taxable sale for their fair market value, and TriMas (or its affiliate) would recognize taxable gain in an amount equal to the excess of the fair market value of such shares over its tax basis in such shares. That tax liability could have a material adverse effect on our company.

We may not be able to engage in desirable strategic or equity raising transactions following the spin-off. In addition, under some circumstances, we could be liable for any adverse tax consequences resulting from engaging in significant strategic or capital raising transactions.

Even if the spin-off otherwise qualifies as a tax-free distribution under Section 355 of the Code, the spin-off may result in significant U.S. federal income tax liabilities to TriMas under applicable provisions of the Code if 50% or more of TriMas’ shares or our shares (in each case, by vote or value) are treated as having been acquired, directly or indirectly, by one or more persons (other than the acquisition of our common stock by TriMas stockholders in the spin-off) as part of a plan (or series of related transactions) that includes the spin-off. Under those provisions, any acquisitions of TriMas shares or our shares (or similar acquisitions), or any understanding, arrangement or substantial negotiations regarding an acquisition of TriMas shares or our shares (or similar acquisitions), within two years before or after the spin-off are subject to special scrutiny. The process for determining whether an acquisition triggering those provisions has occurred is complex, inherently factual and subject to interpretation of the facts and circumstances of a particular case. If a direct or indirect acquisition of TriMas shares or our shares resulted in a change in control as contemplated by those provisions, TriMas (but not its stockholders) would recognize a taxable gain. Under the tax sharing agreement, there are restrictions on our ability to take actions that could cause the separation to fail to qualify as a tax-free distribution, and we will be required to indemnify TriMas against any such tax liabilities attributable to actions taken by or with respect to us or any of our affiliates, or any person that, after the spin-off, is an affiliate thereof. We may be similarly liable if we breach certain other representations or covenants set forth in the tax sharing agreement. As a result of the foregoing, we may be unable to engage in certain strategic or capital raising transactions that our stockholders might consider favorable, including use of Horizon common stock to make acquisitions and equity capital market transactions, or to structure potential transactions in the manner most favorable to us, without adverse tax consequences, if at all.

Potential indemnification liabilities to TriMas pursuant to the separation and distribution agreement could materially and adversely affect our business, financial condition, results of operations and cash flows.

We entered into a separation and distribution agreement with TriMas that provides for, among other things, the principal corporate transactions required to affect the spin-off, certain conditions to the spin-off and provisions governing the relationship between our company and TriMas with respect to and resulting from the spin-off. Among other things, the separation and distribution agreement provides for indemnification obligations designed to make us financially responsible for substantially all liabilities that may exist relating to our Cequent business activities, whether incurred prior to or after the spin-off, as well as those obligations of TriMas assumed by us pursuant to the separation and distribution agreement. If we are required to indemnify TriMas under the circumstances set forth in the separation and distribution agreement, we may be subject to substantial liabilities.

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In connection with our separation from TriMas, TriMas will indemnify us for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that TriMas’ ability to satisfy its indemnification obligations will not be impaired in the future.

Pursuant to the separation and distribution agreement, TriMas agreed to indemnify us for certain liabilities. However, third parties could seek to hold us responsible for any of the liabilities that TriMas has agreed to retain, and there can be no assurance that the indemnity from TriMas will be sufficient to protect us against the full amount of such liabilities, or that TriMas will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from TriMas any amounts for which we are held liable, we may be temporarily required to bear these liabilities ourselves. If TriMas is unable to satisfy its indemnification obligations, the underlying liabilities could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Further, TriMas’ insurers may deny coverage to us for liabilities associated with occurrences prior to the spin-off. Even if we ultimately succeed in recovering from such insurance providers, we may be required to temporarily bear such loss of coverage.

Risks Relating to Ownership of Our Common Stock

Our stock price may be subject to significant volatility due to our own results or market trends.

If our revenue, earnings or cash flows in any quarter fail to meet the investment community’s expectations, there could be an immediate negative impact on our stock price. Our stock price could also be impacted by broader market trends and world events unrelated to our performance.

Our recent issuance of convertible senior notes, or the issuance of any additional shares of our common stock or instruments convertible into shares of our common stock, could materially and adversely affect the market price of our common stock.

In February 2017, we issued $125.0 million aggregate principal amount of convertible senior notes. The convertible senior notes may be settled in cash, shares of common stock or a combination of cash and shares of common stock, at our option. In the future, we may issued additional shares of our common stock or other instruments convertible into, or exchangeable or exercisable for, shares of our common stock. The recent convertible senior notes issuance, and any future issuance of shares of our common stock or instruments convertible into, or exercisable or exchangeable into, shares of our common stock, may materially and adversely affect the market price of our common stock.

In particular, a substantial number of shares of our common stock is reserved for issuance upon conversion of the convertible senior notes upon exercise and settlement or termination of the warrant transactions that we entered into in connection with the convertible senior notes offering, and upon the exercise of stock options, the vesting of restricted stock awards and deferred restricted stock units to our employees. We cannot predict the size of future issuances or the effect, if any, that they may have on the market price for our common stock. The issuance and sale of substantial amounts of shares of our common stock, or the perception that such issuances and sales may occur, could adversely affect the market price of our common stock and impair our ability to raise capital through the sale of additional equity or equity-linked securities. In addition, the market price of our common stock could also be affected by possible sales of our common stock by investors who view our convertible senior notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that we expect to develop involving our convertible senior notes and our common stock.

Anti-takeover provisions contained in our Amended and Restated Certificate of Incorporation, or our “certificate of incorporation,” and Amended and Restated Bylaws, or our “bylaws,” as well as provisions of Delaware law, could impair a takeover attempt that stockholders may consider favorable.

Our certificate of incorporation and bylaws provisions, as amended and restated, may have the effect of delaying, deferring or discouraging a prospective acquiror from making a tender offer for our common stock or otherwise attempting to obtain control of us. These provisions, among other things, establish that our board of directors fixes the number of members of the board, divide the board of directors into three classes with staggered terms and establish advance notice requirements for nomination of candidates for election to the board or for proposing matters that can be acted on by stockholders at stockholder meetings. To the extent that these provisions discourage takeover attempts, they could deprive stockholders of opportunities to realize takeover premiums for their shares of common stock. Moreover, these provisions could discourage accumulations of large blocks of our common stock, thus depriving stockholders of any advantages that large accumulations of common stock might provide.

As a Delaware corporation, we will also be subject to provisions of Delaware law, including Section 203 of the General Corporation Law of the State of Delaware. Section 203 prevents some stockholders holding more than 15% of our voting stock from engaging in certain business combinations unless the business combination or the transaction that resulted in the stockholder becoming an interested stockholder was approved in advance by our board of directors, results in the stockholder holding more than 85% of

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our voting stock, subject to certain restrictions, or is approved at an annual or special meeting of stockholders by the holders of at least 66 ^2/3 % of our voting stock not held by the stockholder engaging in the transaction.

Any provision of our certificate of incorporation or our bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

We may issue preferred stock with terms that could dilute the voting power or reduce the value of our common stock.

Our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock respecting dividends and distributions, as our board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of our common stock.

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”). For as long as we continue to be an emerging growth company we may choose to take advantage of certain exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, which includes, among other things:


▪	exemption from the auditor attestation requirements under Section 404 of the Sarbanes-Oxley Act of 2002;


▪	reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements;


▪	exemption from the requirements of holding non-binding stockholder votes on executive compensation arrangements; and


▪	exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless the SEC otherwise determines, any future audit rules that may be adopted by the Public Company Accounting Oversight Board.

We could be an emerging growth company until the last day of the fiscal year following the fifth anniversary of the consummation of the spin-off, or until the earliest of (i) the last day of the fiscal year in which we have annual gross revenue of $1 billion (subject to adjustment for inflation) or more, (ii) the date on which we have, during the previous three year period, issued more than $1 billion in non-convertible debt or (iii) the date on which we are deemed to be a large accelerated filer under the federal securities laws. We will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million in outstanding common equity held by our non-affiliates and (ii) been public for at least 12 months. The value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter.

Under the JOBS Act, emerging growth companies are also permitted to elect to delay adoption of new or revised accounting standards until companies that are not subject to periodic reporting obligations are required to comply, if such accounting standards apply to non-reporting companies. We have made an irrevocable decision to opt out of this extended transition period for complying with new or revised accounting standards.

Changes in laws or regulations or the manner of their interpretation or enforcement could adversely impact our financial performance and restrict our ability to operate our business or execute our strategies.

New laws or regulations, or changes in existing laws or regulations, or the manner of their interpretation or enforcement, could increase our cost of doing business and restrict our ability to operate our business or execute our strategies. In particular, there may be significant changes in U.S. laws and regulations and existing international trade agreements by the current U.S. presidential administration that could affect a wide variety of industries and businesses, including those businesses we own and operate. If the current U.S. presidential administration materially modifies U.S. laws and regulations and international trade agreements, our business, financial condition, and results of operations could be adversely affected.

On December 22, 2017, U.S. tax reform legislation informally known as the Tax Cuts and Jobs Act, or the "2017 Tax Act,” was signed into law. The 2017 Tax Act makes substantial changes to U.S. tax law, including a reduction in the corporate tax rate, a limitation on deductibility of interest expense, a limitation on the use of net operating losses to offset future taxable income, the

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allowance of immediate expensing of capital expenditures, deemed repatriation of foreign earnings and significant changes to the taxation of foreign earnings going forward. We expect the 2017 Tax Act to have significant effects on us, some of which may be adverse. For example, we would expect impacts on the amount of tax expense and deferred tax assets and liabilities recognized in the financial statements. The extent of the impact remains uncertain at this time and is subject to any other regulatory or administrative developments including any regulations or other guidance promulgated by the U.S. Internal Revenue Service. The 2017 Tax Act contains numerous, complex provisions impacting U.S. multinational companies, and we continue to review and assess the legislative language and its potential impact on us.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

As of December 31, 2017 , our operations were conducted through 58 facilities in 21 countries. All of our principal manufacturing facilities are leased. The leases for our manufacturing facilities have initial terms that expire from 2018 through 2027 and are all renewable, at our option, for various terms, provided that we are not in default under the lease agreements. Our corporate headquarters are located in Troy, Michigan under a lease through November 2027. We believe that substantially all of our properties are in generally good condition and there is sufficient capacity to meet current and projected manufacturing, product development and logistics requirements.

The following list identifies, by reportable segment, the location of our principal manufacturing and other facilities as of December 31, 2017 :



Horizon Americas	Horizon Asia‑Pacific	Horizon Europe‑Africa
United States: Indiana: South Bend Michigan: Plymouth Ohio: Solon Texas: Dallas McAllen Kansas: Edgerton International: Brazil: Itaquaquecetuba, São Paulo Canada: Mississauga, Ontario Mexico: Reynosa	International: Australia: Keysborough,Victoria New Zealand: Manukau City Thailand: Chon Buri	International: Germany: Hartha Rheda-Wiedenbrück France: Luneray Romania: Braşov South Africa: Pretoria Springs United Kingdom: Deeside

Item 3. Legal Proceedings

We are subject to claims and litigation in the ordinary course of business, but we do not believe that any such claim or litigation is likely to have a material adverse effect on our financial position and results of operations or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

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Supplementary Item. Executive Officers of the Company

All executive officers have been employed by us in their current roles since the spin-off. The executive officers of Horizon as of December 31, 2017 are as follows:

A. Mark Zeffiro . Mr. Zeffiro was appointed our president and chief executive officer on June 30, 2015. Mr. Zeffiro served as Co-Chair of our Board from June 29, 2015 to February 14, 2018 and has served as president and a director of Horizon since our incorporation on January 14, 2015. Mr. Zeffiro previously served as group president of Cequent, which was comprised of TriMas’ Cequent Americas and Cequent APEA reporting segments specializing in towing, trailering and cargo management products (“Cequent”), beginning in January 2015. Mr. Zeffiro served as chief financial officer of TriMas from June 2008 to January 2015 and executive vice president of TriMas from May 2013 until January 2015. Prior to joining TriMas, Mr. Zeffiro held various financial management and business positions with General Electric Company, or GE, a diversified technology and financial services company, and Black and Decker Corporation, or Black & Decker, a global manufacturer of quality power tools and accessories, hardware, home improvement products and fastening systems. From 2004 through 2008, during Mr. Zeffiro’s four-year tenure with Black & Decker, he was vice president of finance for the global consumer product group and Latin America. In addition, Mr. Zeffiro was directly responsible for and functioned as general manager of Black & Decker’s factory store business unit. From 2003 to 2004, Mr. Zeffiro was chief financial officer of First Quality Enterprises, a private company producing consumer products for the health care market. From 1988 through 2002, he held a series of operational and financial leadership positions with GE, the most recent of which was chief financial officer of its medical imaging manufacturing division. In April 2015, Mr. Zeffiro was appointed to the board of directors of Atkore International Group, Inc., a manufacturer of electrical raceway solutions. Mr. Zeffiro also serves on the board of directors of the Detroit Institute of Arts, where he chairs the finance committee, and the board of trustees of Walsh College, where he sits on the academic committee. Mr. Zeffiro’s position as president and chief executive officer of Horizon provides him the ability to offer the Board firsthand insight into the operations and strategic vision of the Company. Mr. Zeffiro has extensive knowledge and subject matter expertise in strategic planning, business management, mergers and acquisitions and financial accounting.

David Rice. Mr. Rice was named our chief financial officer on June 30, 2015 in connection with the spin-off from TriMas. From January 14, 2015 through June 29, 2015, Mr. Rice served as vice president and a director of Horizon. Mr. Rice was previously division finance officer for TriMas’ subsidiary Cequent Performance Products, Inc. beginning in 2011. Prior to his appointment in 2011, Mr. Rice held various positions within TriMas, including group controller from 2005 to 2009 and vice president of corporate audit from 2009 to 2011. Before joining TriMas in 2005, Mr. Rice held divisional controller positions with GKN Sinter Metals, a leading supplier of powdered metal precision components, from 2004 to 2005, and Mueller Industries, Inc., a manufacturer and distributor of copper, brass, aluminum and plastic fittings, valves and related tubular flow control and industrial products, from 1998 to 2004. Mr. Rice held positions of increasing financial leadership at The Woodbridge Group from 1994 to 1998, a company offering urethane and bead foam technologies to the automotive and commercial vehicle industries and other business sectors. Mr. Rice began his career in public accounting with Coopers and Lybrand and brings over 30 years of accounting and financial leadership, mergers and acquisitions and management of international operations experience.

Jay Goldbaum. Mr. Goldbaum was named our general counsel effective November 13, 2017 and continues as chief compliance officer and corporate secretary. Mr. Goldbaum served as legal director, chief compliance officer and corporate secretary since June 30, 2015 in connection with the spin-off from TriMas. From January 14, 2015 through June 29, 2015, Mr. Goldbaum served as vice president, corporate secretary and a director of Horizon. Mr. Goldbaum was previously associate general counsel-commercial law for TriMas beginning in January 2014. Mr. Goldbaum joined TriMas in January 2012 and held the position of legal counsel. Before joining TriMas, Mr. Goldbaum was an associate in the corporate and litigation practice groups at the law firm of Jaffe, Raitt, Heuer & Weiss, P.C. from September 2007 to August 2011.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock, par value $0.01 per share, is listed for trading on the New York Stock Exchange, or NYSE, under the symbol “HZN.” As of February 26, 2018 , there were 260 holders of record of our common stock.

The high and low sales prices per share of our common stock by quarter, as reported on the New York Stock Exchange through December 31, 2017 , are shown below:



	Price range of common stock
	High Price		Low Price
Year ended December 31, 2017
1st Quarter	$	24.75	$	12.26
2nd Quarter	$	15.59	$	11.80
3rd Quarter	$	19.26	$	13.34
4th Quarter	$	18.24	$	13.00
Year ended December 31, 2016
1st Quarter	$	12.80	$	8.06
2nd Quarter	$	13.10	$	10.60
3rd Quarter	$	20.97	$	10.84
4th Quarter	$	25.36	$	19.20
Year ended December 31, 2015
2nd Quarter	$	16.25	$	15.05
3rd Quarter	$	15.75	$	8.59
4th Quarter	$	11.00	$	8.04

Horizon does not intend to declare and pay any dividends on its common stock for the foreseeable future. The Company currently intends to invest its future earnings, if any, to fund its growth, to develop its business, for working capital needs and for general corporate purposes. Any payment of dividends will be at the discretion of Horizon’s board of directors and will depend upon various factors then existing, including earnings, financial condition, results of operations, capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by applicable law, general business conditions and other factors that Horizon’s board of directors may deem relevant.

Performance Graph

The following graph provides a comparison of the cumulative shareholder return on the Company’s common stock to the returns of the Russell 2000 Index and the average performance of the Company’s selected peer group ⁽¹⁾ based on total shareholder return from July 1, 2015 (the first day our common stock began regular-way trading on the NYSE) through December 31, 2017 . We have assumed that dividends have been reinvested and returns have been weighted-averaged based on market capitalization. The graph assumes that $100 was invested on July 1, 2015 in each of Horizon’s common stock, the stocks comprising the Russell 2000 Index and the stocks comprising the peer group.

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______________

⁽¹⁾ Includes Ametek Inc., Dorman Products Inc., Douglas Dynamics, Inc., LCI Industries, Federal Signal Corporation, Fox Factory Holding Corp., Gentex Corporation, Gentherm Incorporated, Manitex International Inc., Motorcar Parts of America, Inc., Shiloh Industries, Inc., Spartan Motors, Inc., Standard Motor Products, Inc., Stoneridge, Inc., Strattec Security Corporation, Superior Industries International, Inc., Wabash National Corporation and WABCO Holdings Inc.

Issuer Purchases of Equity Securities

The Company’s purchases of its shares of common stock during the fourth quarter of 2017 were as follows:



Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs ^(a)
October 1 - 31, 2017	—		—	813,494
November 1 - 30, 2017	—		—	813,494
December 1 - 31, 2017	—		—	813,494
Total	—		—

__________________________

^(a) The Company has a share repurchase program that was announced in May 2017 to purchase up to 1.5 million shares of the Company’s common stock. At the end of the fourth quarter of 2017, 813,494 shares of common stock remains to be purchased under this program. The share repurchase program expires on May 5, 2020.

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Item 6. Selected Financial Data

The consolidated financial statements for periods prior to the spin-off include the historical results of operations, assets and liabilities of the legal entities that are considered to comprise Horizon. Our historical results of operations, financial position, and cash flows presented in the consolidated financial statements for periods prior to the separation may not be indicative of what they would have been had we actually been a separate stand-alone public entity during such periods, nor are they necessarily indicative of our future results of operations, financial position and cash flows.

The following data should be read in conjunction with Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations, ” and our audited financial statements included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K.



	Year ended December 31,
	2017 ^(a)			2016 ^(a)			2015		2014		2013
	(dollars in thousands, except per share data)
Statement of Income Data:
Net sales	$	892,980		$	649,200		$	575,510	$	611,780	$	588,270
Gross profit	207,600			160,350			143,040		148,090		125,010
Operating profit	34,760			6,300			19,570		24,460		5,670
Net income (loss)	(4,770		)	(12,660		)	8,300		15,350		9,780
Net (loss) attributable to noncontrolling interest	(1,220		)	(300		)	—		—		—
Net income (loss) attributable to Horizon Global	(3,550		)	(12,360		)	8,300		15,350		9,780
Net income (loss) per share attributable to Horizon Global:
Basic	$	(0.14	)	$	(0.66	)	$	0.46	$	0.85	$	0.54
Diluted	$	(0.14	)	$	(0.66	)	$	0.46	$	0.85	$	0.54
Weighted average common shares outstanding:
Basic	24,781,349			18,775,500			18,064,491		18,062,027		18,062,027
Diluted	24,781,349			18,775,500			18,160,852		18,113,416		18,098,645

^(a) 2017 and 2016 results include the impact of the Westfalia Group acquisition. Refer to Note 4 , “ Acquisitions ”, in Item 8 , “ Financial Statements and Supplementary Data ,” included within this Annual Report on Form 10-K for additional information.



	As of December 31,
	2017		2016		2015		2014		2013
	(dollars in thousands)
Balance Sheet Data:
Total assets	$	661,030	$	613,370	$	331,580	$	339,500	$	360,680
Current maturities, long-term debt	16,710		22,900		10,130		460		1,300
Long-term debt	258,880		327,040		178,610		300		670

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition contains forward-looking statements regarding industry outlook and our expectations regarding the performance of our business. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under the heading “Forward-Looking Statements,” at the beginning of this Annual Report on Form 10-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

The financial information discussed below and included in this Annual Report on Form 10-K for periods prior to the separation may not necessarily reflect what Horizon’s financial condition, results of operations or cash flows would have been had Horizon been a stand-alone public entity during this period or what Horizon’s financial condition, results of operations and cash flows may be in the future. You should read the following discussion together with Item 8, “Financial Statements and Supplementary Data” within this Annual Report on Form 10-K.

Overview

Critical factors affecting our ability to succeed include: our ability to realize the expected economic benefits of structural realignment of manufacturing facilities and business units; our ability to quickly and cost-effectively introduce new products; our ability to acquire and integrate companies or products that supplement existing product lines, add new distribution channels and expand our geographic coverage; our ability to manage our cost structure more efficiently via supply base management, internal sourcing and/or purchasing of materials, selective outsourcing and/or purchasing of support functions, working capital management, and leverage of our administrative functions. If we are unable to do any of the foregoing successfully, our financial condition and results of operations could be materially and adversely impacted.

We report shipping and handling expenses associated with our Horizon Americas reportable segment’s distribution network as an element of selling, general and administrative expenses in our consolidated statements of income (loss). As such, gross margins for the Horizon Americas reportable segment may not be comparable to those of our Horizon Europe‑Africa and Horizon Asia‑Pacific segments, which primarily rely on third-party distributors, for which all costs are included in cost of sales.

The acquisition of the Westfalia Group, a European leader in towing products, addressed a geographic gap in our global footprint by strengthening our presence in the European market. The Westfalia Group is included in the results of operations and consolidated financial statements beginning October 1, 2016. The pending acquisition of the Brink Group will further strengthen our global platform and enhance our product portfolio.

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Segment Information and Supplemental Analysis

The following table summarizes financial information for our three reportable segments:



	Year ended December 31,
	2017			As a Percentage of Net Sales		2016			As a Percentage of Net Sales		2015			As a Percentage of Net Sales
	(dollars in thousands)
Net Sales
Horizon Americas	$	439,700		49.2	%	$	443,240		68.3	%	$	429,310		74.6	%
Horizon Europe‑Africa	325,970			36.5	%	104,080			16.0	%	50,930			8.8	%
Horizon Asia‑Pacific	127,310			14.3	%	101,880			15.7	%	95,270			16.6	%
Total	$	892,980		100.0	%	$	649,200		100.0	%	$	575,510		100.0	%
Gross Profit
Horizon Americas	$	127,990		29.1	%	$	131,320		29.6	%	$	116,290		27.1	%
Horizon Europe‑Africa	46,760			14.3	%	6,560			6.3	%	7,650			15.0	%
Horizon Asia‑Pacific	32,850			25.8	%	22,470			22.1	%	19,100			20.0	%
Total	$	207,600		23.2	%	$	160,350		24.7	%	$	143,040		24.9	%
Selling, General and Administrative Expense
Horizon Americas	$	83,680		19.0	%	$	86,470		19.5	%	$	84,190		19.6	%
Horizon Europe‑Africa	47,750			14.6	%	17,180			16.5	%	7,460			14.6	%
Horizon Asia‑Pacific	13,940			10.9	%	11,210			11.0	%	11,420			12.0	%
Corporate	26,250			N/A		30,290			N/A		18,280			N/A
Total	$	171,620		19.2	%	$	145,150		22.4	%	$	121,350		21.1	%
Net Loss on Disposition of Property and Equipment
Horizon Americas	$	(240	)	(0.1	)%	$	(230	)	(0.1	)%	$	(1,800	)	(0.4	)%
Horizon Europe‑Africa	(800		)	(0.2	)%	(280		)	(0.3	)%	(290		)	(0.6	)%
Horizon Asia‑Pacific	(170		)	(0.1	)%	(30		)	—	%	(30		)	—	%
Corporate	(10		)	N/A		—			N/A		—			N/A
Total	$	(1,220	)	(0.1	)%	$	(540	)	(0.1	)%	$	(2,120	)	(0.4	)%
Operating Profit (Loss)
Horizon Americas	$	44,060		10.0	%	$	38,680		8.7	%	$	30,300		7.1	%
Horizon Europe‑Africa	(1,790		)	(0.5	)%	(13,320		)	(12.8	)%	(100		)	(0.2	)%
Horizon Asia‑Pacific	18,740			14.7	%	11,230			11.0	%	7,650			8.0	%
Corporate	(26,250		)	N/A		(30,290		)	N/A		(18,280		)	N/A
Total	$	34,760		3.9	%	$	6,300		1.0	%	$	19,570		3.4	%
Capital Expenditures
Horizon Americas	$	10,150		2.3	%	$	5,550		1.3	%	$	5,970		1.4	%
Horizon Europe‑Africa	13,190			4.0	%	4,670			4.5	%	690			1.4	%
Horizon Asia‑Pacific	2,440			1.9	%	3,310			3.2	%	1,360			1.4	%
Corporate	1,510			N/A		1,010			N/A		300			N/A
Total	$	27,290		3.1	%	$	14,540		2.2	%	$	8,320		1.4	%
Depreciation and Amortization
Horizon Americas	$	10,660		2.4	%	$	10,750		2.4	%	$	10,750		2.5	%
Horizon Europe‑Africa	10,110			3.1	%	3,290			3.2	%	2,070			4.1	%
Horizon Asia‑Pacific	4,310			3.4	%	4,090			4.0	%	4,130			4.3	%
Corporate	260			N/A		90			N/A		130			N/A
Total	$	25,340		2.8	%	$	18,220		2.8	%	$	17,080		3.0	%

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Results of Operations

Year Ended December 31, 2017 Compared with Year Ended December 31, 2016

Overall, net sales increased approximately $243.8 million , or approximately 37.6% , to $893.0 million in 2017 , as compared to $649.2 million in 2016 . Net sales within our Horizon Europe‑Africa reportable segment increased $221.9 million primarily driven by our fourth quarter 2016 acquisition of the Westfalia Group. Net sales within our Horizon Asia‑Pacific reportable segment increased by $25.4 million due to a regional bolt-on acquisition and net sales to a new customer. Net sales within our Horizon Americas reportable segment decreased $3.5 million driven by decreases in the retail and aftermarket channels, which were partially offset by an increase within the automotive OE, e-commerce, and industrial channels.

Gross profit margin (gross profit as a percentage of net sales) approximated 23.2% and 24.7% in 2017 and 2016 , respectively. The overall decline in gross profit margin is the result of a shift in concentration of net sales from our higher margin Horizon Americas reportable segment to our lower margin Horizon Europe‑Africa reportable segment. Further, gross profit margin declined in our Horizon Americas reportable segment as the negative impacts of unfavorable commodity prices more than offset the lower costs and cost savings realized in 2017 from the consolidation of our manufacturing facilities that occurred in 2016. Gross profit margin improved in our Horizon Asia‑Pacific reportable segment as a result of increased sales volumes and productivity initiatives. An increase in gross profit margin in our Horizon Europe‑Africa reportable segment is primarily due to the acquisition of the Westfalia Group.

Operating profit margin (operating profit as a percentage of net sales) approximated 3.9% and 1.0% in 2017 and 2016 , respectively. Operating profit increased $28.5 million , or 451.7% , to $34.8 million in 2017 as compared to $6.3 million in 2016 , as a result of an operating profit margin improvement across all of our reportable segments. Operating profit margin increased in our Horizon Europe‑Africa reportable segment driven by the Westfalia Group. Operating profit margin was positively impacted by $8.4 million of lower expenses compared to 2016 related to the impairment of intangible assets in our Horizon Americas and Horizon Europe-Africa reportable segments. Increased volumes and operational improvements in our Horizon Asia‑Pacific reportable segment also favorably impacted operating profit margin. Further contributing to the increase in operating profit margin was a decrease in corporate expenses primarily due to lower costs associated with the Westfalia Group acquisition.

Interest expense increased approximately $2.3 million , to $22.4 million in 2017 , as compared to $20.1 million in 2016 , primarily due to additional interest and non-cash amortization of debt discount and issuance costs related our Convertible Notes (as defined below) issued in early 2017.

Other expense, net remained relatively flat at $2.7 million in 2017 compared to $2.6 million in 2016 .

The effective income tax rate for 2017 and 2016 was 195.8% and 22.8% , respectively. The 2017 Tax Cuts and Jobs Act (the “2017 Tax Act”) created an $11.9 million tax charge that was the main driver of change in effective tax rate. This amount largely reflects transition tax but also includes other provisions of the 2017 Tax Act applicable to the Company. Two other main factors influenced both the 2017 and 2016 effective tax rates. First, nondeductible transaction costs associated with foreign acquisitions resulted in additional tax expense of $1.6 million and $2.7 million during December 31, 2017 and 2016 , respectively. Second, income tax benefits associated with the release of certain unrecognized tax positions were recognized in 2017 and 2016 for approximately $4.0 million and $1.3 million , respectively.

Net loss decreased approximately $7.9 million to a net loss of $4.8 million in 2017 , from a net loss of $12.7 million in 2016 . The improvement was primarily the result of a $28.5 million increase in operating profit, partially offset by a $2.3 million increase in interest expense, a $4.6 million loss on extinguishment of debt due to a prepayment made on our Term B Loan (as defined below), and by a $13.5 million increase in income tax expense.

See below for a discussion of operating results by reportable segment.

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Horizon Americas . Net sales decreased approximately $3.5 million , or 0.8% , to $439.7 million in 2017 , as compared to $443.2 million in 2016 . Net sales in our retail channel decreased approximately $8.2 million primarily due to point of sale weakness and reductions in inventory levels at our mass merchant retail customers, as well as the sale of our Broom and Brush product line during the fourth quarter of 2017. Further contributing to a net sales shortfall in the channel were inventory management efforts by retailers, lost business with a home improvement customer, as well as delivery delays during the fourth quarter of 2017 as we transitioned to a new distribution facility. Net sales in our aftermarket channel decreased by approximately $5.2 million primarily due to challenges faced during the integration of our ERP system in early 2017, which were partially offset by increased sales with our warehouse distribution partners. Partially offsetting these decreases were increases in our automotive OE, e-commerce, and industrial channels. Net sales in our automotive OE channel increased approximately $4.0 million due to increased volumes on existing programs with major customers, partially offset by higher volumes in 2016 due to the launch of a new program with another major customer that did not reoccur. Net sales in our e-commerce channel increased by approximately $2.9 million as higher demand as we believe the way consumers do business appears to be evolving to online research and purchasing. Partially offsetting this increase was reduced sales to certain customers who did not maintain channel pricing discipline. Net sales in our industrial channel increased approximately $2.4 million as a result of increased demand from trailer manufacturers and increased production levels. The remainder of the change is due to favorable currency exchange as the Brazilian real strengthened in relation to the U.S. dollar.

Horizon Americas ’ gross profit decreased approximately $3.3 million to $128.0 million , or 29.1% of net sales, in 2017 , from approximately $131.3 million , or 29.6% of net sales, in 2016 . Negatively impacting gross profit margin was approximately $6.0 million of unfavorable commodity prices and freight costs, in advance of pricing actions, and approximately $0.3 million of costs associated with upgrading the paintline in our Mexico manufacturing facility. Partially offsetting these decreases was approximately $3.3 million of lower costs due to the consolidation of our manufacturing facilities during 2016 that did not reoccur in 2017. The remainder of the change is a result of lower sales levels and unfavorable currency exchange.

Selling, general and administrative expenses decreased approximately $2.8 million to $83.7 million , or 19.0% of net sales, in 2017 , as compared to $86.5 million , or 19.5% of net sales, in 2016 . Approximately $3.4 million of the decrease is primarily due to lower incentive compensation as a result of lower segment performance and approximately $1.5 million of the decrease is due to lower legal costs as a result of an award settlement that was received in the fourth quarter of 2017. These decreases were partially offset by approximately $1.7 million of costs associated with a project to optimize our distribution footprint and unfavorable currency exchange.

Horizon Americas ’ operating profit increased approximately $5.4 million to $44.1 million , or 10.0% of net sales, in 2017 , from $38.7 million , or 8.7% of net sales, in 2016 . Operating profit and operating profit margin increased primarily due to approximately $6.0 million of lower expense related to the impairment of intangible assets during 2016. Partially offsetting this decrease were unfavorable commodity prices, higher freight costs, and lower selling, general and administrative expenses.

Horizon Europe-Africa. Net sales increased approximately $221.9 million , or 213.2% , to $326.0 million in 2017 , as compared to $104.1 million in 2016 , primarily due to the Westfalia Group, acquired in the fourth quarter of 2016. The remainder of the change is primarily due to favorable currency exchange as the strengthening of the euro more than offset the weakening of the British pound in relation to the U.S. dollar.

Horizon Europe‑Africa ’s gross profit increased approximately $40.2 million to $46.8 million , or 14.3% of net sales in 2017 , from approximately $6.6 million , or 6.3% of net sales, in 2016 , driven by the Westfalia Group acquisition. Gross profit margin was negatively impacted by $2.7 million due to restructuring costs and decreased productivity related to the closure of our manufacturing facility in the United Kingdom.

Horizon Europe‑Africa ’s selling, general and administrative expenses increased approximately $30.6 million to $47.8 million , or 14.6% of net sales in 2017 , as compared to $17.2 million , or 16.5% of net sales in 2016 . Selling, general and administrative expenses increased by approximately $23.6 million attributable to the results of the Westfalia Group, which included approximately $6.4 million in incremental depreciation and amortization related to purchase accounting and $3.0 million of higher transaction-related expenditures, including professional fees and severance, compared to 2016 . Further negatively impacting selling, general, and administrative expenses were increased costs associated with establishing a management structure in the region.

Horizon Europe‑Africa ’s operating loss decreased approximately $11.5 million to an operating loss of $1.8 million , or 0.5% of net sales, in 2017 , from an operating loss of $13.3 million , or 12.8% of net sales in 2016 , primarily due to the inclusion of the Westfalia Group in results for the full year of 2017 compared to only the fourth quarter of 2016. Further, operating loss decreased due to approximately $2.4 million of lower expense related to the impairment of intangible assets during 2016. These decreases to operating loss were partially offset by increased costs associated with establishing a management structure in the region.

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Horizon Asia-Pacific. Net sales increased approximately $25.4 million , or 25.0% , to $127.3 million in 2017 , as compared to $101.9 million in 2016 . A regional bolt-on acquisition, completed in the third quarter of 2017, contributed $10.8 million in net sales. The increase in net sales in our industrial channel of approximately $8.1 million is primarily due to a full year of sales from a new product launched in the fourth quarter of 2016 with a new customer. Net sales in our automotive OE channel, exclusive of this acquisition, increased $1.6 million due to increased volumes on existing programs in our businesses in Australia and Thailand. Net sales in our aftermarket channel increased $1.3 million as a result of strong demand within the region. The remainder of the increase is a result of favorable currency exchange as the Australian dollar, Thai baht, and New Zealand dollar strengthened in relation to the U.S. dollar.

Horizon Asia‑Pacific ’s gross profit increased approximately $10.4 million to $32.9 million , or 25.8% of net sales in 2017 , from approximately $22.5 million , or 22.1% of net sales, in 2016 . The improvement in gross profit was driven by the increased sales volumes mentioned above. Gross profit margin was further positively impacted by the results of productivity initiatives in our Australian business and efficiencies realized in Thailand due to restructuring of operations completed in the second quarter of 2017.

Horizon Asia‑Pacific ’s selling, general and administrative expenses increased approximately $2.7 million to $13.9 million , or 10.9% of net sales in 2017 , as compared to $11.2 million , or 11.0% of net sales, in 2016 . The increase in selling, general and administrative expenses is primarily due to increased people costs in support of growth initiatives and operational restructuring costs. Additionally, selling, general and administrative expenses was increased by acquisition-related costs of $ 1.2 million . Further negatively impacting selling, general and administrative expenses was $0.4 million in unfavorable currency exchange.

Horizon Asia‑Pacific ’s operating profit increased approximately $7.5 million to $18.7 million , or 14.7% of net sales, in 2017 , from $11.2 million , or 11.0% of net sales in 2016 , primarily due to increased volumes and operational improvements across the region.

Corporate Expenses. Corporate expenses decreased approximately $4.0 million to $26.3 million in 2017 , as compared to $30.3 million in 2016 . Corporate expenses decreased approximately $6.5 million due to lower expenses related to the acquisition of Westfalia Group and $2.3 million as a result of lower incentive compensation. Partially offsetting these decreases was $1.9 million of expenses related to completed or announced acquisitions in 2017 and the remainder of the change was due to increased professional fees for various human resource, information technology, and compliance initiatives.

Year Ended December 31, 2016 Compared with Year Ended December 31, 2015

Overall, net sales increased approximately $73.7 million , or approximately 12.8% , to $649.2 million in 2016 , as compared to $575.5 million in 2015 . During the year ended December 31, 2016 , net sales increased in all of our reportable segments. Net sales within our Horizon Europe‑Africa reportable segment increased $53.2 million driven by our fourth quarter 2016 acquisition of the Westfalia Group, which added net sales of $54.5 million to Horizon Europe-Africa’s results in 2016. Growth in Horizon Europe-Africa’s automotive OE channel in the legacy businesses in Germany and South Africa were more than offset by declines in legacy businesses elsewhere in Europe and unfavorable currency exchange. Net sales within our Horizon Americas reportable segment were up $13.9 million driven by increases in the automotive OE, e-commerce, and retail channels, which were partially offset by a decline within the aftermarket and industrial channels. Net sales within our Horizon Asia‑Pacific reportable segment increased by $6.6 million primarily due to increases in the automotive OE channel, which were partially offset by unfavorable currency exchange.

Gross profit margin approximated 24.7% and 24.9% in 2016 and 2015 , respectively. The overall decrease in gross profit margin primarily relates to our Horizon Europe‑Africa reportable segment, which was negatively impacted by purchase accounting, as well as higher commodity prices, product input costs, and unfavorable currency exchange. The decreases in gross profit margin were partially offset by higher sales volumes in both of our Horizon Americas and Horizon Asia‑Pacific reportable segments. Additionally, margin improvement in our Horizon Americas ’ reportable segment and cost savings and productivity initiatives in our Horizon Asia‑Pacific reportable segment partially offset the decline in the gross profit margin.

Operating profit margin approximated 1.0% and 3.4% in 2016 and 2015 , respectively. Operating profit decreased $13.3 million , or 67.8% , to $6.3 million in 2016 as compared to $19.6 million in 2015 , primarily as a result of the impact of purchase accounting and transaction related expenses within the Horizon Europe-Africa reportable segment. Operating profit margin was also negatively impacted by $6.8 million of incremental expenses related to the impairment of intangible assets and the disposal of property and equipment compared to 2015 in our Horizon Americas and Horizon Europe-Africa reportable segments. Partially offsetting these decreases were favorable product mix and lower input costs in our Horizon Americas reportable segment and cost and productivity initiatives in our Horizon Asia‑Pacific reportable segment.

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Interest expense increased approximately $11.3 million , to $20.1 million in 2016 , as compared to $8.8 million in 2015 . As we became a public company, we incurred debt in the form of a Term B Loan and ABL Facility (as defined below). The increase in expense in 2016 is partially due to these instruments being outstanding for twelve months compared to only six months in 2015. We also incurred additional debt in the form of the Incremental Term B Loan that was extended to us in the fourth quarter of 2016 in connection with the acquisition of the Westfalia Group.

Other expense, net increased approximately $1.1 million to $2.6 million in 2016 , from $3.7 million in 2015 , primarily driven by lower foreign currency transaction losses as the U.S. dollar stabilized in relation to the foreign currencies in which we operate.

The effective income tax rate for 2016 was 22.8% , compared to (18.2)% for 2015 . The higher effective tax rate for the year ended December 31, 2016 is primarily driven by incurring non-deductible transaction costs related to the Westfalia Group acquisition, which were partially offset by the recognition of income tax benefits associated with the release of certain unrecognized tax positions. The lower tax rate in 2015 was due to the recognition of a $3.3 million tax benefit due to the release of an unrecognized tax contingency due to the expiration of the statute of limitations, which was offset by $2.9 million of tax charges for spin-off related transaction costs. Additionally, the overall effective tax rate for 2015 was reduced by the recognition of benefits associated with losses in certain jurisdictions with higher statutory tax rates.

Net income decreased approximately $21.0 million to a net loss of $12.7 million in 2016 , from net income of $8.3 million in 2015 . The decrease was primarily the result of a $13.3 million decrease in operating profit, a $11.3 million increase in interest expense, partially offset by $1.1 million decrease in other expenses, net and by a $2.5 million increase in income tax benefit.

See below for a discussion of operating results by reportable segment.

Horizon Americas . Net sales increased approximately $13.9 million , or 3.2% , to $443.2 million in 2016 , as compared to $429.3 million in 2015 . Net sales in our automotive OE channel increased approximately $14.8 million, primarily driven by new programs and continued growth with global automotive manufacturers. E-commerce increased by approximately $7.6 million, due to increased consumer promotional activity and increased demand from automotive Internet retailers. Net sales in our retail channel increased approximately $0.8 million, driven by growth with our mass merchant and automotive retail customers in our towing, trailering, and broom and brush categories. These increases were partially offset by decreases within our aftermarket and industrial channels. Net sales in our aftermarket channel decreased approximately $4.6 million due to a consumer shift towards the e-commerce channel, lower sales to smaller regional warehouse distributor customers, and macroeconomic conditions in the Brazilian market, which more than offset sales increases to our national warehouse distributor customers. Net sales in our industrial channel decreased approximately $4.0 million, primarily due to lower demand from our OE and warehouse distributor customers servicing energy and agricultural end markets. The remainder of the change in net sales was primarily due to unfavorable currency exchange as the Brazilian real weakened in relation to the U.S. dollar.

Horizon Americas ’ gross profit increased approximately $15.0 million to $131.3 million , or 29.6% of net sales, in 2016 , from approximately $116.3 million , or 27.1% of net sales, in 2015 , due to margin improvement and higher sales levels. Gross profit margin was positively impacted due to a favorable product sales mix within our automotive OE channel, as sales of our higher margin brake controllers and heavy duty towing products increased year-over-year. Further improving gross profit margin in 2016 were favorable commodity prices, lower labor input costs in our Mexican facilities as a result of a strengthened U.S. dollar in relation to the Mexican peso, and lower freight costs as we benefited from efforts to localize supply chain near our manufacturing facility.

Selling, general and administrative expenses increased approximately $2.3 million to $86.5 million , or 19.5% of net sales, in 2016 , as compared to $84.2 million , or 19.6% of net sales, in 2015 . Selling, general and administrative costs increased due to approximately $3.1 million in higher people costs primarily related to marketing and product design in support of growth initiatives within our e-commerce and retail channels, as well as $1.0 million in increased health insurance costs and $0.6 million related to the implementation of a new ERP system. These increases were partially offset by approximately $2.4 million of lower costs associated with combining our Cequent Consumer Products and Cequent Performance Products businesses.

Horizon Americas ’ operating profit increased approximately $8.4 million to $38.7 million , or 8.7% of net sales, in 2016 , from $30.3 million , or 7.1% of net sales, in 2015 . Operating profit increased primarily due to favorable product sales mix and lower manufacturing input costs. These effects were partially offset by $4.4 million incremental expense related to the impairment of intangible assets and the disposal of property and equipment compared to 2015.

Horizon Europe‑Africa . Net sales increased approximately $53.2 million , or 104.4% , to $104.1 million in 2016 , as compared to $50.9 million in 2015 . Approximately $54.5 million of the increase is attributable to the Westfalia Group acquisition in the fourth quarter of 2016. Net sales increased approximately $4.5 million in our legacy Germany and South Africa businesses driven by increased volume on existing programs and new program awards with existing automotive OE customers. These increases were partially offset by a decrease of approximately $0.8 million in the United Kingdom as a result of a strategic decision to

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discontinue a distribution partnership and a decrease of approximately $1.2 million in Finland due to weak economic conditions. Net sales were further negatively impacted by approximately $3.9 million of unfavorable currency exchange.

Horizon Europe‑Africa ’s gross profit decreased approximately $1.1 million to $6.6 million , or 6.3% of net sales in 2016 , from approximately $7.7 million , or 15.0% of net sales, in 2015 . Gross profit was negatively impacted by approximately $0.6 million of unfavorable foreign currency exchange. Gross profit margin also decreased by $0.5 million in South Africa and the United Kingdom due to higher commodity prices and product input costs. Gross profit was marginally impacted by the Westfalia Group, as the net sales attributable to the Westfalia Group were offset by its cost of sales, which included approximately $6.7 million of amortization expense related to the fair value step-up of inventory as a result of purchase accounting.

Horizon Europe‑Africa ’s selling, general and administrative expenses increased approximately $9.7 million to $17.2 million , or 16.5% of net sales in 2016 , as compared to $7.5 million , or 14.6% of net sales in 2015 . Selling, general and administrative expenses increased by approximately $9.6 million attributable to the results of the Westfalia Group, which included approximately $1.4 million in transaction-related expenditures including professional fees and severance. Increased costs associated with establishing a management structure in the region were partially offset by approximately $0.7 million of favorable foreign currency exchange.

Horizon Europe‑Africa ’s operating loss increased approximately $13.2 million to $13.3 million , or 12.8% of net sales, in 2016 , from an operation loss of $0.1 million , or 0.2% of net sales in 2015 , primarily due to losses of approximately $9.6 million realized in the Westfalia Group resulting from the impacts of purchase accounting and transaction related expenditures. The operating loss was further increased by $2.3 million due to unfavorable foreign currency exchange. Impairment charges of approximately $2.4 million in 2016 more than offset the impacts of higher sales volumes in our legacy Germany and South Africa businesses as discussed above, as well as plant closure costs in Finland in 2015 that did not recur in 2016.

Horizon Asia‑Pacific . Net sales increased approximately $6.6 million , or 6.9% , to $101.9 million in 2016 , as compared to $95.3 million in 2015 . Net sales were negatively impacted by approximately $0.8 million of unfavorable currency exchange. Net sales increased approximately $6.3 million in Australia, driven by increased volume and new program awards with existing OE customers, which outpaced weaker demand in Western Australia due to declining macroeconomic conditions. The remainder of the net sales increase is due to new program awards with OE customers in our New Zealand and Thailand businesses which more than offset the loss of an existing OE contract in Thailand.

Horizon Asia‑Pacific ’s gross profit increased approximately $3.4 million to $22.5 million , or 22.1% of net sales in 2016 , from approximately $19.1 million , or 20.0% of net sales, in 2015 . The improvement in gross profit year-over-year was driven by the higher sales volumes, cost savings and productivity initiatives in our Australia business. This improvement was partially offset by a large OEM recovery in Thailand during 2015 that did not reoccur in 2016.

Horizon Asia‑Pacific ’s selling, general and administrative expenses decreased approximately $0.2 million to $11.2 million , or 11.0% of net sales in 2016 , as compared to $11.4 million , or 12.0% of net sales in 2015 . Selling, general and administrative expenses decreased by approximately $0.5 million due to lower costs associated with promotional activities compared to 2015, which was partially offset by an increase of $0.3 million in people costs primarily resulting from increased sales levels.

Horizon Asia‑Pacific ’s operating profit increased approximately $3.6 million to $11.2 million , or 11.0% of net sales, in 2016 , from $7.7 million , or 8.0% of net sales in 2015 , primarily due to higher sales volumes and cost savings and productivity initiatives in our Australia business.

Corporate Expenses. Corporate expenses increased approximately $12.0 million to $30.3 million in 2016 , as compared to $18.3 million in 2015 . Corporate expenses increased approximately $9.4 million due to expenses related to the acquisition of Westfalia Group. The remaining increase is primarily related to the costs of operating as a standalone public company for a full year, versus only six months in 2015. For the first six months of 2015, the consolidated financial statements include expense allocations, related to the spin-off, for certain functions provided by our former parent; however, the allocations may not be comparable to the corporate expenses we incurred as a stand-alone company. Corporate expenses included in operating profit in the accompanying consolidated financial statements include amounts that were allocated to us on the basis of direct usage when identifiable, with the remainder allocated on the basis of revenue or headcount.

Liquidity and Capital Resources

Our capital and working capital requirements are funded through a combination of cash flows from operations, cash on hand and various borrowings and factoring arrangements described below, including our asset-based revolving credit facility (“ABL Facility”). We utilize intercompany loans and equity contributions to fund our worldwide operations. See Note 9 , “ Long-term Debt ” included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K. As of December 31, 2017 and 2016 , there was $23.7 million and $20.2 million , respectively, of cash held at foreign subsidiaries. There may be country specific regulations which may restrict or result in increased costs in the repatriation of these funds.

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Based on our current and anticipated levels of operations and the condition in our markets and industry, we believe that our cash on hand, cash flow from operations and availability under our ABL Facility will enable us to meet our working capital, capital expenditures, debt service and other funding requirements. However, our ability to fund our working capital needs, debt payments and other obligations, and to comply with financial covenants, including borrowing base limitations under our ABL Facility, depends on our future operating performance and cash flows and many factors outside of our control, including the costs of raw materials, the state of the automotive accessories market and financial and economic conditions and other factors. Any future acquisitions, joint ventures or other similar transactions will likely require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms, if at all.

On February 1, 2017, the Company completed an underwritten public offering of 4.6 million shares of common stock, which included the exercise in full by the underwriters of their option to purchase 0.6 million shares of common stock, at a public offering price of $18.50 per share (the “Common Stock Offering”). Proceeds from the Common Stock Offering were approximately $79.9 million , net of underwriting discounts, commissions, and offering-related transaction costs.

Concurrently, the Company completed an underwritten public offering of $125.0 million aggregate principal amount of Convertible Notes. The Convertible Notes mature on July 1, 2022 unless earlier converted in accordance with the terms prior to such date, and bears interest at a rate of 2.75% per annum. We used net proceeds from the Convertible Notes offering, along with proceeds from the issuance of common stock, to prepay $177.0 million of the Term B Loan. Additionally, on March 31, 2017, we entered into the Third Amendment to the Term B Loan. This amendment allowed us to repay the existing Original Term B Loan and Incremental Term Loans and provided for the Replacement Term Loan, which reduced the required principal payments by $2.7 million per quarter and reduced the interest rate by 1.5% per annum. Refer to Note 9 , “ Long-term Debt ” included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K for additional information.

Cash Flows - Operating Activities

Cash provided by operating activities in 2017 was approximately $14.2 million , as compared to $35.4 million in 2016 . In 2017 , the Company generated $36.5 million in cash flows, based on the reported net loss of $4.8 million and after considering the effects of non-cash items related to gains and losses on dispositions of property and equipment, depreciation, amortization, stock compensation, loss on extinguishment of debt, amortization of inventory step-up recorded as part of purchase accounting, changes in deferred income taxes, amortization of original issuance discount and debt issuance costs, and other, net. In 2016 , the Company generated $20.0 million based on the reported net loss of $12.7 million and after considering the effects of similar non-cash items.

Changes in operating assets and liabilities used approximately $22.3 million of cash in 2017 and generated approximately $15.4 million of cash in 2016 . Increases in accounts receivable resulted in a net use of cash of $9.5 million in 2017 , while decreases in accounts receivable resulted in a source of cash of $4.7 million in 2016 . The increase in accounts receivable in 2017 was primarily driven by an increase in tax-related receivables. The decrease in accounts receivable in 2016 was due to improved collection efforts and timing of sales within the fourth quarter.

Changes in inventory resulted in a net use of cash of $17.7 million in 2017 , as compared to a source of cash of $10.7 million in 2016 . The increase in inventory in 2017 was primarily due to sales shortfall in our Americas reportable segment in the fourth quarter driven by a system stock take-out by our retail customers and delivery delays related to the transition to a new distribution center. The decrease in inventory in 2016 was primarily the result of improved inventory management, the reduction of safety stock held at December 31, 2015 to support the transition out of Juarez and El Paso facilities, and a manufacturing slow down near the end of the year in anticipation of a new ERP going live.

Changes in prepaid expenses and other assets resulted in a net source of cash of $1.4 million in 2017 , as compared to a use of cash of approximately $6.3 million in 2016 . The decrease in prepaid expenses and other assets in 2017 was primarily due to a change in the timing of payments as certain large contracts were renewed late in 2016. The increase in prepaid expenses and other assets in 2016 was due to the timing of payments and renewals of contracts.

Changes in accounts payable and accrued liabilities resulted in a net source of cash of $3.5 million in 2017 , as compared to a net source of cash of approximately $6.3 million in 2016 . The decrease in accounts payable and accrued liabilities in 2017 was primarily due to a reduction in certain compensation accruals related to bonuses as certain performance targets were not met during the year. The increase in accounts payable and accrued liabilities in 2016 was primarily related to the timing of payments made to suppliers, mix of vendors and related terms, as well as increases in certain compensation accruals primarily related to bonuses and severance payments.

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Cash Flows - Investing Activities

Net cash used for investing activities in 2017 was approximately $40.7 million , as compared to $108.4 million in 2016 . During 2017 , we acquired Best Bars for total cash consideration paid of $19.8 million . In addition, we invested approximately $27.3 million in capital expenditures, as we have continued our investment in growth, capacity and productivity-related capital projects. Cash received from the disposition of assets was approximately $6.4 million in 2017 and included $4.3 million net cash received from the sale of our Broom and Brush product line. During 2016 , we acquired businesses for total cash consideration paid of $94.4 million , net of cash acquired, the largest of which was the acquisition of the Westfalia Group. In addition, we invested approximately $14.5 million in capital expenditures. Cash received from the disposition of assets was approximately $0.5 million .

Cash Flows - Financing Activities

Net cash provided by financing activities was approximately $3.7 million and $100.5 million in 2017 and 2016 , respectively. During 2017 , we received proceeds of $121.1 million from the issuance of our Convertible Notes, net of issuance costs; $79.9 million from the issuance of common stock, net of offering costs; $20.9 million from the issuance of Warrants; and our net borrowing from our ABL Facility totaled $10.0 million . We used cash of approximately $189.8 million for repayments on our Term B Loan, $29.7 million for payments on Convertible Note Hedges, net of issuance costs, and approximately $10.0 million to repurchase shares as part of our Share Repurchase Program. During 2016 , we entered into an amendment to the Original Term B Loan to finance, in part, the acquisition of the Westfalia Group and received proceeds, net of repayments and transaction costs, of $138.2 million. We used $39.0 million of the Incremental Loans to repay Westfalia Group debt that we assumed as part of the acquisition.

Factoring Arrangements

We have factoring arrangements with financial institutions to sell certain accounts receivable under non-recourse agreements. Total receivables sold under the factoring arrangements was approximately $257.5 million and $20.7 million for the years ended December 31, 2017 and December 31, 2016 , respectively. We utilize factoring arrangements as part of our financing for working capital. The costs of participating in these arrangements are immaterial to our results. Refer to Note 3 , “ Summary of Significant Accounting Policies ” in Item 8 , “ Financial Statements and Supplementary Data ,” included within this Annual Report report on Form 10-K for additional information.

Our Debt and Other Commitments

We and certain of our subsidiaries are party to the ABL Facility, an asset-based revolving credit facility that provides for $99.0 million of funding on a revolving basis, subject to borrowing base availability. The ABL Facility matures in June 2020 and bears interest on outstanding balances at variable rates as outlined in the credit agreement. On June 30, 2015, we entered into a term loan agreement (the “Original Term B Loan”) under which we borrowed an aggregate amount of $200.0 million . On September 19, 2016, we entered into the First Amendment to the Original Term B Loan (the “Term Loan Amendment”) which provided for incremental commitments in an aggregate principal amount of $152.0 million (the “Incremental Term Loans”). On March 31, 2017, we entered into the Third Amendment to the Original Term B Loan (the “Replacement Term Loan”) which amended the Term B Loan to provide for a new term loan commitment. The proceeds from the Replacement Term Loan were used to repay in full the outstanding principal of the Term B Loan. As part of the amendment, the interest rate was reduced by 1.5% per annum and the quarterly principal payments required under the Original Term B Loan and the Term Loan Amendment of $4.6 million in total were reduced to an aggregate principal payment of $1.9 million . On and after the Replacement Term Loan Amendment effective date, each reference to “Term B Loan” is deemed to be a reference to the Replacement Term Loan. The Term B Loan matures in June 2021 and bears interest at variable rates in accordance with the credit agreement. Refer to Note 9 , “ Long-term Debt ,” in Item 8 , “ Financial Statements and Supplementary Data ,” included within this Annual Report report on Form 10-K for additional information.

At December 31, 2017 there was $10.0 million outstanding on the ABL Facility and $149.6 million outstanding on the Term B Loan bearing interest at 6.07% .

On February 16, 2018, we entered into the Fourth Amendment to the Term B Loan (the “2018 Replacement Term Loan Amendment”) to further amend the Original Term B Loan. The 2018 Replacement Term Loan Amendment provides for a new term loan commitment (the “2018 Replacement Term Loan”) in an original aggregate principal amount of $385.0 million . The proceeds from the 2018 Replacement Term Loan will be used to (i) repay in full the outstanding principal amount of the Term B Loan, (ii) to consummate the acquisition of the Brink Group and pay a portion of the acquisition consideration thereof and the fees and expenses incurred in connection therewith, and (iii) for general corporate purposes. Refer to Note 18 , “ Subsequent Events ,” in

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Item 8 , “ Financial Statements and Supplementary Data ,” included within this Annual Report report on Form 10-K for additional information.

The agreements governing the ABL Facility and Term B Loan contain various negative and affirmative covenants and other requirements affecting us and our subsidiaries, including restrictions on incurrence of debt, liens, mergers, investments, loans, advances, guarantee obligations, acquisitions, asset dispositions, sale-leaseback transactions, hedging agreements, dividends and other restricted payments, transactions with affiliates, restrictive agreements and amendments to charters, bylaws, and other material documents. The ABL Facility does not include any financial maintenance covenants other than a springing minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a trailing twelve-month basis, which will be tested only upon the occurrence of an event of default or certain other conditions as specified in the agreement. The Term B Loan contains customary negative covenants, and also contains a financial maintenance covenant which requires us to maintain a net leverage ratio not exceeding 5.00 to 1.00 through the fiscal quarter ending March 31, 2018; 4.75 to 1.00 through the fiscal quarter ending September 30, 2018; and thereafter, 4.50 to 1.00 . At December 31, 2017 , we were in compliance with our financial covenants contained in the ABL Facility and the Term B Loan, respectively.

On July 3, 2017, our Australian subsidiary entered into an new agreement to provide for revolving borrowings up to an aggregate amount of $32.0 million . The agreement includes two sub-facilities: (i) Facility A has a borrowing capacity of $20.3 million , matures on July 3, 2020 , and is subject to interest at Bank Bill Swap rate plus a margin determined based on the most recent net leverage ratio; (ii) Facility B has a borrowing capacity of $11.7 million , matures on July 3, 2018 and is subject to interest at Bank Bill Swap rate plus 0.9% per annum. Borrowings under this arrangement are subject to financial and reporting covenants. Financial covenants include maintaining a net leverage ratio not exceeding 2.50 to 1.00 during the period commencing on the date of the agreement and ending on the first anniversary of the date of the agreement; and 2.00 to 1.00 thereafter; working capital coverage ratio (working capital over total debt) greater than 1.75 to 1.00 and a gearing ration (senior debt to senior debt plus equity) not exceeding 50% . As of December 31, 2017 , we were in compliance with all covenants.

We are subject to variable interest rates on our Term B Loan and ABL Facility. At December 31, 2017 , 1-Month LIBOR and 3-Month LIBOR approximated 1.56% and 1.69% , respectively.

In addition to our long-term debt, we have other cash commitments related to leases. We account for these lease transactions as operating leases and annual rent expense related thereto approximated $20.0 million for the year ended December 31, 2017 . We expect to continue to utilize leasing as a financing strategy in the future to meet capital expenditure needs and to reduce debt levels.

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The following is a reconciliation of net income, as reported, which is a U.S. GAAP measure of our operating results, to Consolidated Bank EBITDA, as defined in our credit agreement, for the year ended December 31, 2017 . We present Consolidated Bank EBITDA to show our performance under our financial covenants.



	Year ended December 31, 2017
	(dollars in thousands)
Net loss attributable to Horizon Global	$	(3,550	)
Bank stipulated adjustments:
Interest expense, net (as defined)	22,410
Income tax expense	9,750
Depreciation and amortization	25,340
Extraordinary charges	2,520
Non-cash compensation expense ^(a)	3,630
Other non-cash expenses or losses	2,180
Pro forma EBITDA of permitted acquisition	840
Interest-equivalent costs associated with any Specified Vendor Receivables Financing	1,490
Debt extinguishment costs	4,640
Items limited to 25% of consolidated EBITDA:
Non-recurring expense or costs ^(b)	2,440
Acquisition integration costs ^(c)	11,210
Synergies related to permitted acquisition ^(d)	1,480
EBITDA limitation for non-recurring expenses or costs ^(e)	—
Consolidated Bank EBITDA, as defined	$	84,380



	December 31, 2017
	(dollars in thousands)
Total Consolidated Indebtedness	$	268,170
Consolidated Bank EBITDA, as defined	84,380
Actual leverage ratio	3.18		x
Covenant requirement	5.00		x

______________

^(a) Non-cash compensation expenses resulting from the grant of restricted units of common stock and common stock options.

^(b) Under our credit agreement, costs and expenses related to cost savings projects, including restructuring and severance expenses, are not to exceed $5 million in any fiscal year and $20 million in aggregate, commencing on or after January 1, 2015.

^(c) Under our credit agreement, costs and expenses related to the integration of the Westfalia Group acquisition are not to exceed $10 million in any fiscal year and $30 million in aggregate, or other permitted acquisitions are not to exceed $7.5 million in any fiscal year and $20 million in aggregate.

^(d) Under our credit agreement, the add back for the amount of reasonably identifiable and factually supportable “run rate” cost savings, operating expense reductions, and other synergies cannot exceed $12.5 million for the Westfalia Group acquisition.

^(e) The amounts added to Consolidated Net Income pursuant to items in notes b-d shall not exceed 25% of Consolidated EBITDA, excluding these items, for such period.

Refer to Note 9 , “ Long-term Debt ,” in Item 8, “ Financial Statements and Supplementary Data ,” included within this Annual Report on Form 10-K for additional information.

Contractual Obligations

Under various agreements, we are obligated to make future cash payments in fixed amounts. These include payments under our long-term debt agreements, rent payments required under operating and capital lease agreements and interest obligations on our term loans and convertible debt.

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The following table summarizes our contractual obligations over various future periods related to these items as of December 31, 2017 .



	Payments Due by Periods
	Total		Less than One Year		1 - 3 Years		3 - 5 Years		More than 5 Years
	(dollars in thousands)
Contractual cash obligations:
ABL Facility	$	10,000	$	—	$	10,000	$	—	$	—
Term B Loan	149,610		7,770		15,540		126,300		—
Convertible Notes	125,000		—		—		125,000		—
Bank facilities	22,140		7,660		1,530		180		12,770
Operating and capital lease obligations	90,880		19,390		31,620		22,470		17,400
Interest obligations	42,760		11,700		27,590		3,470		—
Deferred purchase price	5,690		2,080		3,610		—		—
Total contractual obligations	$	446,080	$	48,600	$	89,890	$	277,420	$	30,170

The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a reasonable estimate of the timing and amount of cash flows from future tax settlements cannot be determined. For additional information, refer to Note 16 , “ Income Taxes ,” included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K.

Credit Rating

We and certain of our outstanding debt obligations are rated by Standard & Poor’s and Moody’s. On January 26, 2018, Moody’s awarded a rating of B2 for our prospective $380 million ($150 million at time of rating, prior to refinancing) senior secured term loan to be issued early in 2018. Moody’s also maintained our corporate family rating of B2 and confirmed our outlook as stable. On January 25, 2018, Standard & Poor’s issued a rating of B for our prospective $380 million ($150 million at the time of the rating, prior to refinancing) senior secured term loan and assigned the Company a negative outlook. Standard & Poor’s maintained our B corporate credit rating and the B- rating of our Convertible Notes. If our credit ratings were to decline, our ability to access certain financial markets may become limited, our cost of borrowings may increase, the perception of us in the view of our customers, suppliers and security holders may worsen and as a result, we may be adversely affected.

Outlook

Our global business remains susceptible to economic conditions that could adversely affect our results. In the near-term, the economies that most significantly affect our demand, including the United States, European Union, and Australia, are expected to continue to grow. The impact of tax reform in the U.S. should continue to drive growth in the near-term; however, the longer-term implications of tax reform on economic growth are not yet fully understood. We continue to monitor the trade policy discussions taking place in Washington, D.C. and the impact any changes could have on our operations. If geopolitical tensions, particularly in East Asia, escalate, it may affect global consumer sentiment affecting the expected economic growth in the near-term.

Our 2017 financial results did not meet our expectations, despite increasing operating profit by $28.5 million. In the fourth quarter of 2017, we experienced performance issues including: manufacturing inefficiencies in our Reynosa, Mexico manufacturing facility, as well as startup inefficiencies in both our new Kansas City distribution facility in the Americas segment and our Romanian manufacturing facility in the Europe-Africa segment. In response to these challenges, we have made organizational changes, enlisted the assistance of manufacturing consultants, and identified additional cost reduction projects, including the closure of two non-manufacturing facilities in our Americas segment. We are focused on executing our targeted action plan we have publicly communicated and we have already initiated many of the projects.

Shortly after the completion of the acquisition of Westfalia in the fourth quarter of 2016, we initiated projects to achieve significant cost reductions and efficiencies in our Europe-Africa segment. In 2017, we were pleased with the results of our efforts to reduce costs and increase efficiencies; however, the costs associated with executing these projects limited their impact on our 2017 results. We expect the positive momentum from these projects, as well as the execution of our targeted action plan, to result in improved margins in both the Americas and Europe-Africa segments in the long-term. In the short-term, the costs associated with executing these initiatives, including severance, unrecoverable lease obligations, and professional service fees, may affect our results and cash flows.

We believe the unique global footprint we enjoy in our market space will benefit us as our OE customers continue to demonstrate a preference for stronger relationships with few suppliers. We believe that our strong brand positions, portfolio of product offerings, and existing customer relationships present a long-term opportunity for us.

While a strong global economy offers opportunities for growth and cost leverage, we are committed to delivering on our internal projects to drive margin improvement. We believe our internal projects, if executed well, will have a positive impact on our margins in future periods.

Our strategic priorities are to improve margins, reduce our leverage, and drive top line growth.

Impact of New Accounting Standards

See Note 2 , “ New Accounting Pronouncements ,” included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K.

Critical Accounting Estimates

The following discussion of accounting policies is intended to supplement the accounting policies presented in Note 3 , “ Summary of Significant Accounting Policies ” included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, our evaluation of business and macroeconomic trends, and information from other outside sources, as appropriate.

Revenue Recognition. Revenue is recognized when there is evidence of a sale, delivery has occurred or services have been rendered, the sales price is fixed or determinable and the collectability of receivables is reasonably assured. Net sales is comprised of gross revenues less estimates of expected returns, trade discounts and customer allowances, which include incentives such as cooperative advertising agreements, volume discounts and other supply agreements in connection with various programs. Such deductions are recorded during the period the related revenue is recognized.

Sales Related Accruals. Net sales is comprised of gross revenues less estimates of expected returns, trade discounts and customer allowances, which include incentives for items such as cooperative advertising agreements, volume discounts and other supply agreements in connection with various customer programs. On at least a quarterly basis, we perform detailed reviews of our sales related accruals by evaluating specific customer contractual commitments, assessing current incentive programs and other relevant information in order to assess the adequacy of the reserve. Reductions to revenue and estimated accruals are recorded in the period in which revenue is recognized.

Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts to reflect management’s best estimate of probable credit losses inherent in our accounts receivable balances. Determination of the allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the allowances for doubtful accounts and, therefore, net income. The level of the allowance is based on quantitative and qualitative factors including historical loss experience, delinquency trends, economic conditions and customer credit risk. We perform detailed reviews of our accounts receivable portfolio on at least a quarterly basis to assess the adequacy of the allowance. Over the past two years, the allowance for doubtful accounts has approximated 3.3% to 4.7% of gross accounts receivable. We do not believe that significant credit risk exists due to our diverse customer base.

Impairment of Long-Lived Assets and Definite-Lived Intangible Assets. We review, on at least a quarterly basis, the financial performance of each business unit for indicators of impairment. In reviewing for impairment indicators, we also consider events or changes in circumstances such as business prospects, customer retention, market trends, potential product obsolescence, competitive activities and other economic factors. An impairment loss is recognized when the carrying value of an asset group exceeds the future net undiscounted cash flows expected to be generated by that asset group. The impairment loss recognized is the amount by which the carrying value of the asset group exceeds its fair value.

Goodwill and Indefinite-Lived Intangibles. We assess goodwill and indefinite-lived intangible assets for impairment at the reporting unit level on an annual basis as of October 1, after the annual forecasting process is complete. More frequent evaluations may be required if we experience changes in our business climate or as a result of other triggering events that take place. If the carrying value exceeds fair value, the asset is considered impaired and is reduced to fair value.

In assessing goodwill for impairment, we may choose to initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, then the impairment analysis for goodwill is performed at the reporting unit level using a quantitative approach. The quantitative test is a comparison of the fair value of the reporting unit, determined using a combination of the income and market approaches, to its recorded amount. If the recorded amount exceeds the fair value, an impairment is recorded to reduce the carrying amount to fair

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value, but will not exceed the amount of goodwill that is recorded. Indefinite-lived intangible assets are tested for impairment by comparing the fair value, as determined using the relief from royalty method, compared to the carrying amount of the intangible assets.

The process of evaluating goodwill and indefinite-lived intangibles for impairment is subjective and requires significant judgment at many points during the analysis. If we elect to perform an optional qualitative analysis, we consider many factors including, but not limited to, general economic conditions, industry and market conditions, financial performance and key business drivers, long-term operating plans, and potential changes to significant assumptions used in the most recent fair value analysis for either the reporting unit or respective intangible. When performing a quantitative goodwill or indefinite-lived intangibles impairment test, we generally determine fair value using an income-based approach, a market-based approach or a combination of both methods. The fair value determination consists primarily of using significant unobservable inputs (Level 3) under the fair value measurement standards. We believe the most critical assumptions and estimates in determining the estimated fair value of our reporting units or indefinite-lived intangibles include, but are not limited to, the amounts and timing of expected future cash flows which is largely dependent on expected EBITDA margins, the discount rate applied to those cash flows, terminal growth rates and royalty rates. The assumptions used in determining our expected future cash flows consider various factors such as historical operating trends and long-term operating strategies and initiatives. The discount rate used by each reporting unit is based on our assumption of a prudent investor’s required rate of return of assuming the risk of investing in a particular company in a specific country. The terminal growth rate reflects the sustainable operating income a reporting unit could generate in a perpetual state as a function of revenue growth, inflation and future margin expectations.

Goodwill impairment test

Goodwill allocated to our Horizon Europe‑Africa reporting unit was approximately $126.2 million as of December 31, 2017. In connection with our annual goodwill impairment test, we performed a quantitative assessment as of October 1, 2017, utilizing a combination of the income and market approaches, the results of which we weighted evenly. No impairment was indicated as the fair value of the reporting unit substantially exceeded its carrying value. In the fourth quarter of 2017, we experienced a significant decline in our market capitalization. Further, the reporting unit did not perform in-line with expectations during the fourth quarter, driven by a delayed closure and additional costs incurred relating to closing facilities in the United Kingdom and Sweden, delayed realization of price increases and inefficiencies transferring production to lower cost manufacturing sites. Because of the decline in market capitalization and fourth quarter results we identified an indicator of impairment in the fourth quarter. As a result, we performed an interim quantitative assessment as of December 31, 2017, utilizing a combination of the income and market approaches, which we weighted evenly. The results of the quantitative analysis performed indicated the fair value of the reporting unit exceeded the carrying value by approximately 1%. Key assumptions used in the analysis were a discount rate of 13.0%, EBITDA margin and the terminal growth rate of 2.5%. The primary driver in the reduction of the fair value of the reporting unit was a reduction of expected future cash flows. Since the acquisition in the Westfalia Group, we have invested, and intend to continue to invest, in cost savings and productivity initiatives that will drive strong future profitability. While these investments have resulted in lower than projected post-acquisition EBITDA for the reporting unit, we continue to believe these projects will result in significant future earnings. Future events and changing market conditions may, however, lead us to reevaluate the assumptions we have used to test for goodwill impairment, including key assumptions used in our expected EBITDA margins and cash flows, as well as other key assumptions with respect to matters out of our control, such as discount rates, currency exchange rates and market multiple comparables. Based on the results of the quantitative test, we performed sensitivity analysis around the key assumptions used in the analysis, the results of which were: a) a 100 basis point decline in EBITDA margin used to determine expected future cash flows would have resulted in an impairment of approximately $27.5 million, and b) a 50 basis point increase in the discount rate would have resulted in an impairment of approximately $13.5 million.

Goodwill allocated to our Horizon Americas and Horizon Asia‑Pacific reporting units was approximately $5.3 million and $6.8 million , respectively, as of December 31, 2017. We performed a qualitative assessment for goodwill impairment in the Horizon Americas and Horizon Asia‑Pacific reportable segments at October 1, 2017, which was updated as of December 31, 2017 based on the indicators noted above. For our Horizon Americas segment, we performed a quantitative analysis as of October 1, 2016, which resulted in no impairment as the fair value of the reporting unit substantially exceeded the carrying value. Goodwill in the Horizon Asia-Pacific was the result of an acquisition completed in the third quarter of 2017. Based on the results of the qualitative analysis performed we do not believe that it is more likely than not that the fair value of the reporting units is less that the carrying amounts; therefore, we determined a quantitative assessment is not required.

Indefinite-lived intangible asset impairment test

We conducted the annual indefinite-lived intangible asset impairment tests as of October 1, 2017, and as a result of the impairment indicators noted above we performed an interim assessment as of December 31, 2017. Based on the results of our analyses there were certain trade names where the estimated fair values only slightly exceeded the carrying values. Key assumptions used in the analysis were discount rates of 13% to 15.5% and royalty rates ranging from 0.5% to 3.0%. Based on the results of the quantitative test, we performed sensitivity analysis around the key assumptions used in the analysis, the results of which were: a) a 50 basis

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point increase in the discount rate used during our testing would not have resulted in a material impairment to any of our trade names, and b) a 25 basis point decrease in the royalty rates used during our testing would have resulted in an impairment of approximately $4.7 million to our Westfalia trade name.

Subsequent impairment indicators

Subsequent to December 31, 2017, the Company’s market capitalization has declined, primarily due to a pre-release of our estimated 2017 results that fell short of our previously communicated guidance, which may be an indicator of impairment. As noted above, the revised expectations were included in our interim goodwill impairment assessment. The Company will continue to assess the impact of its market capitalization and any other indicators of potential impairment. It is possible that if the Company’s market capitalization decline is more than temporary, or if other indicators of impairment are identified, an interim impairment analysis may be necessary, which could result in an impairment of goodwill, indefinite-lived intangible assets and other long-lived assets in 2018.

Income Taxes. We compute income taxes using the asset and liability method, whereby deferred income taxes using current enacted tax rates are provided for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities and for operating loss and tax credit carryforwards. We determine valuation allowances based on an assessment of positive and negative evidence on a jurisdiction-by-jurisdiction basis and record a valuation allowance to reduce deferred tax assets to the amount more likely than not to be realized. To make this assessment, we evaluated historical operating results, the existence of cumulative losses in the most recent fiscal years, expectations for future pretax operating income, the time period over which our temporary differences will reverse and the implementation of feasible and prudent tax planning strategies. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense.

The 2017 Tax Act was signed into law on December 22, 2017. The 2017 Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21%, eliminating certain deductions, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries as of 2017, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the 2017 Tax Act was passed late in the fourth quarter of 2017, we have accounted for the 2017 Tax Act on a provisional basis as of December 31, 2017. Our accounting for certain income tax effects is incomplete, but we have determined reasonable estimates for those effects. Our reasonable estimates are included in our financial statements as of December 31, 2017. We expect to complete our accounting during the one-year measurement period from the enactment date.

Emerging Growth Company

The JOBS Act establishes a class of company called an “emerging growth company,” which generally is a company whose initial public offering was completed after December 8, 2011 and had total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year. We currently qualify as an emerging growth company.

As an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements that are not available to public reporting companies that do not qualify for this classification, including without limitation the following:


▪	An emerging growth company is exempt from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and financial statements, commonly known as an “auditor discussion and analysis.”


▪	An emerging growth company is not required to hold a nonbinding advisory stockholder vote on executive compensation or any golden parachute payments not previously approved by stockholders.


▪	An emerging growth company is not required to comply with the requirement of auditor attestation of management’s assessment of internal control over financial reporting, which is required for other public reporting companies by Section 404 of the Sarbanes-Oxley Act.


▪	An emerging growth company is eligible for reduced disclosure obligations regarding executive compensation in its periodic and annual reports, including without limitation exemption from the requirement to provide a compensation discussion and analysis describing compensation practices and procedures.

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▪	A company that is an emerging growth company is eligible for reduced financial statement disclosure in registration statements, which must include two years of audited financial statements rather than the three years of audited financial statements that are required for other public reporting companies.

For as long as we continue to be an emerging growth company, we expect that we will take advantage of the reduced disclosure obligations available to us as a result of this classification. We will remain an emerging growth company until the earlier of (i) December 31, 2020, the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion (subject to further adjustment for inflation) or more; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under applicable SEC rules. We expect that we will remain an emerging growth company for the foreseeable future, but cannot retain our emerging growth company status indefinitely and will no longer qualify as an emerging growth company on or before December 31, 2020.

Emerging growth companies may elect to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to “opt out” of such extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to market risk associated with fluctuations in interest rates, commodity prices, insurable risks due to property damage, employee and liability claims, and other uncertainties in the financial and credit markets, which may impact demand for our products.

We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. The functional currencies of our foreign subsidiaries are primarily the local currency in the country of domicile. We manage these operating activities at the local level and revenues and costs are generally denominated in local currencies; however, results of operations and assets and liabilities reported in U.S. dollars will fluctuate with changes in exchange rates between such local currencies and the U.S. dollar. A 10% change in average exchange rates versus the U.S. Dollar would have resulted in an approximate $46.3 million and $21.4 million change to our net sales for the years ended December 31, 2017 and 2016 , respectively.

We are exposed to market risk from changes in the interest rates on a significant portion of our outstanding debt. Outstanding balances under our Term B Loan, at the Company’s election, bear interest at variable rates based on a margin over defined LIBOR. Based on the amount outstanding on the Term B Loan as of December 31, 2017 and 2016 , a hypothetical unfavorable change of 100 basis points in the LIBOR would result in an approximate $1.5 million and $2.6 million increase, respectively, to our annual interest expense.

We use derivative financial instruments to manage our currency risks. We are also subject to interest risk as it relates to long-term debt, for which we may prospectively employ derivative instruments such as interest rate swaps to mitigate the risk of variable interest rates. See Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations, ” for details about our primary market risks, and the objectives and strategies used to manage these risks. Also see Note 9 , “ Long-term Debt ,” and Note 10 , “ Derivative Instruments ,” included in Item 8, “ Financial Statements and Supplementary Data ,” within this Annual Report on Form 10-K for additional information.

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Item 8 . Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and Board of Directors of

Horizon Global Corporation

Troy, MI

We have audited the accompanying consolidated balance sheets of Horizon Global Corporation and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of income (loss), comprehensive income (loss), cash flows, and shareholders’ equity for each of the three years in the period ended December 31, 2017 and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

Horizon Global Corporation spin-off to TriMas Corporation Shareholders

As discussed in Note 1 to the consolidated financial statements, prior to June 30, 2015, the accompanying consolidated financial statements have been prepared from the separate records maintained by TriMas Corporation and may not necessarily be indicative of the financial condition, or results of operations and cash flows that would have existed had the Company been operated as a stand-alone company during the period prior to June 30, 2015 presented. For the periods subsequent June 30, 2015, the consolidated financial statements are derived from the historical accounting records of Horizon Global Corporation on a stand-alone basis.

/s/ Deloitte & Touche LLP

Detroit, Michigan

March 1, 2018

We have served as the Company’s auditor since 2014

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Horizon Global Corporation

Consolidated Balance Sheets

(Dollars in thousands)



	December 31,
	2017			2016
Assets
Current assets:
Cash and cash equivalents	$	29,570		$	50,240
Receivables, net	91,770			77,570
Inventories	171,500			146,020
Prepaid expenses and other current assets	10,950			12,160
Total current assets	303,790			285,990
Property and equipment, net	113,020			93,760
Goodwill	138,190			120,190
Other intangibles, net	90,230			86,720
Deferred income taxes	4,290			9,370
Other assets	11,510			17,340
Total assets	$	661,030		$	613,370
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities, long-term debt	$	16,710		$	22,900
Accounts payable	138,730			111,450
Accrued liabilities	53,070			63,780
Total current liabilities	208,510			198,130
Long-term debt	258,880			327,040
Deferred income taxes	14,870			25,730
Other long-term liabilities	38,370			30,410
Total liabilities	520,630			581,310
Commitments and contingent liabilities	—			—
Shareholders' equity:
Preferred stock $0.01 par: Authorized 100,000,000 shares; Issued and outstanding: None	—			—
Common stock, $0.01 par: Authorized 400,000,000 shares; 25,625,571 shares issued and 24,939,065 outstanding at December 31, 2017, respectively, and 20,899,959 shares issued and outstanding at December 31, 2016	250			210
Paid-in capital	159,490			54,800
Treasury stock, at cost: 686,506 shares at December 31, 2017 and no shares at December 31, 2016	(10,000		)	—
Accumulated deficit	(17,860		)	(14,310		)
Accumulated other comprehensive income (loss)	10,010			(8,340		)
Total Horizon Global shareholders' equity	141,890			32,360
Noncontrolling interest	(1,490		)	(300		)
Total shareholders' equity	140,400			32,060
Total liabilities and shareholders' equity	$	661,030		$	613,370

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

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Horizon Global Corporation

Consolidated Statements of Income (Loss)

(Dollars in thousands, except per share amounts)



	Year ended December 31,
	2017			2016			2015
Net sales	$	892,980		$	649,200		$	575,510
Cost of sales	(685,380		)	(488,850		)	(432,470		)
Gross profit	207,600			160,350			143,040
Selling, general and administrative expenses	(171,620		)	(145,150		)	(121,350		)
Net loss on dispositions of property and equipment	(1,220		)	(540		)	(2,120		)
Impairment of intangible assets	—			(8,360		)	—
Operating profit	34,760			6,300			19,570
Other expense, net:
Interest expense	(22,410		)	(20,080		)	(8,810		)
Loss on extinguishment of debt	(4,640		)	—			—
Other expense, net	(2,730		)	(2,610		)	(3,740		)
Other expense, net	(29,780		)	(22,690		)	(12,550		)
Income (loss) before income tax	4,980			(16,390		)	7,020
Income tax benefit (expense)	(9,750		)	3,730			1,280
Net income (loss)	(4,770		)	(12,660		)	8,300
Less: Net loss attributable to noncontrolling interest	(1,220		)	(300		)	—
Net income (loss) attributable to Horizon Global	$	(3,550	)	$	(12,360	)	$	8,300
Net income (loss) per share attributable to Horizon Global:
Basic	$	(0.14	)	$	(0.66	)	$	0.46
Diluted	$	(0.14	)	$	(0.66	)	$	0.46
Weighted average common shares outstanding:
Basic	24,781,349			18,775,500			18,064,491
Diluted	24,781,349			18,775,500			18,160,852

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

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Horizon Global Corporation

Consolidated Statements of Comprehensive Income (Loss)

(Dollars in thousands)



	Year ended December 31,
	2017			2016			2015
Net income (loss)	$	(4,770	)	$	(12,660	)	$	8,300
Other comprehensive income (loss), net of tax:
Foreign currency translation	17,840			(10,590		)	(9,510		)
Derivative instruments (Note 10)	540			(220		)	(640		)
Total other comprehensive income (loss)	18,380			(10,810		)	(10,150		)
Total comprehensive income (loss)	13,610			(23,470		)	(1,850		)
Less: Comprehensive loss attributable to noncontrolling interest	(1,190		)	(300		)	—
Comprehensive income (loss) attributable to Horizon Global	$	14,800		$	(23,170	)	$	(1,850	)

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

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Horizon Global Corporation

Consolidated Statements of Cash Flows

(Dollars in thousands)



	Year ended December 31,
	2017			2016			2015
Cash Flows from Operating Activities:
Net income (loss)	$	(4,770	)	$	(12,660	)	$	8,300
Adjustments to reconcile net income (loss) to net cash provided by operating activities, net of acquisition impact:
Net loss on dispositions of property and equipment	1,220			540			2,120
Impairment of intangible assets	—			8,360			—
Depreciation	14,930			10,260			9,740
Amortization of intangible assets	10,410			7,960			7,340
Amortization of original issuance discount and debt issuance costs	6,940			2,090			830
Deferred income taxes	(100		)	(8,430		)	(4,920		)
Non-cash compensation expense	3,630			3,860			2,530
Loss on extinguishment of debt	4,640			—			—
Amortization of purchase accounting inventory step-up	420			6,680			—
(Increase) decrease in receivables	(9,540		)	4,740			(5,460		)
(Increase) decrease in inventories	(17,710		)	10,650			(30		)
(Increase) decrease in prepaid expenses and other assets	1,410			(6,300		)	140
Increase in accounts payable and accrued liabilities	3,540			6,300			5,870
Other, net	(860		)	1,360			450
Net cash provided by operating activities	14,160			35,410			26,910
Cash Flows from Investing Activities:
Capital expenditures	(27,290		)	(14,540		)	(8,320		)
Acquisition of businesses, net of cash acquired	(19,800		)	(94,370		)	—
Net proceeds from disposition of product line, property and equipment	6,350			470			1,510
Net cash used for investing activities	(40,740		)	(108,440		)	(6,810		)
Cash Flows from Financing Activities:
Proceeds from borrowing on credit facilities	52,310			41,820			119,340
Repayments of borrowings on credit facilities	(50,910		)	(40,200		)	(118,890		)
Proceeds from Term B Loan, net of issuance costs	—			148,180			192,820
Repayments of borrowings on Term B Loan, including transaction fees	(189,760		)	(10,000		)	(5,000		)
Proceeds from ABL Facility, net of issuance costs	139,100			118,430			57,120
Repayments of borrowings on ABL Facility	(129,100		)	(118,430		)	(59,430		)
Repayments of Westfalia Group debt	—			(39,000		)	—
Repurchase of common stock	(10,000		)	—			—
Proceeds from sale of common stock in connection with the Company's equity offering, net of issuance costs	79,920			—			—
Proceeds from issuance of Convertible Notes, net of issuance costs	121,130			—			—
Proceeds from issuance of Warrants, net of issuance costs	20,930			—			—
Payments on Convertible Note Hedges, inclusive of issuance costs	(29,680		)	—			—
Cash dividend paid to former parent	—			—			(214,500		)
Net transfers from former parent	—			—			27,630
Other, net	(240		)	(300		)	—
Net cash provided by (used for) financing activities	3,700			100,500			(910		)
Effect of exchange rate changes on cash	2,210			(750		)	(1,390		)
Cash and Cash Equivalents:
Increase (decrease) for the year	(20,670		)	26,720			17,800
At beginning of year	50,240			23,520			5,720
At end of year	$	29,570		$	50,240		$	23,520
Supplemental disclosure of cash flow information:
Cash paid for interest	$	14,270		$	17,330		$	7,870
Non-cash investing/financing activities:
Non-cash equity issuance for acquisition of businesses	$	—		$	49,960		$	—

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

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Horizon Global Corporation

Consolidated Statements of Shareholders’ Equity

(Dollars in thousands)



	Common Stock		Paid-in Capital			Treasury Stock			Parent Company Investment			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Horizon Global Shareholders' Equity			Noncontrolling Interest			Total Shareholders' Equity
Balances at December 31, 2014	$	—	$	—		$	—		$	180,800		$	—		$	7,390		$	188,190		$	—		$	188,190
Net income	—		—			—			3,680			4,620			—			8,300			—			8,300
Other comprehensive loss, net of tax	—		—			—			—			—			(10,150		)	(10,150		)	—			(10,150		)
Issuance of common stock	180		—			—			(180		)	—			—			—			—			—
Net transfers to former parent	—		—			—			23,670			—			5,230			28,900			—			28,900
Cash dividend paid to former parent	—		—			—			(214,500		)	—			—			(214,500		)	—			(214,500		)
Non-cash compensation expense	—		1,260			—			—			—			—			1,260			—			1,260
Reclassification of net parent investment to accumulated deficit	—		—			—			6,530			(6,530		)	—			—			—			—
Balances at December 31, 2015	$	180	$	1,260		$	—		$	—		$	(1,910	)	$	2,470		$	2,000		$	—		$	2,000
Net loss	—		—			—			—			(12,360		)	—			(12,360		)	(300		)	(12,660		)
Other comprehensive loss, net of tax	—		—			—			—			—			(10,810		)	(10,810		)	—			(10,810		)
Issuance of common stock	30		49,930			—			—			—			—			49,960			—			49,960
Shares surrendered upon vesting of employees' share based payment awards to cover tax obligations	—		(330		)	—			—			—			—			(330		)	—			(330		)
Exercise of stock options	—		40			—			—			—			—			40			—			40
Non-cash compensation expense	—		3,860			—			—			—			—			3,860			—			3,860
Impact of adoption of new accounting guidance related to stock based compensation	—		40			—			—			(40		)	—			—			—			—
Balances at December 31, 2016	$	210	$	54,800		$	—		$	—		$	(14,310	)	$	(8,340	)	$	32,360		$	(300	)	$	32,060
Net loss	—		—			—			—			(3,550		)	—			(3,550		)	(1,220		)	(4,770		)
Other comprehensive income, net of tax	—		—			—			—			—			18,350			18,350			30			18,380
Issuance of common stock, net of issuance costs	40		79,880			—			—			—			—			79,920			—			79,920
Repurchase of common stock	—		—			(10,000		)	—			—			—			(10,000		)	—			(10,000		)
Shares surrendered upon vesting of employees' share based payment awards to cover tax obligations	—		(260		)	—			—			—			—			(260		)	—			(260		)
Exercise of stock options	—		50			—			—			—			—			50			—			50
Non-cash compensation expense	—		3,630			—			—			—			—			3,630			—			3,630
Issuance of Warrants, net of issuance costs	—		20,930			—			—			—			—			20,930			—			20,930
Initial equity component of the 2.75% Convertible Senior Notes due 2022, net of issuance costs and tax	—		20,010			—			—			—			—			20,010			—			20,010
Convertible Note Hedges, net of issuance costs and tax	—		(19,550		)	—			—			—			—			(19,550		)	—			(19,550		)
Balances at December 31, 2017	$	250	$	159,490		$	(10,000	)	$	—		$	(17,860	)	$	10,010		$	141,890		$	(1,490	)	$	140,400

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

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 . Basis of Presentation

Horizon Global Corporation (“Horizon,” “Horizon Global” or the “Company”) is a global designer, manufacturer and distributor of a wide variety of high quality, custom-engineered towing, trailering, cargo management and other related accessories. These products are designed to support original equipment manufacturers and original equipment suppliers (collectively, “OEs”), aftermarket and retail customers within the agricultural, automotive, construction, horse/livestock, industrial, marine, military, recreational, trailer and utility markets. The Company groups its operating segments into reportable segments by the region in which sales and manufacturing efforts are focused. The Company’s reportable segments are Horizon Americas , Horizon Europe‑Africa , and Horizon Asia‑Pacific . See Note 15 , “ Segment Information ,” for further information on each of the Company’s reportable segments.

On June 30, 2015, Horizon became an independent company as a result of the distribution by TriMas Corporation (“TriMas” or “former parent”) of 100 percent of the outstanding common shares of Horizon Global to TriMas shareholders (the “spin-off”). Each TriMas shareholder of record as of the close of business on June 25, 2015 (the “Record Date”) received two Horizon Global common shares for every five TriMas common shares held as of the Record Date. The spin-off was completed on June 30, 2015 and was structured to be tax-free to both TriMas and Horizon Global shareholders.

On July 1, 2015, Horizon Global common shares began regular trading on the New York Stock Exchange under the ticker symbol “HZN”. Pursuant to the separation and distribution agreement with TriMas, on June 30, 2015, the Company paid a cash dividend to TriMas of $214.5 million .

The accompanying consolidated financial statements for the period prior to the spin-off are derived from TriMas’ historical accounting records on a carve-out basis. For the periods subsequent to the spin-off, the consolidated financial statements are derived from the historical accounting records of Horizon on a stand-alone basis. As such, the consolidated statements of income (loss), consolidated statement of comprehensive income (loss) and consolidated statement of cash flows for the years ended December 31, 2017 and 2016 consist of the consolidated results of Horizon on a stand-alone basis. The consolidated financial statements for the year ended December 31, 2015 consist of the consolidated results of Horizon on a stand-alone basis for the six months ended December 31, 2015, and the consolidated results of operations of Horizon as historically managed under TriMas, on a carve-out basis, for the six months ended June 30, 2015.

For the period prior to the separation, the consolidated financial statements include expense allocations for certain functions provided by our former parent; however, the allocations may not reflect the expenses the Company would have incurred as an independent, publicly traded company for the period presented. These expenses were allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on the basis of revenue or headcount. Transactions historically treated as intercompany between the Company and our former parent have been included in these consolidated financial statements and were considered effectively settled for cash at the time of the spin-off.

2 . New Accounting Pronouncements

In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires, for qualifying hedges, the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also modifies the accounting for components excluded from the assessment of hedge effectiveness, eases documentation and assessment requirements and modifies certain disclosure requirements. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted and should be applied on a modified retrospective basis. The Company is in the process of assessing the impact of the adoption of ASU 2017-12 on its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”). ASU 2017-09 amends the scope of modification accounting for share-based payment arrangements and provides guidance on when an entity would be required to apply modification accounting. This guidance is effective for all entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted and should be applied on a prospective basis. The Company will adopt ASU 2017-09 on January, 1, 2018 on a prospective basis.

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 eliminates the requirement to perform a hypothetical purchase price allocation to

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

measure the amount of goodwill impairment. Instead, under ASU 2017-04, the goodwill impairment would be the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 with early adoption permitted. The Company has early adopted ASU 2017-04 for its annual goodwill impairment test during the fourth quarter of 2017 and there was no impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 provides clarification on the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within those annual periods, and should be applied on a prospective basis. ASU 2017-01 is effective for the Company for any new acquisitions (or disposals) starting on January 1, 2018.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”). ASU 2016-16 provides an amendment to the accounting guidance related to the recognition of income tax consequences of an intra-entity transfer of an asset other than inventory. Under the new guidance, an entity is required to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Under the current guidance, the income tax effects are deferred until the asset has been sold to an outside party. The Company will adopt ASU 2016-16 on January 1, 2018, on a modified retrospective basis, which will not have a material impact on the financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)” (“ASU 2016-15”). ASU 2016-15 was issued to reduce differences in practice with respect to how specific transactions are classified in the statement of cash flows. This guidance is effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted and should be applied on a retrospective basis. The Company will adopt ASU 2016-15 on January 1, 2018, which will not have a material impact on the financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which supersedes the leases requirements in “Leases (Topic 840)” (“ASU 2016-02”). The objective of this update is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. The Company is in the process of assessing the impact of the adoption of ASU 2016-02 on its consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” This guidance provides that inventory not measured using the last-in, first out (“LIFO”) or retail inventory methods should be measured at the lower of cost and net realizable value. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory. As of January 1, 2017, the provisions of this ASU became effective for the Company on a prospective basis and did not have a material impact on the Company’s consolidated financial position or results of operations.

Accounting Standards Update 2014-09

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09” or “Topic 606”). ASU 2014-09 supersedes most of the existing guidance on revenue recognition in Accounting Standard Codification (“ASC”) Topic 605, “Revenue Recognition” (“Topic 605”), and establishes a broad principle that would require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity identifies the contract with a customer, identifies the separate performance obligations in the contract, determines the transaction price, allocates the transaction price to the separate performance obligations and recognizes revenue when each separate performance obligation is satisfied. The FASB has subsequently issued additional ASUs to clarify certain elements of Topic 606. This guidance is effective for Horizon Global beginning on January 1, 2018 and entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The Company will adopt ASU 2014-09 using the modified retrospective approach whereby a cumulative-effect adjustment to the opening balance of retained earnings is recognized as of the date of adoption.

The Company has drafted its accounting policy for Topic 606 based on its evaluation of the five steps in the new revenue recognition model, which included a detailed review of its business and contracts active during and through the end of 2017. While the Company

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

continues to assess all potential impacts of the new standard, the Company does not expect that the adoption of the new revenue standard will have a material impact on the Company’s revenues, results of operations or financial position.

There are also certain considerations related to internal control over financial reporting that are associated with implementing the new guidance under Topic 606. The Company has evaluated its control framework for revenue recognition and is currently implementing necessary changes to its internal controls to address risks associated with the new standard. Disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the former guidance. The Company is currently concluding its assessment of the new disclosure requirements and is in process of drafting its disclosures under Topic 606 which will be finalized and incorporated in the Company’s Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2018.

3 . Summary of Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the assets, liabilities, revenues and expenses of Horizon Global and its subsidiaries as of December 31, 2017 and 2016 and for the years ended December 31, 2017 , 2016 and 2015 . In addition, the consolidated financial statements include the consolidation of a variable interest entity (“VIE”) that the Company has deemed to be the primary beneficiary of. The consolidated financial statements include the assets and liabilities of the VIE at December 31, 2017 and 2016 , and the revenues and expenses of the VIE for the period beginning October 1, 2016. Intercompany transactions have been eliminated.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management of the Company 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. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill and other intangibles, valuation allowances for receivables, inventories and deferred income tax assets, valuation of derivatives, estimated future unrecoverable lease costs, estimated unrecognized tax benefits, legal and product liability matters, assets and obligations related to employee benefits and allocated expenses, and the respective allocation methods. Actual results may differ from such estimates and assumptions.

Cash and Cash Equivalents. The Company considers cash on hand and on deposit and investments in all highly liquid debt instruments with initial maturities of three months or less to be cash and cash equivalents.

Account Receivables. Receivables are presented net of allowances for doubtful accounts of approximately $3.1 million and $3.8 million at December 31, 2017 and 2016 , respectively. The Company monitors its exposure for credit losses and maintains allowances for doubtful accounts based upon the Company’s best estimate of probable losses inherent in the accounts receivable balances. The Company does not believe that significant credit risk exists due to its diverse customer base.

Account Receivables Factoring. The Company has factoring arrangements with financial institutions to sell certain accounts receivable under non-recourse agreements. Total receivables sold under the factoring arrangements were approximately $257.5 million and $20.7 million as of December 31, 2017 and 2016 , respectively. The sales of accounts receivable in accordance with the factoring arrangements are reflected as a reduction of Receivables, net in the consolidated balance sheets as they meet the applicable criteria of ASC 860, “ Transfers and Servicing.” The holdback amount due from the factoring institutions was approximately $3.1 million and $3.0 million as of December 31, 2017 and 2016 , respectively, and is shown in Receivables, net in the consolidated balance sheets. Cash proceeds from these arrangements are included in the change in receivables under the operating activities section of the consolidated statements of cash flows. The Company pays factoring fees associated with the sale of receivables based on the dollar value of the receivables sold. Total factoring fees were $0.7 million and $0.1 million for the years ended December 31, 2017 and 2016 . The Company had no factoring arrangements for the year ended December 31, 2015 .

Inventories. Inventories are stated at lower of cost or net realizable value, with cost determined using the first-in, first-out method. Direct materials, direct labor and allocations of variable and fixed manufacturing-related overhead are included in inventory cost.

Property and Equipment. Property and equipment additions, including significant improvements, are recorded at cost. Upon retirement or disposal of property and equipment, the historical cost and accumulated depreciation are removed from the accounts, and any gain or loss is included in the accompanying consolidated statements of income (loss). Repair and maintenance costs are charged to expense as incurred.

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Depreciation and Amortization. Depreciation is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: building and land/building improvements 10 to 40 years, and machinery and equipment, three to 15 years. Customer relationship intangibles are amortized over periods ranging from five to 25 years, while technology and other intangibles are amortized over periods ranging from three to 15 years. Capitalized debt issuance costs are amortized over the underlying terms of the related debt.

Impairment of Long-Lived Assets and Definite-Lived Intangible Assets. The Company reviews, on at least a quarterly basis, the financial performance of each business unit for indicators of impairment. In reviewing for impairment indicators, the Company also considers events or changes in circumstances such as business prospects, customer retention, market trends, potential product obsolescence, competitive activities and other economic factors. An impairment loss is recognized when the carrying value of an asset group exceeds the future net undiscounted cash flows expected to be generated by that asset group. The impairment loss recognized is the amount by which the carrying value of the asset group exceeds its fair value.

Goodwill. Goodwill relating to a single business reporting unit is included as an asset of the applicable segment. Goodwill arising from major acquisitions that involve multiple reportable segments is allocated to the reporting units based on the relative fair value of the reporting unit. The Company determines its reporting units at the individual operating segment level, or one level below, when there is discrete financial information available that is regularly reviewed by segment management for evaluating operating results. For purposes of the Company’s 2017 goodwill impairment test, the Company had three reporting units within its three reportable segments, all of which had goodwill.

Goodwill is reviewed by the Company for impairment on a reporting unit basis annually on October 1st or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. During 2017, the Company has elected to early adopt ASU 2017-04, which eliminates the second step of the two-step goodwill impairment test. The Company performs a qualitative assessment (Step Zero) of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If not, no further goodwill impairment testing is performed. If so, the Company performs testing for possible impairment in a one-step quantitative process. The fair value of a reporting unit is compared with its carrying value, including goodwill. If fair value exceeds the carrying value, goodwill is not considered to be impaired. If the fair value of a reporting unit is below the carrying value, then goodwill is considered to be impaired in the amount of the excess of a reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

The Company prepared a qualitative assessment of the carrying value of goodwill within its Horizon Americas and Horizon Asia‑Pacific reporting units as of our annual testing date at October 1, 2017, using the criteria in ASC 350-20-35-3 to determine whether it is more likely than not that the reporting unit’s fair value is less than its carrying value. As a result of the impairment indicators discussed in detail below, we updated our analysis as of December 31, 2017. Based on the qualitative analysis performed, the Company does not believe that it is more likely than not that the that the fair value of the reporting units is less than the carrying amounts; therefore, the quantitative step is not required for the 2017 goodwill impairment test.

The Company exercised its unconditional option provided by ASC 350-20-35-3B to bypass the qualitative assessment (Step Zero) of goodwill in its Horizon Europe-Africa reporting unit. The Company prepared a quantitative assessment to estimate the fair value of its Horizon Europe-Africa reporting unit at the annual testing date of October 1, 2017 utilizing a weighting of the income approach and the market approach. Based on the Step One analysis performed, the Horizon Europe-Africa reporting unit’s fair value substantially exceeded its carrying value; therefore, there is no goodwill impairment as a result of this 2017 goodwill impairment test.

In the fourth quarter of 2017, the Company experienced a significant decline in its market capitalization. Further, the Horizon Europe‑Africa reporting unit did not perform in-line with expectations during the fourth quarter, driven by delayed closure and additional costs incurred relating to closing facilities in the United Kingdom and Sweden, delayed realization of price increases and inefficiencies transferring production to lower cost manufacturing sites. Because of the decline in market capitalization and fourth quarter results, the Company identified an indicator of impairment in the fourth quarter. As a result of the indicators identified, the Company performed an interim quantitative assessment as of December 31, 2017, utilizing a combination of the income and market approaches, which was weighted evenly. The results of the quantitative analysis performed indicated the fair value of the reporting unit exceeded the carrying value by approximately 1% . Key assumptions used in the analysis were a discount rate of 13% , EBITDA margin and a terminal growth rate of 2.5% . The primary driver in the reduction of the fair value of the reporting unit was a reduction of expected future cash flows. Since the acquisition of the Westfalia Group, as further described in Note 4 , “ Acquisitions” , the Company has invested, and intends to continue to invest, in cost savings and productivity initiatives that will drive strong future profitability. While these investments have resulted in lower post-acquisition EBITDA, the Company continues to believe these projects will result in significant future earnings. Future events and changing market conditions may, however,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

lead the Company to reevaluate the assumptions that have been used to test for goodwill impairment, including key assumptions used in the expected EBITDA margins, cash flows and discount rates, as well as other assumptions with respect to matters out of the Company’s control, such as currency exchange rates and market multiple comparables.

Indefinite-Lived Intangibles. The Company assesses indefinite-lived intangible assets, primarily trademarks and trade names, for impairment annually on October 1st by reviewing relevant quantitative factors. More frequent evaluations may be required if the Company experiences changes in its business climate or as a result of other triggering events that take place.

Indefinite-lived assets are tested for impairment by comparing the fair value of each intangible asset with its carrying value. The value of indefinite-lived assets are based on the present value of projected cash flows using a relief from royalty approach. If the carrying value exceeds fair value, the intangible asset is considered impaired and is reduced to fair value.

Self-insurance. Horizon has historically, indirectly as a component of TriMas, participated in TriMas’ self-insurance plans and has been allocated a portion of the related expenses and liabilities for the period presented prior to the spin-off. TriMas was generally self-insured for losses and liabilities related to workers’ compensation, health and welfare claims and comprehensive general, product and vehicle liability. Liabilities associated with the risks were estimated by considering historical claims experience and other actuarial assumptions. Following the spin-off, the Company continued to participate in TriMas’ health and welfare plan through December 31, 2015 and reimbursed them for claims paid on its behalf.

Horizon instituted self-insurance plans for losses and liabilities related to workers’ compensation and comprehensive general, product and vehicle liability at the time of spin-off which ran through June 30, 2016. The Company was generally responsible for up to $1.0 million per occurrence under our comprehensive general, product and vehicle liability plan and $0.5 million under our workers’ compensation plan. Beginning on July 1, 2016, Horizon is fully insured for workers’ compensation and retain no liability for claims under the new plan, and are generally responsible for up to $0.8 million per occurrence under our comprehensive general, product and vehicle liability plan. Reserves for claim losses, including an estimate of related litigation defense costs, are recorded based upon the Company’s estimates of the aggregate liability for claims incurred using actuarial assumptions about future events. Changes in assumptions for factors such as actual experience could cause these estimates to change.

Revenue Recognition. Revenues from product sales are recognized when products are shipped or provided to customers, the customer takes ownership and assumes risk of loss, the sales price is fixed and determinable and collectability is reasonably assured. Net sales is comprised of gross revenues less estimates of expected returns, trade discounts and customer allowances, which include incentives such as cooperative advertising agreements, volume discounts and other supply agreements in connection with various programs. Such deductions are recorded during the period the related revenue is recognized.

Cost of Sales. Cost of sales includes material, labor and overhead costs incurred in the manufacture of products sold in the period. Material costs include raw material, purchased components, outside processing and inbound freight costs. Overhead costs consist of variable and fixed manufacturing costs, wages and fringe benefits, and purchasing, receiving and inspection costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses include the following: costs related to the advertising, sale, marketing and distribution of the Company’s products, shipping and handling costs, amortization of customer intangible assets, costs of finance, human resources, legal functions, executive management costs and other administrative expenses.

Research and Development Costs. Research and development (“R&D”) costs are expensed as incurred. R&D expenses were approximately $15.4 million , $10.4 million and $4.1 million for the years ended December 31, 2017 , 2016 and 2015 , respectively, and are included in cost of sales in the accompanying consolidated statements of income (loss).

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Shipping and Handling Expenses. Freight costs are included in cost of sales. Shipping and handling expenses, including those of Horizon Americas ’ distribution network, are included in selling, general and administrative expenses in the accompanying consolidated statements of income (loss). Shipping and handling costs were $13.3 million , $9.1 million and $7.6 million for the years ended December 31, 2017 , 2016 and 2015 , respectively.

Advertising and Sales Promotion Costs. Advertising and sales promotion costs are expensed as incurred. Advertising costs were approximately $6.2 million , $6.1 million and $7.8 million for the years ended December 31, 2017 , 2016 and 2015 , respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of income (loss).

Income Taxes. For the purposes of the consolidated financial statements as of and for the six months ended June 30, 2015, the Company’s income tax expense and deferred income tax balances have been estimated as if the Company filed income tax returns on a stand-alone basis separate from former parent. As a stand-alone entity, deferred income taxes and effective tax rates may differ from those in the historical periods.

Following the spin-off, the Company computes income taxes using the asset and liability method, whereby deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities and for operating loss and tax credit carryforwards. Under the method, changes in tax rates and laws are recognized in income in the period such changes are enacted. Valuation allowances are determined based on an assessment of positive and negative evidence on a jurisdiction-by-jurisdiction basis and are utilized to reduce deferred tax assets to the amount more likely than not to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits within income tax expense. Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets.

The provision for federal, foreign, and state and local income taxes is calculated on income before income taxes based on current tax law and includes the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provision differs from the amounts currently payable because certain items of income and expense are recognized in different reporting periods for financial reporting purposes than for income tax purposes.

Foreign Currency Translation. The financial statements of subsidiaries located outside of the United States are measured using the currency of the primary economic environment in which they operate as the functional currency. When translating into U.S. dollars, income and expense items are translated at average monthly exchange rates and assets and liabilities are translated at exchange rates in effect at the balance sheet date. Translation adjustments resulting from translating the functional currency into U.S. dollars are deferred as a component of accumulated other comprehensive income (loss) in the consolidated statements of shareholders’ equity. Net foreign currency transaction gains or losses were approximately a $0.8 million loss for the year ended December 31, 2017 , a $0.5 million gain for the year ended December 31, 2016 , and a $1.4 million loss for the year ended December 31, 2015 . Net foreign currency transaction gains or losses are included in other expense, net in the accompanying consolidated statements of income (loss).

Derivative Financial Instruments. The Company records all derivative financial instruments at fair value on the balance sheets as either assets or liabilities, and changes in their fair values are immediately recognized in earnings if the derivatives do not qualify as effective hedges. If a derivative is designated as a fair value hedge, then the effective portion of changes in the fair value of the derivative are offset against the changes in the fair value of the underlying hedged item. If a derivative is designated as a cash flow hedge, then the effective portion of the changes in the fair value of the derivative is recognized as a component of other comprehensive income (loss) until the underlying hedged item is recognized in earnings or the forecasted transaction is no longer probable of occurring. When the underlying hedged transaction is realized or the hedged transaction is no longer probable, the gain or loss included in accumulated other comprehensive loss is recorded in earnings and reflected in the consolidated statements of income (loss) through the same line item.

The Company formally documents hedging relationships for all derivative transactions and the underlying hedged items, as well as its risk management objectives and strategies for undertaking the hedge transactions.

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Fair Value of Financial Instruments. In accounting for and disclosing the fair value of these instruments, the Company uses the following hierarchy:


▪	Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date;


▪	Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and


▪	Level 3 inputs are unobservable inputs for the asset or liability.

Valuation of the Company’s foreign currency forward contracts and cross currency swaps are based on the income approach, which uses observable inputs such as forward currency exchange rates and swap rates. The carrying value of financial instruments reported in the balance sheets for current assets and current liabilities approximates fair value due to the short maturity of these instruments.

Business Combinations. The Company records assets acquired and liabilities assumed from acquisitions at fair value. The fair value of working capital accounts generally approximate book value. The valuation of inventory, property, plant and equipment, and intangible assets require significant assumptions. Inventory is recorded based on the estimated selling price less costs to sell, including completion, disposal and holding period costs with a reasonable profit margin. Property, plant and equipment is recorded at fair value using a combination of both the cost and market approaches for both the real and personal property acquired. Under the cost approach, consideration is given to the amount required to construct or purchase a new asset of equal value at current prices, with adjustments in value for physical deterioration, as well as functional and economic obsolescence. Under the market approach, recent transactions for similar types of assets are used as the basis for estimating fair value. For trademark/trade names and technology and other intangible assets, the estimated fair value is based on projected discounted future net cash flows using the relief-from-royalty method. For customer relationship intangible assets, the estimated fair value is based on projected discounted future cash flows using the excess earnings method. The relief-from-royalty and excess earnings method are both income approaches that utilize key assumptions such as forecasts of revenue and expenses over an extended period of time, royalty rate percentages, tax rates, and estimated costs of debt and equity capital to discount the projected cash flows.

Earnings Per Share. Basic earnings per share (“EPS”) is computed based upon the weighted average number of common shares outstanding for each period. Diluted EPS is computed based on the weighted average number of common shares and common equivalent shares. Common equivalent shares represent the effect of stock-based awards, warrants, and convertible notes during each period presented, which, if exercised, earned, or converted, would have a dilutive effect on earnings per share. On June 30, 2015, 18,062,027 shares of our common stock were distributed to TriMas shareholders of record to complete the spin-off from TriMas. For comparative purposes we have used weighted average shares of 18,062,027 to calculate basic EPS for all periods prior to the spin-off. Dilutive earnings per share are calculated to give effect to stock options and warrants, restricted shares outstanding, and convertible notes during each period.

Environmental Obligations. The Company is subject to increasingly stringent environmental laws and regulations, including those relating to air emissions, wastewater discharges and chemical and hazardous waste management and disposal. Some of these environmental laws hold owners or operators of land or businesses liable for their own and for previous owners’ or operators’ releases of hazardous or toxic substances or wastes. Other environmental laws and regulations require the obtainment and compliance with environmental permits. To date, costs of complying with environmental, health and safety requirements have not been material; however, the Company cannot quantify with certainty the potential impact of future compliance efforts and environmental remediation actions.

While the Company must comply with existing and pending climate change legislation, regulation and international treaties or accords, current laws and regulations have not had a material impact on the Company’s business, capital expenditures or financial position. Future events, including those relating to climate change or greenhouse gas regulation could require the Company to incur expenses related to the modification or curtailment of operations, installation of pollution control equipment or investigation and cleanup of contaminated sites.

Ordinary Course Claims. The Company is subject to claims and litigation in the ordinary course of business, but does not believe that any such claim or litigation is likely to have a material adverse effect on its financial position and results of operations or cash flows.

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Stock-based Compensation. The Company measures stock-based compensation expense at fair value as of the grant date in accordance with U.S. GAAP and recognizes such expenses over the vesting period of the stock-based employee awards. Stock options are issued with an exercise price equal to the opening market price of Horizon common shares on the date of grant. The fair value of stock options is determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, expected option life, risk-free interest rate and expected dividend yield. In addition, the Company periodically updates its estimate of attainment for each restricted share with a performance factor based on current and forecasted results, reflecting the change from prior estimate, if any, in current period compensation expense.

Other Comprehensive Income (Loss). The Company refers to other comprehensive income (loss) as revenues, expenses, gains and losses that under U.S. GAAP are included in comprehensive income (loss) but are excluded from net earnings as these amounts are recorded directly as an adjustment to accumulated deficit. Other comprehensive income (loss) is comprised of foreign currency translation adjustments and changes in unrealized gains and losses on forward currency contracts and cross currency swaps.

Net transfers (to) from parent . Net transfers (to) from parent in the consolidated statements of cash flows and statements of shareholders’ equity represent the total net effect of the settlement of intercompany transactions with TriMas.

Reclassifications. Certain amounts in prior years’ financial statements have been reclassified to conform to the current presentation.

4 . Acquisitions

2017 Acquisition

On July 3, 2017, the Company completed the acquisition of Best Bars Limited (“Best Bars”), within the Horizon Asia-Pacific reportable segment, for total consideration of $19.8 million , subject to a net working capital adjustment which has not been finalized. Best Bars is a provider of towing solutions and automotive accessories to OE and aftermarket customers in New Zealand. The Company believes the acquisition will expand its opportunities for revenue and margin growth, increase its market share and further develop its global OE footprint. Supplemental pro forma disclosures are not included as the amounts are deemed immaterial. Revenues and earnings of the acquiree since the acquisition date included in the Company’s consolidated statements of income (loss) are immaterial.

The following table summarizes the fair value of consideration paid for Best Bars, and the assets acquired and liabilities assumed:



	Acquisition Date
	(dollars in thousands)
Consideration
Cash paid	$	19,800

Recognized amounts of identifiable assets acquired and liabilities assumed
Receivables	2,100
Inventories	2,340
Other intangibles	7,690
Prepaid expenses and other current assets	110
Property and equipment	2,250
Accounts payable and accrued liabilities	(1,680		)
Total identifiable net assets	12,810
Goodwill	6,990
	$	19,800

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2016 Acquisition

On October 4, 2016, the Company completed the acquisition of 100% of the equity interest in Westfalia-Automotive Holding GmbH and TeIJs Holding B.V. (collectively, the “ Westfalia Group ”). The acquisition was effective October 1, 2016, and was for total consideration of approximately $141.5 million , net of cash acquired. The consideration was in the form of approximately $91.6 million paid in cash, net of cash acquired, and approximately $49.9 million paid through the issuance of 2,704,310 shares of the Company’s common stock. The fair value of the common stock was $18.48 , determined based on the price of the Company’s common stock on October 4, 2016, which was $19.87 , with a discount applied due to restrictions on marketability.

The Westfalia Group is a leading global towing company. Headquartered in Rheda-Wiedenbrück, Germany, with operating facilities in 11 countries, it manufactures towing and trailering products, including more than 1,700 different types of towbars, wiring kits and carrier systems for cars and light utility vehicles. The Company believes the acquisition will expand its opportunities for revenue and margin growth, increase its market share and augment its global OE footprint with access to new markets and customers.

The following table summarizes the fair value of consideration paid for the Westfalia Group , and the assets acquired and liabilities assumed:



	Acquisition Date
	(dollars in thousands)
Consideration
Cash paid	$	91,580
Issuance of common stock	49,960
Total consideration	$	141,540
Recognized amounts of identifiable assets acquired and liabilities assumed
Receivables	$	19,700
Inventories	43,290
Other intangibles ^(a)	47,780
Prepaid expenses and other current assets	1,740
Property and equipment	47,480
Accounts payable and accrued liabilities	(54,150		)
Long-term debt	(59,140		)
Other long-term liabilities	(31,210		)
Total identifiable net assets	15,490
Goodwill ^(b)	126,050
	$	141,540

___________________________

^(a) Consists of approximately $33.6 million of customer relationships with an estimated useful life of 16.3 years, $3.4 million of technology and other intangible assets with an estimated useful life of 10 years and $10.8 million of trademark/trade names with an indefinite useful life.

^(b) All of the goodwill was assigned to the Company’s Horizon Europe‑Africa reportable segment and is expected to be deductible for tax purposes.

The results of operations of the Westfalia Group are included in the Company’s results beginning October 1, 2016. The actual amounts of net sales and operating loss of the Westfalia Group included in the accompanying consolidated statements of income (loss) for the year ended December 31, 2016 are $54.5 million and $9.6 million , respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the supplemental pro forma results of the combined entity as if the acquisition had occurred on January 1, 2015. The supplemental pro forma information presented below is for informational purposes and is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated on January 1, 2015:



	Pro forma Combined ^(a)
	Year ended December 31,
	2016			2015
	(dollars in thousands)
Net sales	$	811,330		$	787,930
Net loss attributable to Horizon Global	$	(12,780	)	$	(18,350	)
Basic earnings (loss) per share attributable to Horizon Global	$	(0.61	)	$	(0.88	)
Diluted earnings (loss) per share attributable to Horizon Global	$	(0.61	)	$	(0.88	)

___________________________

^(a) The supplemental pro forma results reflect certain material adjustments, as follows:


1.	Pre-tax pro forma adjustments for inventory step-up of $6.7 million for each of the years ended December 31, 2016 and December 31, 2015, respectively, associated with the acquisition.


2.	Pre-tax pro forma adjustments for depreciation expense of $1.4 million and $2.0 million for the years ended December 31, 2016 and December 31, 2015, respectively, on the property and equipment associated with the acquisition.


3.	Pre-tax pro forma adjustments for amortization expense of $1.4 million and $1.5 million for the years ended December 31, 2016 and December 31, 2015, respectively, on the intangible assets associated with the acquisition.


4.	Pre-tax pro forma adjustments for financing costs of $0.5 million and $0.6 million for the years ended December 31, 2016 and December 31, 2015, respectively, on the incremental debt associated with the acquisition.


5.	Pre-tax pro forma adjustments for transaction costs of $10.3 million for each of the years ended December 31, 2016 and December 31, 2015, respectively, associated with the acquisition.


6.	Pre-tax pro forma adjustments of $8.1 million and $10.7 million for the years ended December 31, 2016 and December 31, 2015, respectively, to reflect interest expense incurred on the incremental term loan and revolver borrowings incurred in order to fund the acquisition.

Total acquisition costs incurred by the Company in connection with its purchase of the Westfalia Group , primarily related to third- party legal, accounting and tax diligence fees, were approximately $10.3 million , all of which were incurred during 2016. These costs are recorded in selling, general and administrative expenses in the accompanying consolidated statements of income (loss).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5 . Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 are as follows:



		Horizon Americas			Horizon Europe‑Africa			Horizon Asia‑Pacific			Total
	(dollars in thousands)
Balances at December 31, 2015		$	4,410		$	—		$	—		$	4,410
Goodwill from acquisitions ^(a)		—			126,050			—			126,050
Foreign currency translation and other		960			(11,230		)	—			(10,270		)
Balances at December 31, 2016		5,370			114,820			—			120,190
Goodwill from acquisitions ^(b)		—			—			6,990			6,990
Foreign currency translation and other		(90		)	11,340			(240		)	11,010
Balances at December 31, 2017		$	5,280		$	126,160		$	6,750		$	138,190

__________________________

^(a) Attributable to the acquisition of the Westfalia Group, as further described in Note 4 , “ Acquisitions ”.

^(b) Attributable to the acquisition of Best Bars, as further described in Note 4 , “ Acquisitions ”.

Other Intangible Assets

In May 2016, the Company made a decision to simplify its brand offering in the Horizon Americas ’ reportable segment. Based on this decision, the Company no longer expects that the economic benefit of certain indefinite-lived trade names extends beyond the foreseeable future. As a result, in the second quarter of 2016, the Company determined that trade names with an aggregate carrying value of $2.4 million should be assigned finite useful lives. In accordance with ASC 350, “ Intangibles - Goodwill and Other, ” these trade names were first tested for impairment as indefinite-lived intangible assets resulting in non-cash intangible asset impairment charges of $2.2 million . The remaining $0.2 million was reclassified to amortizable intangible assets during the second quarter of 2016 and amortized within selling, general and administrative costs over the remainder of the year.

During the Company’s annual indefinite-lived impairment testing in the fourth quarter of 2016, due to the macroeconomic conditions in Brazil and declining sales and sales projections as a result of competitive pressures in the United Kingdom, the Company determined that certain trade names with an aggregate carrying value of $6.9 million were impaired. In accordance with ASC 350, “ Intangibles - Goodwill and Other, ” the indefinite-lived assets were tested for impairment with fair value measurements derived from a relief from royalty method, which considers projected revenue and an estimated royalty rate. It was determined that the carrying value of these trade names exceeded their estimated fair value. As a result, non-cash intangible asset impairment charges of $3.8 million and $2.4 million were recorded in the Horizon Americas and Horizon Europe‑Africa reportable segments, respectively. No impairment charges were recorded during the year ended December 31, 2017. Refer to Note 3 , “Summary of Significant Accounting Policies” for further discussion.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The gross carrying amounts and accumulated amortization of the Company’s other intangibles as of December 31, 2017 and 2016 are summarized below. The Company amortizes these assets over periods ranging from on e to 25 years.



	As of December 31, 2017					As of December 31, 2016
Intangible Category by Useful Life	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
	(dollars in thousands)
Finite-lived intangible assets:
Customer relationships, 5 - 25 years	$	180,850	$	(121,750	)	$	170,690	$	(112,560	)
Technology and other, 3 - 15 years	19,950		(15,260		)	18,410		(14,560		)
Trademark/Trade names, 1 - 8 years	730		(190		)	150		(150		)
Total finite-lived intangible assets	201,530		(137,200		)	189,250		(127,270		)
Trademark/Trade names, indefinite-lived	25,900		—			24,740		—
Total other intangible assets	$	227,430	$	(137,200	)	$	213,990	$	(127,270	)

Amortization expense related to intangible assets as included in the accompanying consolidated statements of income (loss) is summarized as follows:



	Year ended December 31,
	2017		2016		2015
	(dollars in thousands)
Technology and other, included in cost of sales	$	710	$	170	$	190
Customer relationships & Trademark/Trade names, included in selling, general and administrative expenses	9,700		7,790		7,150
Total amortization expense	$	10,410	$	7,960	$	7,340

Estimated amortization expense for the next five fiscal years beginning after December 31, 2017 is as follows:



Year ended December 31,	Estimated Amortization Expense
	(dollars in thousands)
2018	$	7,740
2019	7,240
2020	7,040
2021	5,490
2022	5,240

6. Inventories

Inventories consist of the following components:



	December 31, 2017		December 31, 2016
	(dollars in thousands)
Finished goods	$	105,070	$	89,410
Work in process	16,590		16,270
Raw materials	49,840		40,340
Total inventories	$	171,500	$	146,020

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7 . Property and Equipment, Net

Property and equipment consists of the following components:



	December 31, 2017		December 31, 2016
	(dollars in thousands)
Land and land improvements	$	480	$	520
Buildings	23,370		20,120
Machinery and equipment	162,830		138,470
	186,680		159,110
Less: Accumulated depreciation	73,660		65,350
Property and equipment, net	$	113,020	$	93,760

Depreciation expense as included in the accompanying consolidated statements of income (loss) is as follows:



	Year ended December 31,
	2017		2016		2015
	(dollars in thousands)
Depreciation expense, included in cost of sales	$	13,730	$	8,800	$	8,210
Depreciation expense, included in selling, general and administrative expense	1,200		1,460		1,530
Total depreciation expense	$	14,930	$	10,260	$	9,740

8. Accrued and other long-term liabilities

As of December 31, 2017 and 2016 , accrued wages and bonus were approximately $9.9 million and $16.7 million , respectively. No other classification of accrued liabilities exceeded 5% of current liabilities as of December 31, 2017 and 2016 .

Other long-term liabilities consist of the following components:



	December 31, 2017		December 31, 2016
	(dollars in thousands)
Long-term tax liabilities	$	13,750	$	9,720
Cross currency swap	7,830		—
Deferred purchase price	3,350		5,070
Other	13,440		15,620
Total other long-term liabilities	$	38,370	$	30,410

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9 . Long-term Debt

The Company’s long-term debt consists of the following:



	December 31, 2017		December 31, 2016
	(dollars in thousands)
ABL Facility	$	10,000	$	—
Term B Loan	149,620		337,000
Convertible Notes	125,000		—
Bank facilities, capital leases and other long-term debt	25,780		21,660
	310,400		358,660
Less:
Unamortized debt issuance costs and original issuance discount on Term B Loan	4,940		8,720
Unamortized debt issuance costs and discount on the Convertible Notes	29,870		—
Current maturities, long-term debt	16,710		22,900
Long-term debt	$	258,880	$	327,040

Convertible Notes

On February 1, 2017, the Company completed a public offering of 2.75% Convertible Senior Notes due 2022 (the “Convertible Notes”) in an aggregate principal amount of $125.0 million . Interest is payable on January 1 and July 1 of each year, beginning on July 1, 2017. The Convertible Notes are convertible into 5,005,000 shares of the Company’s common stock, based on an initial conversion price of $24.98 per share. The Convertible Notes will mature on July 1, 2022 unless earlier converted.

The Convertible Notes are convertible at the option of the holder (i) during any calendar quarter beginning after March 31, 2017, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business days after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of such period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; (iii) upon the occurrence of specified corporate events; and (iv) on or after January 1, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date. During the fourth quarter of 2017 , no conditions allowing holders of the Convertible Notes to convert have been met. Therefore, the Convertible Notes are not convertible during the fourth quarter of 2017 and are classified as long-term debt. Should conditions allowing holders of the Convertible Notes to convert be met in the fourth quarter of 2017 or a future quarter, the Convertible Notes will be convertible at their holders’ option during the immediately following quarter. As of December 31, 2017 , the if-converted value of the Convertible Notes did not exceed the principal value of those Convertible Notes.

Upon conversion by the holders, the Company may elect to settle such conversion in shares of its common stock, cash, or a combination thereof. Because the Company may elect to settle conversion in cash, the Company separated the Convertible Notes into their liability and equity components by allocating the issuance proceeds to each of those components in accordance with Accounting Standards Codification (“ASC”) 470-20, “Debt-Debt with Conversion and Other Options.” The Company first determined the fair value of the liability component by estimating the fair value of a similar liability that does not have an associated equity component. The Company then deducted that amount from the issuance proceeds to arrive at a residual amount, which represents the equity component. The Company accounted for the equity component as a debt discount (with an offset to paid-in capital in excess of par value). The debt discount created by the equity component is being amortized as additional non-cash interest expense using the effective interest method over the contractual term of the Convertible Notes ending on July 1, 2022.

The Company allocated offering costs of $3.9 million to the debt and equity components in proportion to the allocation of proceeds to the components, treating them as debt issuance costs and equity issuance costs, respectively. The debt issuance costs of $2.9 million are being amortized as additional non-cash interest expense using the effective interest method over the contractual term of the Convertible Notes. The Company presents debt issuance costs as a direct deduction from the carrying value of the liability component. The carrying value of the liability component at December 31, 2017 , was $95.1 million , including total unamortized

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

debt discount and debt issuance costs of $29.9 million . The $1.0 million portion of offering costs allocated to equity issuance costs was charged to paid-in capital. The carrying amount of the equity component was $20.0 million at December 31, 2017 , net of issuance costs and taxes.

Interest expense recognized relating to the contractual interest coupon, amortization of debt discount and amortization of debt issuance costs on the Convertible Notes included in the accompanying consolidated statements of income (loss) are as follows:



	Year ended December 31,
	2017		2016
	(dollars in thousands)
Contractual interest coupon on convertible debt	$	3,190	$	—
Amortization of debt issuance costs	$	490	$	—
Amortization of "equity discount" related to debt	$	4,380	$	—

The estimated fair value of the Convertible Notes based on a market approach as of December 31, 2017 was approximately $120.3 million , which represents a Level 2 valuation. The estimated fair value was determined based on the estimated or actual bids and offers of the Convertible Notes in an over-the-counter market on the last business day of the period.

In connection with the issuance of the Convertible Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedges”) in privately negotiated transactions with certain of the underwriters or their affiliates (in this capacity, the “option counterparties”). The Convertible Note Hedges provide the Company with the option to acquire, on a net settlement basis, 5,005,000 shares of its common stock, which is equal to the number of shares of common stock that notionally underlie the Convertible Notes, at a strike price of $24.98 , which corresponds to the conversion price of the Convertible Notes. The Convertible Note Hedges have an expiration date that is the same as the maturity date of the Convertible Notes, subject to earlier exercise. The Convertible Note Hedges have customary anti-dilution provisions similar to the Convertible Notes. The Convertible Note Hedges have a default settlement method of net-share settlement but may be settled in cash or shares, depending on the Company’s method of settlement for conversion of the corresponding Convertible Notes. If the Company exercises the Convertible Note Hedges, the shares of common stock it will receive from the option counterparties to the Convertible Note Hedges will cover the shares of common stock that it would be required to deliver to the holders of the converted Convertible Notes in excess of the principal amount thereof. The aggregate cost of the Convertible Note Hedges was $29.0 million (or $7.5 million net of the total proceeds from the Warrants sold, as discussed below), before the allocation of issuance costs of approximately $0.7 million . The Convertible Note Hedges are accounted for as equity transactions in accordance with ASC 815-40 , “Derivatives and Hedging-Contracts in Entity’s own Equity.”

In connection with the issuance of the Convertible Notes, the Company also sold net-share-settled warrants (the “Warrants”) in privately negotiated transactions with the option counterparties for the purchase of up to 5,005,000 shares of its common stock at a strike price of $29.60 per share, for total proceeds of $21.5 million before the allocation of $0.6 million of issuance costs. The Company also recorded the Warrants within shareholders’ equity in accordance with ASC 815-40. The Warrants have customary anti-dilution provisions similar to the Convertible Notes. As a result of the issuance of the Warrants, the Company will experience dilution to its diluted earnings per share if its average closing stock price exceeds $29.60 for any fiscal quarter. The Warrants expire on various dates from October 2022 through February 2023 and must be net-settled in shares of the Company’s common stock. Therefore, upon exercise of the Warrants, the Company will issue shares of its common stock to the purchasers of the Warrants that represent the value by which the price of the common stock exceeds the strike price stipulated within the particular warrant agreement.

ABL Facility

On December 22, 2015, the Company entered into an amended and restated loan agreement among the Company, Cequent Performance Products, Inc. (“Cequent Performance”), Cequent Consumer Products, Inc. (“Cequent Consumer”), Cequent UK Limited, Cequent Towing Products of Canada Ltd., certain other subsidiaries of the Company party thereto as guarantors, the lenders party thereto and Bank of America, N.A., as agent for the lenders (the “ABL Loan Agreement”), under which the lenders party thereto agreed to provide the Company and certain of its subsidiaries with a committed asset-based revolving credit facility (the “ABL Facility”) providing for revolving loans up to an aggregate principal amount of $99.0 million .

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The ABL Loan Agreement provides for the increase of the U.S. sub-facility from an aggregate principal amount of $85.0 million to up to $94.0 million (subject to availability under a U.S.-specific borrowing base) (the “U.S. Facility”), and the establishment of two new sub-facilities, (i) a Canadian sub-facility, in an aggregate principal amount of up to $2.0 million (subject to availability under a Canadian-specific borrowing base) (the “Canadian Facility”) and (ii) a U.K. sub-facility in an aggregate principal amount of up to $3.0 million (subject to availability under a U.K.-specific borrowing base) (the “U.K. Facility”). The ABL Facility also includes a $20.0 million letter of credit sub-facility, which matures on June 30, 2020 .

Borrowings under the ABL Facility bear interest, at the Company’s election, at either (i) the Base Rate (as defined per the credit agreement, the “Base Rate”) plus the Applicable Margin (as defined per the credit agreement “Applicable Margin”), or (ii) the London Interbank Offered Rate (“LIBOR”) plus the Applicable Margin.

The Company incurs fees with respect to the ABL Facility, including (i) an unused line fee of 0.25% times the amount by which the revolver commitments exceed the average daily revolver usage during any month, (ii) facility fees equal to the applicable margin in effect for LIBOR revolving loans, as defined per the credit agreement, times the average daily stated amount of letters of credit, (iii) a fronting fee equal to 0.125% per annum on the stated amount of each letter of credit and (iv) customary administrative fees.

All of the indebtedness of the U.S. Facility is and will be guaranteed by the Company’s existing and future material domestic subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors. In connection with the ABL Loan Agreement, Cequent Performance and certain other subsidiaries of the Company party to the ABL Loan Agreement entered into a foreign facility guarantee and collateral agreement (the “Foreign Collateral Agreement”) in order to secure and guarantee the obligation under the Canadian Facility and the U.K. Facility. Under the Foreign Collateral Agreement, Cequent Performance and the other subsidiaries of the Company party thereto granted a lien on certain of their assets to Bank of America, N.A., as the agent for the lenders and other secured parties under the Canadian Facility and U.K. Facility.

The ABL Loan Agreement contains customary negative covenants, and does not include any financial maintenance covenants other than a springing minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a trailing twelve-month basis, which will be tested only upon the occurrence of an event of default or certain other conditions as specified in the agreement. At December 31, 2017 , the Company was in compliance with its financial covenants contained in the ABL Facility.

Debt issuance costs of approximately $2.5 million were incurred in connection with the entry into and amendment of the ABL Facility. These debt issuance costs will be amortized into interest expense over the contractual term of the loan. The Company recognized $0.5 million , $0.5 million and $0.1 million during the years ended December 31, 2017 , December 31, 2016 and December 31, 2015 , respectively, related to the amortization of debt issuance costs, which is included in the accompanying consolidated statements of income (loss). There were $1.3 million and $1.8 million of unamortized debt issuance costs included in other assets in the accompanying consolidated balance sheet as of December 31, 2017 and December 31, 2016 , respectively.

There was $10.0 million outstanding under the ABL Facility as of December 31, 2017 with a weighted average interest rate of 3.6% . As of December 31, 2016 there were no amounts outstanding. Total letters of credit issued at December 31, 2017 and 2016 were $6.3 million and $7.0 million , respectively. The Company had $58.5 million and $68.7 million in availability under the ABL Facility as of December 31, 2017 and 2016 , respectively.

Term Loan

On June 30, 2015, the Company entered into a term loan agreement (“Original Term B Loan”) under which the Company borrowed an aggregate of $200.0 million , which matures on June 30, 2021 . On September 19, 2016, the Company entered into the First Amendment to the Original Term B Loan (the “Term Loan Amendment”) which amended the Term B Loan to provide for incremental commitments in an aggregate principal amount of $152.0 million (the “Incremental Term Loans”) that were extended to the Company on October 3, 2016. The Original Term B Loan and Incremental Term Loans are collectively referred to as the “Term B Loan”. On March 31, 2017, the Company entered into the Third Amendment to the Term B Loan (the “Replacement Term Loan Amendment”), which amended the Term B Loan to provide for a new term loan commitment (the “Replacement Term Loan”). The proceeds from the Replacement Term Loan were used to repay in full the outstanding principal amount of the Term B Loan. As a result of the Replacement Term Loan Amendment, the interest rate was reduced by 1.5% per annum. Additionally, quarterly principal payments required under the Original Term B Loan and Term Loan Amendment of $2.5 million and $2.1 million , respectively, were reduced to an aggregate quarterly principal payment of $1.9 million . On and after the Replacement Term Loan Amendment effective date, each reference to “Term B Loan” is deemed to be a reference to the Replacement Term Loan.

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Term B Loan permits the Company to request incremental term loan facilities, subject to certain conditions, in an aggregate principal amount, together with the aggregate principal amount of incremental equivalent debt incurred by the Company, of up to $75.0 million , plus an additional amount such that the Company’s pro forma first lien net leverage ratio (as defined in the term loan agreement) would not exceed 3.50 to 1.00 as a result of the incurrence thereof.

Borrowings under the Term B Loan bear interest, at the Company’s election, at either (i) the Base Rate plus 3.5% per annum, or (ii) LIBOR, with a 1% floor, plus 4.5% per annum. Principal payments required under the Term B Loan are $1.9 million due each calendar quarter beginning June 2017. Commencing with the fiscal year ending December 31, 2017, and for each fiscal year thereafter, the Company will also be required to make prepayments of outstanding amounts under the Term B Loan in an amount equal to 50.0% of the Company’s excess cash flow for such fiscal year, as defined in the Term B Loan, subject to adjustments based on the Company’s leverage ratio and optional prepayments of term loans and certain other indebtedness.

All of the indebtedness under the Term B Loan is and will be guaranteed by the Company’s existing and future material domestic subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors. The Term B Loan contains customary negative covenants, and also contains a financial maintenance covenant which requires the Company to maintain a net leverage ratio not exceeding 5.00 to 1.00 through the fiscal quarter ending March 31, 2018; 4.75 to 1.00 through the fiscal quarter ending September 30, 2018; and thereafter, 4.50 to 1.00 . At December 31, 2017 , the Company was in compliance with its financial covenants as described in the Term B Loan.

During the first quarter of 2017, the Company used a portion of the net proceeds from the Convertible Notes offering as described above, along with proceeds from the Common Stock Offering as described in Note 12 , “Earnings per Share” , to prepay a total of $177.0 million of the Term B Loan. In accordance with ASC 470, “Debt - Modifications and Extinguishments”, the prepayment was determined to be an extinguishment of the existing debt. As a result, the pro-rata share of the unamortized debt issuance costs and original issuance discount related to the prepayment, aggregating to $4.6 million , was recorded as a loss on the extinguishment of debt in the condensed consolidated statements of income (loss). The remaining unamortized debt issuance costs and original issuance discount, including $2.4 million additional transactions fees incurred in connection to the Replacement Term Loan Amendment, was approximately $6.1 million . Both the aggregate debt issuance costs and the original issue discount will be amortized into interest expense over the remaining life of the Term B Loan. The Company recognized $1.6 million , $1.6 million and $0.7 million during the years ended December 31, 2017 , December 31, 2016 and December 31, 2015 related to the amortization of debt issuance costs and original issue discount, which is included in the accompanying consolidated statements of income (loss). The Company had an aggregate principal amount outstanding of $149.6 million and $337.0 million as of December 31, 2017 and 2016 , respectively, under the Term B Loan bearing interest at 6.1% , and had $4.9 million and $8.7 million as of December 31, 2017 and 2016 , respectively, of unamortized debt issuance costs and original issue discount, all of which are recorded as a reduction of the debt balance on the Company’s consolidated balance sheet.

The Company’s Term B Loan traded at approximately 101.4% and 101.6% of par value as of December 31, 2017 and December 31, 2016 . The valuation of the Term B Loan was determined based on Level 2 inputs under the fair value hierarchy, as defined in Note 3 , “ Summary of Significant Accounting Polices. ”

Bank facilities

On July 3, 2017, our Australian subsidiaries entered into a new agreement (collectively, the “Australia Loans”) to provide for revolving borrowings with an aggregate principal amount of $32.0 million as of December 31, 2017 . The Australia Loans include two sub-facilities: (i) Facility A , with a borrowing capacity of $20.3 million that matures on July 3, 2020 and (ii) Facility B , with a borrowing capacity of $11.7 million that matures on July 3, 2018 . There were $6.6 million outstanding under the Australian Loans as for December 31, 2017 . As of December 31, 2016 , no amounts were outstanding under the old revolving debt facility.

Borrowings under Facility A bear interest at the Bank Bill Swap Bid Rate (“BBSY”) plus a margin determined based on the most recent net leverage ratio (as defined per the Australian credit agreement). The margin is to be determined on the first day of the period as follows: (i) 1.10% per annum if the net leverage ratio is less than 1.50 to 1.00; (ii) 1.20% per annum if the net leverage ratio is less than 2.00 to 1.00 and (iii) 1.30% if the net leverage ratio is less than 2.50 to 1.00. Borrowings under Facility B bear interest at the BBSY plus a margin of 0.9% per annum.

The Australian Loans contain financial covenants, which require our Australian subsidiaries to maintain: (i) a net leverage ratio not exceeding 2.50 to 1.00 during the period commencing on the date of the agreement and ending on the first anniversary of the date of the agreement; and 2.00 to 1.00 thereafter; (ii) a working capital coverage ratio (as defined per the Australian credit agreement) greater than 1.75 to 1.00 at all times; and (iii) a gearing ratio (defined as the ratio of senior debt to senior debt plus equity) not to exceed 50% .

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-term Debt Maturities

Future maturities of the face value of long-term debt at December 31, 2017 are as follows:



Years ending December 31,	Future maturities of long-term debt
	(dollars in thousands)
2018	$	16,970
2019	9,670
2020	19,110
2021	127,950
2022	125,010
Thereafter	11,690
Total	$	310,400

10 . Derivative Instruments

Foreign Currency Exchange Rate Risk

As of December 31, 2017 , the Company was party to forward contracts to hedge changes in foreign currency exchange rates with notional amounts of approximately $23.0 million . The Company uses foreign currency forward contracts to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to certain payments for contract manufacturing in its lower-cost manufacturing facilities. The foreign currency forward contracts hedge currency exposure between the Mexican peso and the U.S. dollar, the Thai baht and the Australian dollar and the U.S. dollar and the Australian dollar and mature at specified monthly settlement dates through December 2018. At inception, the Company designated the foreign currency forward contracts as cash flow hedges. Upon the performance of contract manufacturing or purchase of certain inventories the Company de-designates the foreign currency forward contract.

On October 4, 2016, the Company entered into a cross currency swap arrangement to hedge changes in foreign currency exchange rates. As of December 31, 2017 , the notional amount of the cross currency swap was approximately $115.4 million . The Company uses the cross currency swap to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to a non-U.S. denominated intercompany loan of €110.0 million . The cross currency swap hedges currency exposure between the euro and the U.S. dollar and matures on January 3, 2019. The Company makes quarterly principal payments of €1.4 million , plus interest at a fixed rate of 5.4% per annum, in exchange for $1.5 million , plus interest at a fixed rate of 7.2% per annum. At inception, the Company designated the cross currency swap as a cash flow hedge. Changes in the currency rate result in reclassification of amounts from accumulated other comprehensive income (loss) to earnings to offset the re-measurement gain or loss on the non-U.S. denominated intercompany loan.

On August 16, 2017, the Company’s Australian subsidiary entered into a cross currency swap arrangement to hedge changes in foreign currency exchange rates. As of December 31, 2017 , the notional amount of the cross currency was approximately $5.9 million . The Australian subsidiary uses the cross currency swap to mitigate the risk associated with fluctuations in currency rates related to a non-functional currency intercompany loan of NZ $10.0 million . The floating-to-floating cross currency swap hedges currency exposure between the New Zealand dollar and the Australian dollar and matures on June 30, 2020. The Australian subsidiary makes quarterly principal payments of NZ $0.8 million , plus interest at the 3-month Bank Bill Benchmark Rate (“BKBM”) in New Zealand plus a margin of .31% per annum, in exchange for A $0.8 million , plus interest at the 3-month BBSY in Australia per annum. At inception, the cross currency swap was not designated as a hedging instrument.

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Financial Statement Presentation

As of December 31, 2017 and 2016 , the fair value carrying amount of the Company’s derivative instruments were recorded as follows:



		Asset / (Liability) Derivatives
	Balance Sheet Caption	December 31, 2017			December 31, 2016
		(dollars in thousands)
Derivatives designated as hedging instruments
Foreign currency forward contracts	Prepaid expenses and other current assets	$	—		$	670
Foreign currency forward contracts	Accrued liabilities	(670		)	(760		)
Cross currency swap	Other assets	—			5,720
Cross currency swap	Other long-term liabilities	(7,830		)	—
Total derivatives designated as hedging instruments		(8,500		)	5,630
Derivatives not designated as hedging instruments
Foreign currency forward contracts	Prepaid expenses and other current assets	110			—
Foreign currency forward contracts	Accrued liabilities	(90		)	(130		)
Cross currency swap	Other assets	90			—
Total derivatives de-designated as hedging instruments		110			(130		)
Total derivatives		$	(8,390	)	$	5,500

The following table summarizes the gain or loss recognized in accumulated other comprehensive income (loss) (“AOCI”) and the amounts reclassified from AOCI into earnings and the amounts recognized directly into earnings as of December 31, 2017 and 2016 , and for the years ended December 31, 2017 , 2016 and 2015 .



	Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion, net of tax)						Location of Gain (Loss) Reclassified from AOCI into Earnings (Effective Portion)	Amount of Gain (Loss) Reclassified from AOCI into Earnings
	As of December 31,							Year ended December 31,
	2017			2016				2017			2016			2015
	(dollars in thousands)							(dollars in thousands)
Derivative instruments
Foreign currency forward contracts	$	(660	)	$	(320	)	Cost of sales	$	940		$	(1,620	)	$	(590	)
Cross currency swap	$	270		$	(610	)	Other expense, net	$	(15,820	)	$	7,510		$	—

Over the next 12 months, the Company expects to reclassify approximately $0.7 million of pre-tax deferred losses, related to the foreign currency forward contracts, from AOCI to cost of sales as the contract manufacturing and inventory purchases are settled. Over the next 12 months, the Company expects to reclassify approximately $0.4 million of pre-tax deferred gains, related to the cross currency swap, from AOCI to other expense, net as an offset to the re-measurement gains or losses on the non-U.S. denominated intercompany loan.

Derivatives not designated as hedging instruments

The gain or loss resulting from the change in fair value on de-designated forward contracts is reported within cost of sales on the Company’s consolidated statements of income (loss). There was no gain or loss on de-designated derivatives for the year ended December 31, 2017 . The gain and loss on de-designated derivatives amounted to $0.3 million and $0.1 million , respectively, for the years ended December 31, 2016 and 2015 , respectively. The gain or loss resulting from the change in fair value on the floating-to-floating cross currency swap is recorded within other expense, net on the Company’s consolidated statements of income (loss). The gain on this cross currency swap was $0.1 million for the year ended December 31, 2017 .

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During 2016 , the Company entered into forward contracts to acquire a total of €125 million , or $140.0 million , to hedge changes in foreign currency related to the cash portion of the purchase price and debt acquired of the Westfalia Group acquisition. These forward contracts were sold for approximately $140.1 million ; the resulting gain of $0.1 million is included within other expense, net in the Company’s consolidated statements of income (loss) for the year ended December 31, 2016 . Additionally, the Company purchased a currency option to buy €55.0 million at a specified exchange rate in connection with the Westfalia Group acquisition. Upon entering the agreement the Company paid a premium of approximately $0.9 million . This option was sold for approximately $0.4 million ; the resulting loss of $0.5 million is included within other expense, net in the Company’s consolidated statements of income (loss) for the year ended December 31, 2016 .

Fair Value Measurements

The fair value of the Company’s derivatives are estimated using an income approach based on valuation techniques to convert future amounts to a single, discounted amount. The Company’s derivatives are recorded at fair value in its consolidated balance sheets and are valued using pricing models that are primarily based on market observable external inputs, including spot and forward currency exchange rates, benchmark interest rates, and discount rates consistent with the instrument’s tenor, and consider the impact of the Company’s own credit risk, if any. Changes in counterparty credit risk are also considered in the valuation of derivative financial instruments. Fair value measurements and the fair value hierarchy level for the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 and December 31, 2016 are shown below.



	Frequency	Asset / (Liability)			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
		(dollars in thousands)
December 31, 2017
Foreign currency forward contracts	Recurring	$	(650	)	$	—	$	(650	)	$	—
Cross currency swaps	Recurring	$	(7,740	)	$	—	$	(7,740	)	$	—
December 31, 2016
Foreign currency forward contracts	Recurring	$	(220	)	$	—	$	(220	)	$	—
Cross currency swap	Recurring	$	5,720		$	—	$	5,720		$	—

11. Leases

The Company leases certain equipment and facilities under non-cancellable operating leases. Rental expense for the Company totaled approximately $20.0 million in 2017 , $16.8 million in 2016 and $15.8 million in 2015 .

Minimum payments for operating leases having initial or remaining non-cancellable lease terms in excess of one year at December 31, 2017 are summarized below (in thousands):



December 31,	Minimum payments
	(dollars in thousands)
2018	$	17,020
2019	15,550
2020	14,360
2021	13,180
2022	7,820
Thereafter	17,390
Total	$	85,320

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12 . Earnings per Share

On June 30, 2015 , approximately 18.1 million common shares of Horizon Global were distributed to TriMas shareholders in conjunction with the spin-off. For comparative purposes, and to provide a more meaningful calculation for weighted average shares, this amount was assumed to be outstanding as of the beginning of the 2015 period presented in the calculation of basic weighted average shares.

On February 1, 2017, the Company completed an underwritten public offering of 4.6 million shares of common stock, which includes the exercise in full by the underwriters of their option to purchase 0.6 million shares of common stock, at a public offering price of $18.50 per share (the “Common Stock Offering”). Proceeds from the Common Stock Offering were approximately $79.9 million , net of underwriting discounts, commissions, and offering-related transaction costs.

Basic earnings per share is computed using net income attributable to Horizon Global and the number of weighted average shares outstanding. Diluted earnings per share is computed using net income attributable to Horizon Global and the number of weighted average shares outstanding, adjusted to give effect to the assumed exercise of outstanding stock options and warrants, vesting of restricted shares outstanding, and conversion of the Convertible Notes.

Due to net losses for the years ended December 31, 2017 and 2016, the effect of potentially dilutive securities had an antidilutive effect and therefore were excluded from the computation of diluted loss per share.

The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share attributable to Horizon Global and diluted earnings per share attributable to Horizon Global for the years ended December 31, 2017 , 2016 and 2015 :



	Year Ended December 31,
	2017			2016			2015
	(dollars in thousands, except for per share amounts)
Numerator:
Net income (loss) attributable to Horizon Global	$	(3,550	)	$	(12,360	)	$	8,300
Denominator:
Weighted average shares outstanding, basic	24,781,349			18,775,500			18,064,491
Dilutive effect of stock-based awards	—			—			96,361
Weighted average shares outstanding, diluted	24,781,349			18,775,500			18,160,852

Basic earnings (loss) per share attributable to Horizon Global	$	(0.14	)	$	(0.66	)	$	0.46
Diluted earnings (loss) per share attributable to Horizon Global	$	(0.14	)	$	(0.66	)	$	0.46

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The effect of certain potentially dilutive securities were excluded from the computation of weighted average diluted shares outstanding for years ended December 31, 2017 , 2016 and 2015 , as inclusion would have resulted in anti-dilution. A summary of these anti-dilutive common stock equivalents is provided in the table below:



	Year Ended December 31,
	2017	2016	2015
Number of options	343,782	331,485	212,088
Exercise price of options	$9.20 - $11.29	$9.20 - $11.29	$9.20 - $11.29
Restricted stock units	584,335	526,751	—
Convertible Notes	4,566,205	—	—
Warrants	4,566,205	—	—

For purposes of determining diluted earnings per share, the Company has elected a policy to assume that the principal portion of the Convertible Notes, as described in Note 9 , “ Long-term Debt ,” is settled in cash and the conversion premium is settled in shares. Therefore, the Company has adopted a policy of calculating the diluted earnings per share effect of the Convertible Notes using the treasury stock method. As a result, the dilutive effect of the Convertible Notes is limited to the conversion premium, which is reflected in the calculation of diluted earnings per share as if it were a freestanding written call option on the Company’s shares. Using the treasury stock method, the Warrants issued in connection with the issuance of the Convertible Notes are considered to be dilutive when they are in the money relative to the Company’s average common stock price during the period. The Convertible Note Hedges purchased in connection with the issuance of the Convertible Notes are always considered to be anti-dilutive and therefore do not impact the Company’s calculation of diluted earnings per share.

13. Equity Awards

Description of the Plan

Horizon employees and non-employee directors participate in the Horizon Global Corporation 2015 Equity and Incentive Compensation Plan (as amended and restated, the “Horizon 2015 Plan”). The Horizon 2015 Plan authorizes the Compensation Committee of the Horizon Board of Directors to grant stock options (including “incentive stock options” as defined in Section 422 of the U.S. Internal Revenue Code), restricted shares, restricted stock units, performance shares, performance stock units, cash incentive awards, and certain other awards based on or related to our common stock to Horizon employees and non-employee directors. No more than 2.0 million Horizon common shares may be delivered under the Horizon 2015 Plan.

Stock Options

The following table summarizes Horizon stock option activity from December 31, 2016 to December 31, 2017 :



	Number of Stock Options		Weighted Average Exercise Price		Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2016	347,585		$	10.37
Granted	—		—
Exercised	(6,593	)	10.26
Canceled, forfeited	(2,643	)	10.08
Expired	—		—
Outstanding at December 31, 2017	338,349		$	10.38	7.8	$	1,231,917

As of December 31, 2017 , there was $0.1 million in unrecognized compensation costs related to stock options that is expected to be recognized over a weighted average period of 0.5 years. The Company recognized approximately $0.3 million , $0.8 million and $0.2 million of stock-based compensation expense related to stock options for the years ended December 31, 2017 , 2016 and 2015 , respectively. Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statements of income.

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Units

During 2017 , the Company granted an aggregate of 185,423 restricted stock units and performance stock units to certain key employees and non-employee directors. The total grants consisted of: (i) 22,449 time-based restricted stock units that vest ratably on (1) March 1, 2018, (2) March 1, 2019 and (3) March 1, 2020; (ii) 50,416 time-based restricted stock units that vest ratably on (1) March 1, 2018, (2) March 1, 2019, (3) March 1, 2020 and (4) March 1, 2021; (iii) 72,865 market-based performance stock units that vest on March 1, 2020; (iv) 33,426 time-based restricted stock units that vest on July 1, 2018, and (v) 6,267 time-based restricted stock units that vest on July 1, 2019.

The performance criteria for the market-based performance stock units is based on the Company’s total shareholder return (“TSR”) relative to the TSR of the common stock of a pre-defined industry peer group, measured over a period beginning January 1, 2017 and ending December 31, 2019. TSR is calculated as the Company’s average closing stock price for the 20 -trading days at the end of the performance period plus Company dividends, divided by the Company’s average closing stock price for the 20 -trading days prior to the start of the performance period. Depending on the performance achieved, the amount of shares earned can vary from 0% of the target award to a maximum of 200% of the target award. The Company estimated the grant-date fair value of the awards subject to a market condition using a Monte Carlo simulation model, using the following weighted average assumptions: risk-free interest rate of 1.52% and annualized volatility of 38.5% . Due to the lack of adequate stock price history of Horizon common stock, the expected volatility is based on the historical volatility of the common stock of the peer group. The grant date fair value of the performance stock units was $18.41 .

The grant date fair value of restricted stock units is expensed over the vesting period. Restricted stock unit fair values are based on the closing trading price of the Company’s common stock on the date of grant. Changes in the number of restricted stock units outstanding for the year ended December 31, 2017 were as follows:



	Number of Restricted Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016	557,563		$	11.90
Granted	185,423		17.49
Vested	(153,086	)	12.52
Canceled, forfeited	(7,289	)	12.21
Outstanding at December 31, 2017	582,611		$	13.51

As of December 31, 2017 , there was $3.1 million in unrecognized compensation costs related to unvested restricted stock units that is expected to be recognized over a weighted average period of 0.8 years.

The Company recognized approximately $3.3 million , $3.0 million and $2.3 million of stock-based compensation expense related to restricted shares during the years ended December 31, 2017 , 2016 and 2015 , respectively. Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statements of income.

14 . Shareholders’ Equity

Preferred Stock

The Company is authorized to issue 100,000,000 shares of Horizon Global preferred stock, par value of $0.01 per share. There were no preferred shares outstanding at December 31, 2017 or December 31, 2016 .

Common Stock

The Company is authorized to issue 400,000,000 shares of Horizon Global common stock, par value of $0.01 per share. At December 31, 2017 , there were 25,625,571 shares of common stock issued and 24,939,065 shares of common stock outstanding. At December 31, 2016 , there were 20,899,959 shares of common stock issued and outstanding.

Share Repurchase Program

In April 2017, the Board of Directors authorized a share repurchase program of up to 1.5 million shares of the Company’s issued and outstanding common stock during the period beginning on May 5, 2017 and ending May 5, 2020 (the “Share Repurchase Program”). The Share Repurchase Program provides for share purchases in the open market or otherwise, depending on share

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

price, market conditions and other factors, as determined by the Company. In addition, the Company’s ABL Faciliy and Replacement Term Loan Amendment place certain limitations on the Company’s ability to repurchase its common stock. As of December 31, 2017 , cumulative shares purchased totaled 686,506 at an average purchase price per share of $14.55 , excluding commissions. The repurchased shares are presented as treasury stock, at cost, on the consolidated balance sheets.

Accumulated Other Comprehensive Income

Changes in AOCI attributable to Horizon Global by component, net of tax, for the years ended December 31, 2017 , 2016 , and 2015 are summarized as follows:



		Derivative Instruments			Foreign Currency Translation			Total
	(dollars in thousands)
Balances at December 31, 2014		$	(70	)	$	7,460		$	7,390
Net transfer from former parent		—			5,230			5,230
Net unrealized losses arising during the period ^(a)		(1,310		)	(9,510		)	(10,820		)
Less: Net realized losses reclassified to net income ^(b)		(670		)	—			(670		)
Net current-period change		(640		)	(4,280		)	(4,920		)
Balances at December 31, 2015		(710		)	3,180			2,470
Net unrealized gains (losses) arising during the period ^(a)		3,170			(10,590		)	(7,420		)
Less: Net realized gains reclassified to net income ^(b)		3,390			—			3,390
Net current-period change		(220		)	(10,590		)	(10,810		)
Balances at December 31, 2016		(930		)	(7,410		)	(8,340		)
Net unrealized gains (losses) arising during the period ^(a)		(8,810		)	17,810			9,000
Less: Net realized losses reclassified to net income ^(b)		(9,350		)	—			(9,350		)
Net current-period change		540			17,810			18,350
Balances at December 31, 2017		$	(390	)	$	10,400		$	10,010

__________________________

^(a) Derivative instruments, net of income tax benefit (expense) of $5.2 million , $(2.5) million , and $0.1 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. See Note 10 , “ Derivative Instruments ,” for further details.

^(b) Derivative instruments, net of income tax benefit (expense) of $5.5 million , $(2.5) million , and $(0.8) million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. See Note 10 , “ Derivative Instruments ,” for further details.

15 . Segment Information

Horizon groups its operating segments into reportable segments by the region in which sales and manufacturing efforts are focused. Each operating segment has discrete financial information evaluated regularly by the Company’s chief operating decision maker in determining resource allocation and assessing performance. The Company reports the results of its business in three reportable segments: Horizon Americas , Horizon Europe‑Africa , and Horizon Asia‑Pacific . Horizon Americas is comprised of the Company’s North American and South American operations. Horizon Europe‑Africa is comprised of the European and South African operations, while Horizon Asia‑Pacific is comprised of the Australia, Thailand, and New Zealand operations. See below for further information regarding the types of products and services provided within each reportable segment.

Horizon Americas - A market leader in the design, manufacture and distribution of a wide variety of high-quality, custom engineered towing, trailering and cargo management products and related accessories. These products are designed to support OEMs, OESs, aftermarket and retail customers in the agricultural, automotive, construction, industrial, marine, military, recreational vehicle, trailer and utility end markets. Products include brake controllers, cargo management, heavy-duty towing products, jacks and couplers, protection/securing systems, trailer structural and electrical components, tow bars, vehicle roof racks, vehicle trailer hitches and additional accessories.

Horizon Europe‑Africa - With a product offering similar to Horizon Americas , Horizon Europe‑Africa focuses its sales and manufacturing efforts in the Europe and Africa regions of the world.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Horizon Asia‑Pacific - With a product offering similar to Horizon Americas , Horizon Asia‑Pacific focuses its sales and manufacturing efforts in the Asia-Pacific region of the world.

Segment activity is as follows:



	Year ended December 31,
	2017			2016			2015
	(dollars in thousands)
Net Sales
Horizon Americas	$	439,700		$	443,240		$	429,310
Horizon Europe‑Africa	325,970			104,080			50,930
Horizon Asia‑Pacific	127,310			101,880			95,270
Total	$	892,980		$	649,200		$	575,510
Operating Profit (Loss)
Horizon Americas	$	44,060		$	38,680		$	30,300
Horizon Europe‑Africa	(1,790		)	(13,320		)	(100		)
Horizon Asia‑Pacific	18,740			11,230			7,650
Corporate	(26,250		)	(30,290		)	(18,280		)
Total	$	34,760		$	6,300		$	19,570
Capital Expenditures
Horizon Americas	$	10,150		$	5,550		$	5,970
Horizon Europe‑Africa	13,190			4,670			690
Horizon Asia‑Pacific	2,440			3,310			1,360
Corporate	1,510			1,010			300
Total	$	27,290		$	14,540		$	8,320
Depreciation and Amortization
Horizon Americas	$	10,660		$	10,750		$	10,750
Horizon Europe‑Africa	10,110			3,290			2,070
Horizon Asia‑Pacific	4,310			4,090			4,130
Corporate	260			90			130
Total	$	25,340		$	18,220		$	17,080



	As of December 31,
	2017		2016
	(dollars in thousands)
Total Assets
Horizon Americas	$	209,210	$	197,840
Horizon Europe - Africa	341,750		299,500
Horizon Asia‑Pacific	88,210		61,920
Corporate	21,860		54,110
Total	$	661,030	$	613,370

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables present the Company’s net sales for each of the three years ended December 31, 2017 , 2016 , and 2015 ; and net fixed assets at each year ended December 31, 2017 and 2016 , attributed to each subsidiary’s continent of domicile. Australia and Germany are the only non-U.S. countries for which net sales were significant to the consolidated net sales of the Company. Australia, Germany, and the United Kingdom are the only countries in which property and equipment - net are significant to the consolidated property and equipment - net of the Company.



	Year ended December 31,
	2017		2016		2015
	(dollars in thousands)
Net Sales
Total U.S.	$	423,090	$	428,770	$	412,500
Non-U.S.
Australia	69,760		60,020		73,640
Germany	194,120		52,350		14,680
Other Europe	114,940		39,520		24,810
Asia	58,140		41,940		21,630
Africa	16,320		12,130		11,440
Other Americas	16,610		14,470		16,810
Total non-U.S	469,890		220,430		163,010
Total	$	892,980	$	649,200	$	575,510



	As of December 31,
	2017		2016
	(dollars in thousands)
Property and equipment - net
Total U.S.	$	5,770	$	4,700
Non-U.S.
Australia	10,730		11,120
Germany	48,400		41,940
United Kingdom	22,920		17,450
Other Europe	9,830		5,690
Asia	7,720		5,220
Africa	5,260		4,970
Other Americas	2,390		2,670
Total non-U.S	107,250		89,060
Total	$	113,020	$	93,760

The Company’s export sales from the U.S. approximated $34.6 million , $32.6 million and $33.8 million for the years ended 2017 , 2016 and 2015 , respectively.

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents the Company’s net sales contributed by product group for the years ended December 31, 2017 , 2016 and 2015 .



	Year ended December 31,
	2017		2016		2015
Towing	70.3	%	62.7	%	58.1	%
Trailering	16.8	%	21.5	%	23.8	%
Cargo Management	6.3	%	8.9	%	9.5	%
Other	6.6	%	6.9	%	8.6	%
	100.0	%	100.0	%	100.0	%

16 . Income Taxes

The Company’s income before income taxes, by tax jurisdiction, consisted of the following:



	Year ended December 31,
	2017			2016			2015
	(dollars in thousands)
Income (loss) before income taxes:
Domestic	$	(3,880	)	$	(14,630	)	$	(9,750	)
Foreign	8,860			(1,760		)	16,770
Income (loss) before income taxes	$	4,980		$	(16,390	)	$	7,020
Current income tax benefit (expense):
Federal	$	(7,680	)	$	(1,170	)	$	550
State and local	(240		)	(970		)	(610		)
Foreign	(2,190		)	(2,560		)	(3,580		)
Total current income tax expense	(10,110		)	(4,700		)	(3,640		)
Deferred income tax benefit (expense):
Federal	(3,000		)	3,800			3,840
State and local	(390		)	450			(40		)
Foreign	3,750			4,180			1,120
Total deferred income tax benefit	360			8,430			4,920
Income tax benefit (expense)	$	(9,750	)	$	3,730		$	1,280

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of deferred taxes at December 31, 2017 and 2016 are as follows:



	As of December 31,
	2017			2016
	(dollars in thousands)
Deferred tax assets:
Receivables, net	$	460		$	1,440
Inventories	3,280			6,300
Accrued liabilities and other long-term liabilities	10,600			13,670
Tax loss and credit carryforwards	12,930			6,070
Gross deferred tax asset	27,270			27,480
Valuation allowances	(10,560		)	(7,220		)
Net deferred tax asset	16,710			20,260
Deferred tax liabilities:
Property and equipment, net	(4,300		)	(5,230		)
Goodwill and other intangibles, net	(19,710		)	(30,250		)
Other	(3,280		)	(1,140		)
Gross deferred tax liability	(27,290		)	(36,620		)
Net deferred tax (liability) asset	$	(10,580	)	$	(16,360	)

The Company has an on-going analysis against certain deferred tax assets in the U.S. Based on positive evidence and economic outlook, the Company maintains it is more likely than not the U.S. deferred tax assets will be realized and therefore does not require a valuation allowance as of December 31, 2017 .

The following is a reconciliation of our provision for income taxes to income tax expense computed at the U.S. federal statutory rate:



	Year ended December 31,
	2017			2016			2015
	(dollars in thousands)
U.S. federal statutory rate	35		%	35		%	35		%
Tax at U.S. federal statutory rate	$	1,740		$	(5,730	)	$	2,460
State and local taxes, net of federal tax benefit	340			340			650
Differences in statutory foreign tax rates	(3,680		)	(1,230		)	(4,350		)
Unrecognized tax benefits	(3,950		)	(1,260		)	(2,950		)
Tax holiday ⁽¹⁾	(950		)	(460		)	(1,190		)
Withholding taxes	300			300			590
Tax credits	(590		)	70			(300		)
Net change in valuation allowance	3,020			1,600			1,480
Spin-off related restructuring costs	—			—			2,450
Transaction Costs	1,610			2,670			—
Tax Reform	11,850			—			—
Other, net	60			(30		)	(120		)
Income tax expense (benefit)	$	9,750		$	(3,730	)	$	(1,280	)

__________________________

⁽¹⁾ Tax holiday related to Thailand which expired on December 31, 2017.

The Company has recorded deferred tax assets on $0.6 million of various state operating loss carryforwards and $44.9 million of various foreign operating loss carryforwards. The majority of the state tax loss carryforwards expire between 2029 - 2037 and

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the majority of foreign losses have indefinite carryforward periods.

The Company made cash payments for federal and state income taxes of $1.0 million and $2.2 million for the years ended December 31, 2017 and 2016 , respectively. Cash payments made for foreign income taxes of $6.7 million and $2.6 million , for the years ended December 31, 2017 and 2016 , respectively.

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations, that position has not changed following incurring the transition tax under the 2017 Tax Cuts and Jobs Act. No deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our foreign investments to the United States. Furthermore, in light of provisions in the Tax Cuts and Jobs Act (the “Act”), the financial reporting over tax basis in our foreign investments is insignificant as of December 31, 2017 .

Unrecognized Tax Benefits

The Company has approximately $7.3 million and $8.9 million of unrecognized tax benefits (“UTBs”) as of December 31, 2017 and 2016 , respectively. If the unrecognized tax benefits were recognized, the impact to the Company’s effective tax rate would be to reduce reported income tax expense for the years ended December 31, 2017 and 2016 approximately $7.3 million and $8.9 million , respectively.

A reconciliation of the change in the UTBs and related accrued interest and penalties for the years ended December 31, 2017 and 2016 is as follows:



	Unrecognized Tax Benefits
	(dollars in thousands)
Balance at December 31, 2015	$	4,570
Tax positions related to current year:
Additions	1,690
Reductions	—
Tax positions related to prior years:
Additions	2,870
Reductions	—
Lapses in the statutes of limitations	(1,120		)
Cumulative Translation Adjustment	840
Balance at December 31, 2016	$	8,850
Tax positions related to current year:
Additions	—
Reductions	—
Tax positions related to prior years:
Additions	50
Reductions	(30		)
Settlements	—
Lapses in the statutes of limitations	(2,110		)
Cumulative Translation Adjustment	550
Balance at December 31, 2017	$	7,310

The Company recognizes interest accrued related to UTBs and penalties as income tax expense. Related to the unrecognized tax benefits noted above, the Company has accrued penalties and interest of $2.1 million during 2017 and recognized a liability for interest and penalties of $3.4 million as of December 31, 2017 . During 2016 , the Company has accrued penalties and interest of $(0.2) million and recognized a liability for interest and penalties of $5.6 million .

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The decrease in UTBs and liabilities for interest and penalties for tax positions related to prior years is primarily related to the roll-off of certain statutes of limitations and changes in currency exchange rates during 2017.

Income tax returns are filed in multiple domestic and foreign jurisdictions, which are subject to examinations by taxing authorities. As of December 31, 2017 , the Company is subject to U.S. federal tax examination for tax years 2015 through 2017 . The Company is subject to state, local, and foreign income tax examinations for tax years 2010 through 2017 . The Company does not believe that the results of these examinations will have a significant impact on the Company’s tax position or its effective tax rate.

Management monitors changes in tax statutes and regulations and the issuance of judicial decisions to determine the potential impact to unrecognized tax benefits. As of December 31, 2017 , the Company estimated that approximately $7.4 million of unrecognized tax benefits in foreign jurisdictions is expected to be released in the next twelve months.

Other Matters

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act changed many aspects of corporate income taxation, including the reduction of the corporate income tax rate from 35% to 21% and imposition of a one-time tax on deemed repatriated earnings of foreign subsidiaries.

The SEC issued a Staff Accounting Bulletin No. 118 (“SAB 118”), which allows a provisional estimate when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act. SAB 118 allows for adjustments to provisional amounts during a measurement period of up to one year. In accordance with SAB 118, the Company has made reasonable estimates related to the liability associated with the transition tax, the remeasurement of U.S. deferred tax balances and other deferred tax adjustments based on provisions of the Act. As a result, the Company has recognized income tax expense of $11.9 million associated with these items in 2017 .

The Company is continuing to evaluate how the provisions of the Act will be accounted for under ASC 740, “Income Taxes”. The analysis is provisional and is subject to change due to the additional time required to accurately calculate and review the complex tax law. The Company will assess any regulatory guidance that may be issued which could have an impact on the provisional estimates. The Company will continue to gather information and perform additional analysis on these estimates, including, but not limited to, the amount of earnings and profits subject to the transition tax, the calculation of foreign tax credits, remeasurement of U.S deferred taxes and other deferred tax adjustments until the filing of its associated federal and state income tax returns. Any measurement period adjustments will be reported as a component of provision for incomes taxes in the reporting period the amounts are determined.

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HORIZON GLOBAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. Summary Quarterly Financial Data



	Three months ended
	March 31, 2017			June 30, 2017		September 30, 2017		December 31, 2017
	(unaudited, dollars in thousands, except for per share data)
Net sales	$	203,280		$	253,590	$	240,120	$	195,990
Gross profit	$	45,390		$	67,670	$	58,420	$	36,120
Net income (loss)	$	(10,160	)	$	19,970	$	6,560	$	(21,140	)
Net income (loss) attributable to Horizon Global	$	(9,860	)	$	20,260	$	6,890	$	(20,840	)
Net income (loss) per share attributable to Horizon Global:
Basic	$	(0.41	)	$	0.80	$	0.28	$	(0.84	)
Diluted	$	(0.41	)	$	0.79	$	0.27	$	(0.84	)



	Three months ended
	March 31, 2016		June 30, 2016		September 30, 2016		December 31, 2016
	(unaudited, dollars in thousands, except for per share data)
Net sales	$	146,110	$	167,760	$	151,720	$	183,610
Gross profit	$	37,610	$	45,710	$	42,510	$	34,520
Net income (loss)	$	2,190	$	7,330	$	370	$	(22,550	)
Net income (loss) attributable to Horizon Global	$	2,190	$	7,330	$	370	$	(22,250	)
Net income (loss) per share attributable to Horizon Global:
Basic	$	0.12	$	0.40	$	0.02	$	(1.07	)
Diluted	$	0.12	$	0.40	$	0.02	$	(1.07	)

18 . Subsequent Events

On February 16, 2018, the Company entered into the Fourth Amendment to the Term B Loan (the “2018 Replacement Term Loan Amendment”) to further amend the Original Term B Loan, dated as of June 30, 2015. The 2018 Replacement Term Loan Amendment provides for a new term loan commitment (the “2018 Replacement Term Loan”) in an original aggregate principal amount of $385.0 million , and extended the maturity date to the sixth anniversary of the 2018 Replacement Term Loan Amendment effective date. As a result of the 2018 Replacement Term Loan Amendment, borrowings under the 2018 Replacement Term Loan will bear interest, at the Company’s election, at either (i) the Base Rate plus 4% per annum, or (ii) LIBOR, with a 1% floor, plus 5% per annum. Principal payments required under the 2018 Replacement Term Loan will be approximately $2.4 million per quarter for the first eight quarters following the date the 2018 Replacement Term Loan Amendment becomes effective, and approximately $4.8 million per quarter thereafter.

The proceeds from the 2018 Replacement Term Loan will be used to (i) repay in full the outstanding principal amount of the existing term loans, (ii) to consummate the acquisition of Brink International B.V. and its subsidiaries, expected to close in the second quarter of 2018, and pay a portion of the acquisition consideration thereof and the fees and expenses incurred in connection therewith, and (iii) for general corporate purposes.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures

As of the end of the period covered by this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of the Company’s chief executive officer and chief financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based upon that evaluation, the chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the Company. Under the supervision of the chief executive officer and chief financial officer, management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework (2013).” Based on its evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2017 .

Changes in Internal Control Over Financial Reporting

During the fiscal quarter ended December 31, 2017 , the Company implemented a plan that called for modifications and additions to the Company’s internal control over financial reporting related to the accounting for revenue as a result of the new revenue recognition standard, ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. Although the new revenue standard is expected to have an immaterial impact on our ongoing net income, the Company is currently modifying and adding new controls designed to address risks associated with recognizing revenue under the new standard. The Company is therefore augmenting internal control over financial reporting as follows:


▪	Enhancing the risk assessment process to take into account risks associated with the new revenue recognition standard.


▪	Adding controls that address risks associated with the five-step model for recording revenue, including the revision of the Company’s contract review controls.

There were no other changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2017 , that have materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

Item 9B. Other Information

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by Item 10 regarding our directors and corporate governance matters is incorporated by reference herein to the proxy statement for the Company’s 2018 Annual Meeting of Stockholders (the “Proxy Statement”) sections entitled “ Proposal 1 - Election of Directors” and “Corporate Governance .” The information required by Item 10 regarding our executive officers appears as a supplementary item following Item 4 under Part I of this Annual Report on Form 10-K under the title “Executive Officers of the Company.” The information required by Item 10 regarding compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, is incorporated by reference herein to the Proxy Statement section entitled “ Section 16(a) Beneficial Ownership Reporting Compliance .”

The Spirit and The Letter. Effective as of July 1, 2015, the Board adopted the Company’s code of conduct, titled “The Spirit and The Letter”, that applies to all directors and employees, including the Company’s principal executive officer, principal financial officer, and other persons performing similar executive management functions. The Spirit and The Letter is posted on the Company’s website, www.horizonglobal.com , in the Corporate Governance subsection of the Investor Relations section. All amendments to The Spirit and The Letter, if any, will be also posted on the Company’s website, along with all waivers, if any, of The Spirit and The Letter involving senior officers.

Item 11. Executive Compensation

The information required by Item 11 is incorporated by reference herein to the Proxy Statement section entitled “ Executive Compensation .”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 is incorporated by reference herein to the Proxy Statement section entitled “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .”

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is incorporated by reference herein to the Proxy Statement section entitled “ Transactions with Related Persons ” and “ Corporate Governance ”.

Item 14. Principal Accountant Fees and Services

The information required by Item 14 is incorporated by reference herein to the Proxy Statement section entitled “ Fees Paid to Independent Auditor .”

Table of Contents

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) Listing of Documents

(1) Financial Statements

The Company’s consolidated financial statements included in Item 8 hereof, as required at December 31, 2017 and December 31, 2016 , and for the periods ended December 31, 2017 , December 31, 2016 and December 31, 2015 , consist of the following:

Consolidated Balance Sheets

Consolidated Statements of Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Cash Flows

Consolidated Statements of Shareholders’ Equity

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules

Financial Statement Schedule of the Company appended hereto, as required for the periods ended December 31, 2017 , December 31, 2016 and December 31, 2015 , consists of the following:

Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable, not required, or the information is otherwise included in the financial statements or the notes thereto.

Table of Contents

(3) Exhibits

Exhibits Index:



2.1(c)*	Separation and Distribution Agreement, dated as of June 30, 2015, by and between Horizon Global Corporation and TriMas Corporation.
2.2(i)*	Share Purchase Agreement, dated as of August 24, 2016, among Horizon Global Corporation and Blitz K 16-102 GmbH and Parcom Deutschland I GmbH & Co. KG, Co-Investment Partners Europe L.P., BaryernLB Private Equity GmbH, Walter Gnauert, Dr. Bernd Welzel, Frank Klebedanz, Jürgen Lotter and Westfalia Mitarbeiterbeteiligungs GmbH & Co. KG.
2.3*	Sale and Purchase Agreement, dated as of December 13, 2017, among Horizon Global Corporation and Cequent Nederland Holdings B.V. and Cooperatief H2 Equity Partners Fund IV Holding W.A., Stichting Administratiekantoor Brink I, and Stichting Administratiekantoor Brink II.
3.1(d)	Amended and Restated Certificate of Incorporation of Horizon Global Corporation.
3.2(b)	Amended and Restated By-laws of Horizon Global Corporation.
4.1(j)	Indenture, dated as of February 1, 2017, by and between the Company and Wells Fargo Bank, National Association, as Trustee.
4.2(j)	First Supplemental Indenture, dated as of February 1, 2017, by and between the Company and Wells Fargo Bank, National Association, as Trustee.
10.1(c)	Tax Sharing Agreement, dated as of June 30, 2015, by and between Horizon Global Corporation and TriMas Corporation.
10.2(c)	Employee Matters Agreement, dated as of June 30, 2015, by and between Horizon Global Corporation and TriMas Corporation.
10.3(c)	Transition Services Agreement, dated as of June 30, 2015, by and between Horizon Global Corporation and TriMas Corporation.
10.4(c)	Noncompetition and Nonsolicitation Agreement, dated as of June 30, 2015, by and between Horizon Global Corporation and TriMas Corporation.
10.5(c)	Loan Agreement, dated as of June 30, 2015, among the Company, Cequent Performance Products, Inc., Cequent Consumer Products, Inc., the lenders party thereto and Bank of America, N.A., as agent for the lenders.
10.6(f)	Amended and Restated Loan Agreement, dated as of December 22, 2015, among Horizon Global Corporation, Cequent Performance Products, Inc., Cequent Consumer Products, Inc., Cequent UK Limited, Cequent Towing Products of Canada Ltd., the subsidiary guarantors party thereto, the lenders party thereto and Bank of America, N.A., as agent for the lenders.
10.7(f)	Foreign Facility Guarantee and Collateral Agreement, dated as of December 22, 2015, among Cequent Performance Products, Inc., certain of its subsidiaries party thereto as grantors and Bank of America, N.A., as agent.
10.8(i)	Waiver and First Amendment to Amended and Restated Loan Agreement, dated as of October 4, 2016, to the Amended and Restated Loan Agreement, dated as of December 22, 2015, by and among Horizon Global Corporation, Cequent Performance Products, Inc., Cequent Consumer Products, Inc., Cequent UK Limited, Cequent Towing Products of Canada Ltd., the other parties thereto, the lenders party thereto and Bank of America, N.A., as administrative agent.
10.9(l)	Second Amendment to Amended and Restated Loan Agreement, dated as of January 11, 2017, to the Amended and Restated Loan Agreement, dated as of December 22, 2015, by and among Horizon Global Corporation, Cequent Performance Products, Inc., Cequent Consumer Products, Inc., Cequent UK Limited, Cequent Towing Products of Canada Ltd., the other parties thereto, the lenders party thereto and Bank of America, N.A., as administrative agent.
10.10(c)	Term Loan Credit Agreement, dated as of June 30, 2015, among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative and collateral agent.
10.11(i)	First Amendment, dated as of September 19, 2016, to the Term Loan Credit Agreement, dated as of June 30, 2015, among Horizon Global Corporation, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.
10.12(l)	Second Amendment, dated as of January 11, 2017, to the Term Loan Credit Agreement, dated as of June 30, 2015, among Horizon Global Corporation, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.
10.13(k)*	2017 Replacement Term Loan Amendment (Third Amendment to Credit Agreement), dated as of March 31, 2017, to the Term Loan Credit Agreement, dated as of June 30, 2015, by and among Horizon Global Corporation, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
10.14(d)**	Horizon Global Corporation Executive Retirement Plan effective as of July 1, 2015.

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10.15(e)**	Horizon Global Corporation Executive Severance/Change of Control Policy effective as of July 1, 2015.
10.16(a)	Form of Indemnification Agreement.
10.17(e)**	Form of Restricted Stock Units Agreement - Founders Grant - under the 2015 Equity and Incentive Compensation Plan.
10.18(e)**	Form of Restricted Stock Units Agreement - 2015 Board of Directors - under the 2015 Equity and Incentive Compensation Plan.
10.19(e)**	Form of Nonqualified Stock Option Agreement - 2015 LTI - under the 2015 Equity and Incentive Compensation Plan.
10.20(e)**	Form of Nonqualified Stock Option Agreement - Special Award - under the 2015 Equity and Incentive Compensation Plan.
10.21(e)**	Form of Horizon Replacement Restricted Stock Unit Award Agreement (Converted in connection with the adjustment of TriMas 2013 Performance Stock Units - 2006 Plan).
10.22(e)**	Form of Horizon Replacement Restricted Stock Unit Award Agreement (Converted in connection with the adjustment of TriMas 2013 Performance Stock Units - 2011 Plan).
10.23(e)**	Form of Horizon Replacement Restricted Stock Unit Award Agreement (Converted in connection with the adjustment of TriMas 2014 Performance Stock Units - 2011 Plan).
10.24(g)**	Form of Restricted Stock Units Agreement - CEO Award Program - 2016 Grant - under the Amended and Restated 2015 Equity and Incentive Compensation Plan.
10.25(g)**	Form of Restricted Stock Units Agreement - Annual Grant - under the Amended and Restated 2015 Equity and Incentive Compensation Plan.
10.26(g)**	Form of Restricted Stock Units Award Agreement - CEO Grant - under the Amended and Restated 2015 Equity and Incentive Compensation Plan.
10.27(g)**	Form of Performance Share Units Agreement - Annual Grant - under the Amended and Restated 2015 Equity and Incentive Compensation Plan.
10.28(g)**	Form of Nonqualified Stock Option Agreement - Annual Grant - under the Amended and Restated 2015 Equity and Incentive Compensation Plan.
10.29(h)**	Horizon Global Corporation Amended and Restated 2015 Equity and Incentive Compensation Plan.
10.30(i)	Investors’ Rights Agreement, dated as of October 4, 2016, by and between the Company and Parcom Deutschland I GmbH & Co. KG.
10.31(j)	Base Call Option Confirmation, dated as of January 26, 2017, by and between the Company and JPMorgan Chase Bank, National Association, London Branch.
10.32(j)	Additional Call Option Confirmation, dated as of January 27, 2017, by and between the Company and JPMorgan Chase Bank, National Association, London Branch.
10.33(j)	Base Warrant Confirmation, dated as of January 26, 2017, by and between the Company and JPMorgan Chase Bank, National Association, London Branch.
10.34(j)	Additional Warrant Confirmation, dated as of January 27, 2017, by and between the Company and JPMorgan Chase Bank, National Association, London Branch.
10.35(j)	Base Call Option Confirmation, dated as of January 26, 2017, by and between the Company and Wells Fargo Bank, National Association.
10.36(j)	Additional Call Option Confirmation, dated as of January 27, 2017, by and between the Company and Wells Fargo Bank, National Association.
10.37(j)	Base Warrant Confirmation, dated as of January 26, 2017, by and between the Company and Wells Fargo Bank, National Association.
10.38(j)	Additional Warrant Confirmation, dated as of January 27, 2017, by and between the Company and Wells Fargo Bank, National Association.
10.39(j)	Base Call Option Confirmation, dated as of January 26, 2017, by and between the Company and Bank of America, N.A.
10.40(j)	Additional Call Option Confirmation, dated as of January 27, 2017, by and between the Company and Bank of America, N.A.
10.41(j)	Base Warrant Confirmation, dated as of January 26, 2017, by and between the Company and Bank of America, N.A.
10.42(j)	Additional Warrant Confirmation, dated as of January 27, 2017, by and between the Company and Bank of America, N.A.
21.1	Horizon Global Corporation Subsidiary List.
23.1	Consent of Independent Registered Public Accounting Firm.

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31.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

_________________________



(a)		Incorporated by reference to the Exhibits filed with our Registration Statement on Form S-1 filed on March 31, 2015 (Reg. No. 333-203138).
(b)		Incorporated by reference to the Exhibits filed with our Registration Statement on Form S-1/A filed on June 11, 2015 (Reg. No. 333-203138).
(c)		Incorporated by reference to the Exhibits filed with our Current Report on Form 8-K filed on July 6, 2015 (File No. 001-37427).
(d)		Incorporated by reference to the Exhibits filed with our Quarterly Report on Form 10-Q filed on August 11, 2015 (File No. 001-37427).
(e)		Incorporated by reference to the Exhibits filed with our Quarterly Report on Form 10-Q filed on November 10, 2015 (File No. 001-37427).
(f)		Incorporated by reference to the Exhibits filed with our Current Report on Form 8-K filed on December 23, 2015 (File No. 001-37427).
(g)		Incorporated by reference to the Exhibits filed with our Quarterly Report on Form 10-Q filed on May 3, 2016 (File No. 001-37427).
(h)		Incorporated by reference to the Exhibits filed with our Current Report on Form 8-K filed on May 23, 2016 (File No. 001-37427).
(i)		Incorporated by reference to the Exhibits filed with our Current Report on Form 8-K filed on October 11, 2016 (File No. 001-37427).
(j)		Incorporated by reference to the Exhibits filed with our Current Report on Form 8-K filed on February 1, 2017 (File No. 001-37427).
(k)		Incorporated by reference to the Exhibits filed with our Current Report on Form 8-K filed on April 6, 2017 (File No. 001-37427).
(l)		Incorporated by reference to the Exhibits filed with our Annual Report on Form 10-K filed on March 10, 2017 (File No. 001-37427).

* Certain exhibits and schedules were omitted in the original filing pursuant to Item 601(b)(2) of Regulation S-K, and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request.

** Management contracts and compensatory plans or arrangement required to be filed as an exhibit pursuant Item 15(b) of Form 10-K.

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Item 16. Form 10-K Summary

None.

II-4

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.



		HORIZON GLOBAL CORPORATION (Registrant)

		BY:	/s/ A. MARK ZEFFIRO
DATE:	March 1, 2018		Name: A. Mark Zeffiro Title: President and Chief Executive 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 and on the dates indicated.



Name	Title	Date

/s/ A. MARK ZEFFIRO	President and Chief Executive Officer and Director	March 1, 2018
A. Mark Zeffiro	(Principal Executive Officer)

/s/ DAVID G. RICE	Chief Financial Officer	March 1, 2018
David G. Rice	(Principal Financial and Accounting Officer)

/s/ DENISE ILITCH	Chair of the Board of Directors	March 1, 2018
Denise Ilitch

/s/ DAVID C. DAUCH	Director	March 1, 2018
David C. Dauch

/s/ RICHARD L. DEVORE	Director	March 1, 2018
Richard L. DeVore

/s/ SCOTT G. KUNSELMAN	Director	March 1, 2018
Scott G. Kunselman

/s/ RICHARD D. SIEBERT	Director	March 1, 2018
Richard D. Siebert

/s/ SAMUEL VALENTI III	Director	March 1, 2018
Samuel Valenti III

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SCHEDULE II

PURSUANT TO ITEM 15(a)(2)

OF FORM 10-K VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED

December 31, 2017 , 2016 AND 2015

(Dollars in thousands)



			ADDITIONS
DESCRIPTION	BALANCE AT BEGINNING OF PERIOD		CHARGED TO COSTS AND EXPENSES		CHARGED (CREDITED) TO OTHER ACCOUNTS ⁽¹⁾			DEDUCTIONS ⁽²⁾		BALANCE AT END OF PERIOD
Allowance for doubtful accounts deducted from accounts receivable in the balance sheet
Year ended December 31, 2017	$	3,810	$	640	$	(1,340	)	$	10	$	3,100
Year ended December 31, 2016	$	2,960	$	910	$	50		$	110	$	3,810
Year ended December 31, 2015	$	3,230	$	470	$	320		$	1,060	$	2,960

______________

⁽¹⁾ Allowance of companies acquired, and other adjustments, net.

⁽²⁾ Deductions, representing uncollectible accounts written-off, less recoveries of amounts written-off in prior years.

II-6




	SALE AND PURCHASE AGREEMENT

	PROJECT AURORA

CONTENTS

1. DEFINITIONS AND INTERPRETATION 3

2. SALE AND PURCHASE OF THE SHARES 4

3. LEAKAGE AND PERMITTED LEAKAGE 7

4. PRE-COMPLETION COVENANTS 8

5. CONDITIONS FOR COMPLETION 14

6. COMPLETION 20

7. POST-COMPLETION COVENANTS 22

8. SELLERS’ WARRANTIES 22

9. TAX COVENANT 25

10. CLAIMS AND LIMITATION OF LIABILITY 25

11. DUE DILIGENCE INVESTIGATION / AWARENESS OF CLAIMS 31

12. ESCROW, CONTINUED EXISTENCE OF SELLER A 31

13. PURCHASER’S WARRANTIES 31

14. NON-COMPETE AND NON-SOLICIT 32

15. CONFIDENTIALITY 32

16. MISCELLANEOUS 33

17. GOVERNING LAW AND DISPUTE SETTLEMENT 36



SCHEDULES

Schedule	B	Corporate chart
Schedule	E	Data Room DVD
Schedule	1.1	Definitions
Schedule	2.2	Deed of Transfer
Schedule	2.4.1	Example Calculation of the Purchase Price adjustment for the Brink SA Buy Out
Schedule	3.2	Form of Leakage Notice
Schedule	4.5	Horizon Global Corporation Guarantee
Schedule	5.5	Notary Letter
Schedule	5.6	W&I Insurance Policy
Schedule	6.3.a	Completion Agenda
Schedule	6.3.b	Lease waiver and amendment agreement
Schedule	8.2	Sellers' Warranties
Schedule	9	Tax
Schedule	10.6.1.a	Audited Accounts and Interim Accounts
Schedule	12	Escrow Agreement
Schedule	13.1	Purchaser's Warranties

THIS AGREEMENT ("AGREEMENT") IS MADE BETWEEN:


I.	COOPERATIEF H2 EQUITY PARTNERS FUND IV HOLDING W.A., a cooperative with statutory liability (Coöperatie W.A. ), incorporated under the laws of the Netherlands, with its registered seat in Amsterdam, the Netherlands, registered with the trade register of the Chamber of Commerce of the Netherlands under number 50603019 (" Seller A ");


II.	STICHTING ADMINISTRATIEKANTOOR BRINK I, a foundation ( stichting ), incorporated under the laws of the Netherlands, with its registered seat in Amsterdam, the Netherlands, registered with the trade register of the Chamber of Commerce of the Netherlands under number 64005410 (" Seller B ");


III.	STICHTING ADMINISTRATIEKANTOOR BRINK II, a foundation ( stichting ), incorporated under the laws of the Netherlands, with its registered seat in Amsterdam, the Netherlands, registered with the trade register of the Chamber of Commerce of the Netherlands under number 64005526 (" Seller C "); and


IV.	CEQUENT NEDERLAND HOLDINGS B.V., a limited liability company ( besloten vennootschap ), incorporated under the laws of the Netherlands with its registered seat in Amsterdam, registered with the trade register of the Chamber of Commerce of the Netherlands under number 34347776 (the " Purchaser "),

Seller A, Seller B and Seller C hereafter collectively referred to as the " Sellers " and each individually as a " Seller "; the Sellers and the Purchaser hereafter jointly referred to as the " Parties ", and each individually a " Party ".

RECITALS:

The Sellers hold all issued and outstanding shares (the " Shares ") in the capital of BRINK INTERNATIONAL B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid ), incorporated under the laws of the Netherlands, with registered seat in Amsterdam, the Netherlands, registered with the trade register of the Chamber of Commerce of the Netherlands under number 63504340 (the " Company ").


B.	The Company, directly or indirectly, owns the subsidiaries (the " Subsidiaries ") as set out on the corporate chart attached as Schedule B (the Company and the Subsidiaries collectively the " Group " and the " Group Companies ", and each individually a " Group Company ").


C.	The Group is active in the field of developing, manufacturing and selling fixed, detachable and retractable tow bar systems and related wiring kits for the automotive industry (the " Business ").

An Affiliate of Seller A, the Company and the Purchaser have entered into a non-disclosure agreement on 27 February 2017 (the " Confidentiality Agreement "), pursuant to which certain confidential information relating to the Group and the Business was made available to the Purchaser. Moreover, the Purchaser and its advisors were provided with the Disclosed Information (as defined below), attended and participated in information sessions, expert sessions and site visits, and were provided with the opportunity to raise such questions in relation to the Group and the Business as they required.

Prior to the execution of this Agreement the Purchaser has with the help of specialist professional advisors performed a investigation (the " Due Diligence Investigation ") with respect to the Shares, the Business, and the Group Companies and their respective assets, liabilities and prospects, consisting among other things of a review of the Disclosed Information, including the Data Room of which a DVD is attached as Schedule E and has had sufficient opportunity to raise with the Sellers issues that it deemed relevant and/or important in connection with its decision to enter into this Agreement and the Transaction and has received reasonably satisfactory responses to any issues raised. The Purchaser has carefully evaluated its Due Diligence Investigation, the scope and outcome of which was to the Purchaser’s reasonable satisfaction.


F.	The Parties have reached agreement on a transaction whereby the Purchaser will acquire all Shares from the Sellers, subject to the terms and conditions set out in this Agreement (the " Transaction ").

In order to facilitate an efficient process and coverage in the event of inaccuracies in the Sellers' Warranties or the Tax indemnity included in Schedule 9 (as defined below) the Sellers and the Purchaser have agreed that the Parties will arrange for a warranties and indemnities insurance in the name of the Purchaser, without the possibility of any recourse against the Sellers (except for the Escrow Amount, the indemnity under the tax indemnity or if there is fraud or wilful misconduct from the Sellers’ side in which case the insurance will still be valid but there will be recourse against the Sellers), on the terms and conditions set forth in the policy attached to this Agreement as Schedule 5.6 (the " W&I Insurance Policy ");


H.	The Parties have submitted a request for advice from the relevant works council of the Dutch Group Companies relating to the Transaction prior the date hereof.


I.	Prior to Completion, the Parties will obtain clearance from the relevant Competition Authorities.


J.	The Sellers and the Purchaser have obtained all internal and external approvals and consents required for the entering into and execution of this Agreement.

IT IS HEREBY AGREED AS FOLLOWS:


1.	DEFINITIONS AND INTERPRETATION


1.1.	Definitions

In this Agreement, save where explicitly provided otherwise, capitalised words and expressions have the meanings specified or referred to in Schedule 1.1 .


1.2.	Interpretation

In this Agreement, unless specified otherwise:


a.	" Clause ", " Recital ", " Schedule " or " Annex " means a clause (including all subclauses), a recital, a schedule or an annex in or to this Agreement;


b.	the Recitals, Schedules, Annexes and any other attachments to this Agreement form an integral part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement and a reference to this Agreement includes the Recitals, Schedules, Annexes to Schedules and any other attachments to this Agreement;


c.	the headings are included for convenience of reference only and shall not affect the interpretation of this Agreement or of any provisions thereof;


d.	legal terms refer to Dutch legal concepts only, references to legal terms or concepts apply even where the concept referred to by such term does not exist outside the Netherlands and, if necessary, shall include a reference to the term in that jurisdiction outside the Netherlands that most approximates the Dutch term;


e.	the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation";


f.	a reference to a person includes any individual, corporation, entity, limited liability partnership, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organisation or government, whether or not having separate legal personality, and wherever incorporated or registered;


g.	references to books, records or other information shall include books, records or other information stored in any form, including electronic data carriers and any other form of data carrier;


h.	the singular includes the plural and vice versa, and each gender includes any other gender;


i.	the words "as of" shall be deemed to include the date or moment in time specified thereafter;


j.	where a reference is made to the Sellers' best knowledge or awareness or any similar expression, such statement shall for each individual Seller be deemed to refer to the knowledge of the Sellers on the date of this Agreement and at Completion, after having made adequate reasonable investigation about the subject matter with the Key Employees and Mr H. Geerts; and

references to "indemnify" and "indemnifying" any person against any circumstance include indemnifying and keeping him harmless on an after-Tax basis from all actions, claims and proceedings from time to time made against that person and all loss or damage and all payments, costs and expense made or incurred by that person as a consequence of, or which would not have arisen but for, that circumstance.


1.3.	Drafting

The provisions of this Agreement shall not be interpreted adversely against a Party for the reason that such Party or any of its advisors was or were, or is or are deemed to have been, responsible for the drafting of that provision.


2.	SALE AND PURCHASE OF THE SHARES


2.1.	Sale and purchase

Subject to the terms and conditions of this Agreement:


a.	Seller A hereby sells its part of the Shares to the Purchaser and the Purchaser hereby purchases such Shares from Seller A;


b.	Seller B hereby sells its part of the Shares to the Purchaser and the Purchaser hereby purchases such Shares from Seller B; and


c.	Seller C hereby sells its part of the Shares and the Purchaser hereby purchases such Shares from Seller C.


2.2.	Transfer

Subject to the terms and conditions of this Agreement, each of the Sellers shall transfer its part of the Shares to the Purchaser, who shall accept such Shares, free from any and all Encumbrances on the date on which the consummation of the transaction contemplated by this Agreement in accordance with Clause 6.1 (" Completion ") takes place (the " Completion Date "), by executing the deed of transfer of shares, substantially in the form attached hereto as Schedule 2.2 (the " Deed of Transfer ").


2.3.	Effective Date

Subject to Completion taking place, the sale and transfer of the Shares will have economic effect from 0.00 hours a.m. CET on 1 October 2017 (the " Effective Date "). Therefore, subject to Completion taking place and the provisions of this Agreement, the risk and benefit of the Shares, and the risk and benefit of the Group and the Business, will be for the account

of the Purchaser as of the Effective Date. The foregoing implies that, except as set out herein, after the Effective Date Sellers procure that no Leakage (as defined below) has taken or shall take place or that the Purchaser shall be compensated for the net effect after Taxes of such Leakage in accordance with Clause 3.3.3.


2.4.	Purchase Price


2.4.1.	The purchase price for the Shares (the " Purchase Price ") amounts to:


a.	the amount of EUR 117,000,000 (one hundred seventeen million euro) (the " Equity Value "); plus


b.	a day rate of EUR 10,000 (ten thousand euro) per day from and including the Effective Date until (but excluding) the Completion Date; minus


c.	the Sellers' share of the W&I Insurance Premium as determined in accordance with Clause 5.6.2 (net of Taxes), equal to an amount of EUR 162,500 (one hundred sixty two thousand five hundred euro); minus


d.	the Net Leakage Amount (if any);

increased or decreased with either of the following amounts:

increased with the result of (i) EUR 6,000,000 (six million euro), minus (ii) the purchase price paid by the Company or one of its Subsidiaries to Malcolm Anderson Family Trust and Beaumont Family Trust for the acquisition of all of the shares held or owned by the Malcolm Anderson Family Trust and the Beaumont Family Trust in the capital of Brink Towing Systems (pty) Ltd. (the " Brink SA Buy Out "), provided the Brink SA Buy Out has been completed on or before the Completion Date and the purchase price for the Brink SA Buy Out amounts to no more than EUR 6,000,000 (six million euro) and increased with the amount of the purchase price for the Brink SA Buy Out that was funded by the Sellers in the form of equity, as further clarified in Schedule 2.4.1 ;

or as the case may be


f.	decreased with an amount of EUR 3,000,000 (three million euro) if the Brink SA Buy Out has not been completed on or before the Completion Date,

or as the case may be

decreased with the result of (i) the purchase price paid by the Company or one of its Subsidiaries to Malcolm Anderson Family Trust and Beaumont Family Trust for the Brink SA Buy Out, minus EUR 6,000,000 (six million euro), provided the Brink SA Buy Out has been completed on or before the Completion Date and the purchase price for the Brink SA Buy Out amounts to more than EUR 6,000,000 (six million euro) and increased with the amount of the purchase price for the Brink SA Buy Out that was funded by the Sellers in the form of equity, as further clarified in Schedule 2.4.1 ;

it being agreed that any amounts contributed by any Seller or lent by any Seller to the Group in relation to the Brink SA Buy Out shall increase the Purchase Price or be repaid to such Seller as part of the intra-group settlement set out in Clause 2.6.


2.5.	Payment


2.5.1.	The Purchaser shall without any deduction, set off or suspension, pay the amount of the Purchase Price minus the Escrow Amount to the Sellers in cash at Completion in accordance with Clause 6.2 ( Completion ).


2.5.2.	Any payment made under this Agreement by or on behalf of a Seller to the Purchaser including compensation for a Breach or payment made under this Agreement by or on behalf of the Purchaser to any of the Sellers shall be deemed to be an adjustment of the Purchase Price and treated accordingly by the Parties in all relevant respects.


2.6.	Refinancing

2.6.1.

At Completion, the Bank Financing will be repaid. The Sellers shall procure that each of the providers of Bank Financing who have provided loans, will issue Release Letters at Completion, specifying the Refinancing Amounts (as defined in Clause 2.6.2). The Purchaser shall provide financial resources to enable at Completion, the Group Companies to repay the Bank Financing, in accordance with Clause 6.2.

2.6.2.

The Sellers shall notify the Purchaser in writing no less than three (3) Business Days (as defined below) before the expected Completion Date and keep the Purchaser informed during these three (3) Business Days of the expected outstanding amounts under the Bank Financing at Completion (the " Refinancing Amounts "). Between the date of this Agreement and Completion, the Sellers shall upon the reasonable request of the Purchaser inform the Purchaser of the then current actual amounts drawn under the Bank Financing.

2.6.3.

At Completion, any remaining balance of the intragroup payables between the Sellers and/or Affiliates of the Sellers on the one hand and the Group Companies on the other hand will be settled. The Purchaser shall procure that, at Completion, the Group Companies shall have sufficient funds to repay any remaining intercompany payables and management fees to the Sellers and/or Affiliates of the Sellers; as the case may be the Sellers and/or Affiliates of the Sellers shall repay any remaining intragroup payables to the Group Companies ultimately at Completion from the Purchase Price. The Sellers shall notify the Purchaser in writing no less than three (3) Business Days before the expected Completion Date of the expected outstanding amounts under the intragroup payables. Sellers represent and warrant that the amounts notified by the Sellers to the Purchaser in accordance with this provision will be correct at Completion. The Sellers shall and shall procure that neither the Seller nor an Affiliate of Seller and the Group Company shall create new intragroup payables between the Sellers and/or Affiliates of Sellers, except in relation to the management fee of H2 and as may be required in relation to the Brink SA Buy Out. Between the date of this

Agreement and Completion, the Sellers shall upon the reasonable request of the Purchaser inform the Purchaser of the then current actual intragroup balances.


3.	LEAKAGE AND PERMITTED LEAKAGE


3.1.	Leakage

In accordance with Clause 2.4, the Purchase Price shall be reduced by an amount equal to the net effects (after deducting any Leakage Tax Benefit) of any Leakage (the " Net Leakage Amount ").


3.2.	Leakage notice


3.2.1.	The Sellers shall notify the Purchaser in writing (the " Leakage Notice "), and in accordance with Schedule 3.2 , of the Net Leakage Amount not later than five (5) Business Days before the date on which Completion is envisaged to take place.


3.2.2.	The Leakage and the resulting Net Leakage Amount identified by the Sellers and set out in the Leakage Notice shall be binding for the purposes of determining the Purchase Price payable at Completion and shall only be subject to challenges in accordance with Clause 3.3.


3.3.	Procedure for additional Leakage

3.3.1.

If the Purchaser identifies any Additional Leakage within six (6) months after Completion, then the Purchaser shall be entitled to deliver, within this six (6) month period, a written notice to the Sellers, setting out the Additional Leakage identified together with evidence thereof and a calculation of the net effects (after deducting any Leakage Tax Benefit) of such Additional Leakage (the " Net Additional Leakage Amount ").


3.3.2.	If the Sellers and the Purchaser do not agree on the Net Additional Leakage Amount within twenty (20) Business Days of receipt of the written notice from the Purchaser by the Sellers, as referred to in Clause 3.3.1, the Net Additional Leakage Amount shall be determined by an independent expert (the " Independent Expert ") as follows:


a.	the Sellers and the Purchaser shall jointly nominate a reputable accountancy firm in the Netherlands, to be the Independent Expert;

if the Sellers and the Purchaser do not jointly agree on the nomination of the Independent Expert within ten (10) Business Days after the lapse of the twenty (20) Business Days period referred to above, the Sellers and the Purchaser will request the president of the Royal Dutch Institute of Chartered Accountants ( Koninklijke Nederlandse Beroepsorganisatie van Accountants ) to appoint a reputable accountancy firm in the Netherlands as the Independent Expert;


c.	the terms of reference for the Independent Expert shall be to determine, by means of a binding advice ( bindend advies ) the amount of the Net Additional Leakage Amount, if any, within twenty (20) Business Days of its appointment;


d.	the Independent Expert shall be entitled to determine the procedure applicable to its determination;


e.	the Independent Expert shall act as expert and not as arbitrator; and


f.	the fees and expenses arising out of the engagement of the Independent Expert shall be borne by the Party who has either incorrectly presented the Net Additional Leakage Amount or has incorrectly disputed the Net Additional Leakage Amount.


3.3.3.	Within ten (10) Business Days of the Sellers and the Purchaser reaching agreement on the Net Additional Leakage Amount, or as the case may be the determination of the Net Additional Leakage Amount in accordance with Clause 3.3.2, the Sellers shall pay to the Purchaser the Net Additional Leakage Amount.


4.	PRE-COMPLETION COVENANTS


4.1.	General conduct

Subject to Clause 4.3, between the date of this Agreement and the Completion Date, the Sellers shall procure that each Group Company shall:


a.	carry on its part of the Business in the ordinary course in accordance with past practices; and


b.	preserve its present business organisations, lines of business and relationships with customers, suppliers and other third parties, in each case consistent with past practice;


c.	not make any payment other than routine payments in the ordinary and usual course of trading and consistent with past practice.


4.2.	Consent matters


4.2.1.	Between the date of this Agreement and the Completion Date, the Sellers shall procure that the Group Companies shall not, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld, delayed or made conditional), take any action or decision to:


(i)	issue, repurchase and/or cancel any shares, options, warrants, bonds or similar instruments in as far as this does not concern intragroup transactions;


(ii)	issue any depositary receipts;


(iii)	apply for the listing of any shares or debt instruments on a stock exchange;


(iv)	participate in the capital of another company or cooperation or amend the scope of such participation, including but not limited to the establishment of joint ventures or the alienation of (shares in) Subsidiaries and/or current joint ventures, except in as far as (a) the investment concerned with such

subsidiaries and/or joint venture are (anticipated to be) immaterial to the Group or (b) it concerns intra-Group restructuring;


(v)	amend the articles of association or similar constitutional documents of any Group Company;


(vi)	acquire (whether by one transaction or by a series of transactions) the whole, or a substantial or material part of the business, undertaking or assets of any other person or dispose (whether by one transaction or by a series of transactions) the whole or any substantial or material part of its business, undertaking or any other of its assets;


(vii)	voluntarily cease to carry on its business, is wound up or file for the liquidation, bankruptcy or suspension of payments of any Group Company;


(viii)	grant or revoke powers of attorney, except if immaterial or with regard to a revocation in an urgent matter;


(ix)	adopt or amend the annual budget, revised forecast or long term business plans of the Group, save for the adoption of the 2018 budget which is envisaged to be adopted on 19 December 2017 reflecting a budgeted EBITDA in line with the 2018 - 2020 Strategic Plan;


(x)	enter into agreements in which any Group Company provides a surety or undertakes joint and several liability, or provide security for a debt of a third party (excluding the use of existing banking credit facilities other than in the ordinary course of business) unless immaterial;


(xi)	lend or borrow any money (excluding the use of existing committed and non-committed banking credit facilities, and other than in the ordinary course of business) unless immaterial;


(xii)	amend the accounting principles used by the Group, unless required by accounting standards or immaterial;


(xiii)	cancel or terminate any insurance policy that provides cover in respect of any of the Group Companies or their assets or Employees;


(xiv)	enter into material long term co-operation agreements and the cancellation of such co-operation agreements, other than long term customer and supplier contracts in the ordinary course of business;


(xv)	make any capital expenditure of more than EUR 75,000 not currently foreseen or included in the budget / business plan of the Group, save for the procurement of a robot for Brink Towing Systems (pty) Ltd either by way of acquisition or through a lease arrangement;


(xvi)	transfer, let, lease or encumber assets, including real property or intellectual property other than in the ordinary course of business or immaterial;


(xvii)	significantly change the working conditions and employment terms and conditions of a considerable number of Employees;


(xviii)	make any changes to employment terms and conditions (including compensation, fringe benefits or any other employment benefit plan or arrangement) of any Key Employee (except in the ordinary course in line with general indexation applied within any relevant Group Company and/or the applicable Key Employee's employment agreement);


(xix)	introduce or amend any collective incentive scheme / bonus scheme for the Group;


(xx)	set up or amend any pension schemes and award pension rights other than under an existing and approved Group pension scheme;


(xxi)	engage or employ or make any offer to employ any new person who will be entitled to a total remuneration of EUR 75,000 or more, except where it regards a vacancy that has been included in the annual budget up to a total remuneration per vacancy of EUR 100,000;


(xxii)	settle or enter into any litigation- arbitration or similar proceedings (other than relating to debt collection in the ordinary course of business) where the amount in dispute exceeds EUR 75,000 or where the dispute concerns a breach or infringement of Intellectual Property; and


(xxiii)	agree to or permits the institution or settlement of any litigation where it could result in a payment to or by a Group Company after Completion of EUR 75,000 or more, except for collection in the ordinary course of trading debts;


(xxiv)	sell, assign or otherwise dispose of or agree to encumber, assign, assign by way of security lease, sublease or license, any of the Group Companies’ tangible or intangible assets; and


(xxv)	sell, license (except in the ordinary course of business), otherwise dispose of, terminate its right to use, fail to renew or fail to take any action to defend or preserve any material intellectual property right that is owned or used by the relevant member of the Group;


(xxvi)	change the Tax or financial accounting methods, practices, policies or principles or elections from those utilized in the preparation of the latest Tax returns or financial statements, other than any such changes as may be required under applicable law or Dutch GAAP, or any change to any Tax election or settlement or final resolution of any Tax controversy;


(xxvii)	amend or apply for any permits or licenses, except for in the ordinary course of business;


(xxviii)	enter into any rulings or similar type of agreements with any Tax Authorities; and


(xxix)	agree to, or agree to do, any of the foregoing.


4.2.2.	For the purpose of these pre-completion covenants, the term insignificant or immaterial shall in any event mean any transaction of which the value to the Group at the time of the action to be undertaken is determined or reasonably expected to be less than EUR 75,000 (seventy five thousand euro).

4.2.3.

The Sellers will inform the Purchaser in adequate detail of any action listed in Clause 4.2.1 contemplated by them. The Purchaser will inform the Sellers or the Company, as the case may be, as soon as possible and in any event within five (5) Business Days after receipt of a written request for consent by any or more of the Sellers or any Group Company in respect of any of the actions in Clause 4.2.1, such consent taking into account the reasonable interests of the Group not to be unreasonably withheld by the Purchaser and if the Purchaser withholds consent the reason why it has made that decision. If the Purchaser does not inform the Sellers or the Company, as the case may be, within that period of five (5) Business Days, the Purchaser shall be deemed to have consented to the proposed action. In the event the Purchaser notifies the Sellers and the relevant Group Company of its objection, the Parties will promptly and as soon as reasonably possible discuss the proposed action and the Purchaser’s objection with the objective of reaching agreement with regard to the action to be undertaken.


4.3.	Permitted actions

4.3.1.

If a director of a Group Company after due consideration is of the opinion that circumstances urgently require immediate action from any of the Group Companies in order to safeguard the interests of the Group and the Sellers are not reasonably able to timely request the consent of the Purchaser or await a response from the Purchaser to such request in accordance with Clause 4.2.3, no such consent will be required provided that (a) such urgent action, after due consideration by the director of a Group Company, is reasonably required for the business and (b) the Sellers inform the Purchaser of any such situation promptly at the moment they contemplate to take such action.


4.3.2.	The Sellers shall not be in breach of Clause 4.1 or 4.2 if and to the extent that the relevant Group Company:


a.	undertakes such action in relation to the execution of the Brink SA Buy Out in accordance with Clause 4.6;


b.	has received the prior explicit consent of the Purchaser to undertake such specific action or decision;


c.	undertakes such action in relation to the capital contribution by Brink Towing Systems B.V. on the capital in Brink Towing Systems (Thailand) Co. Ltd., in the equivalent amount of no more than EUR 250,000;


d.	undertakes such action in relation to the payment of an end-of-year bonus to thirty (30) employees of ACS Systems B.V. in the amount of about EUR 600 per employee.


4.4.	Funding of Purchase Price

The Purchaser represents that it will fund the payment of the Purchase Price and the Refinancing Amounts at Completion by raising that financing and that it will not require shareholder approval to raise such debt financing.


4.5.	Horizon Global Corporation Guarantee

The Purchaser's ultimate parent company, Horizon Global Corporation, has confirmed to the Sellers that it guarantees full and timely performance of all of the Purchaser's obligations under this Agreement (and those of the Purchaser's assignees, if any) for the benefit of any of the Sellers and their respective assignees (if any). The guarantee from Horizon Global Corporation is attached to this Agreement as Schedule 4.5 .


4.6.	Brink SA Buy Out

4.6.1.

Seller A will use reasonable efforts to pursue the Brink SA Buy Out in an efficient manner, keep the Purchaser regularly informed of the status of the negotiations and he will share the transaction documents for the Brink SA Buy Out on a timely manner in order to allow the Purchaser to request reasonable changes. Seller A will procure that he terms and conditions for the Brink SA Buy Out shall be typical for joint venture transactions (in particular warranties limited to unencumbered title to shares) and shall contain at-arm's-length stipulations. The Seller A use reasonable efforts to ensure that reasonable changes or amendments timely suggested by Purchaser will be agreed (to the extent reasonably possible) with the sellers under the Brink SA Buy Out. Purchaser (or its advisors) will not and will not be obliged to enter into (in)direct contact with the sellers (or their advisors) under the Brink SA Buy Out.

4.6.2.

Seller A warrants that it will procure that the Brink SA Buy Out shall be signed by the parties thereto as soon as possible and that the signing will not be unreasonably held back in light of the management fees of Seller A or any of its Affiliates relating to the Brink SA Buy Out, it being acknowledged that the completion of the Brink SA Buy Out will be subject to Completion of the Transaction, or in any event be completed as much as possible immediately prior to Completion of the Transaction.


4.6.3.	If and to the extent funding for the effectuation of the Brink SA Buy Out cannot in the view of management of the Group be drawn from the Bank Financing, the Sellers may opt to provide funding to the Group, by way of equity contribution, loans, or otherwise, which

funding will lead to an increase in the Purchase Price payable to the Sellers at Completion or repayment to the Sellers pursuant to Clause 2.6.


4.7.	Transaction Costs

Seller A will procure Transaction Costs will be invoiced to the Group Companies as much as reasonably possible prior to Completion, so that they are fully taken into account when providing the Leakage Notice. Any Transaction Costs invoiced to the Group Companies after a period of 6 months after Completion will be for the account of the Sellers. The stipulations of Clause 3.3 shall apply in this respect.


4.8.	Access to Customers and Suppliers

Sellers will, to the extent permitted under relevant anti-trust laws, use reasonable efforts to introduce representatives of the Purchaser and the Horizon Global Corporation access to the Group Companies customers and suppliers as soon as possible following the date hereof. Purchaser will under no circumstances be in any contact whatsoever with any of the Group Companies' customers and suppliers without the Group Companies management being present, except where it relates to the Purchaser's Group's own ordinary course of business, and in any event at all times without any reference to any of the Group Companies, the Business, and/or the Transaction whatsoever unless explicitly consented to by the Sellers and the Company. The same shall mutatis mutandis apply to the Group Companies in relation to the Purchaser's Group's customers and suppliers.


4.9.	Restatement 2016 and 2017 Audited Accounts to US GAAP


4.9.1.	Sellers have agreed to procure that the Group Companies will instruct KPMG to transferor the Audited Accounts of the Group Companies for the fiscal years 2016 and 2017 from IFRS into GAAP (the " Restatement ").


4.9.2.	The Sellers will procure that the Group Companies and KPMG will consult with the Purchaser prior to instructing KPMG and agree with the Purchaser the scope and the costs and expenses (the " Restatement Costs ") for the Restatement. Purchaser will need to approve in writing the scope and the Restatement Costs, such approval not to be unduly withheld or delayed or made conditional.


4.9.3.	The Restatement Costs will be borne by the Company. Should the Transaction not be consummated, the Purchaser shall compensate the Company for the Restatement Costs; however, only to the extent these were approved by the Purchaser.


5.	CONDITIONS FOR COMPLETION


5.1.	Conditions for Completion

The Sellers and the Purchaser shall only be obliged to proceed to Completion if and when the following conditions have been fulfilled (and, where applicable, continue to be fulfilled) (" Conditions for Completion "):


a.	a complete notification of the Transaction contemplated by this Agreement to all relevant Competition Authorities under any applicable competition law shall have been made and all waiting periods with respect to such notifications shall have expired and each relevant Competition Authority:


(i)	shall have issued a written statement or decision that execution and performance of this Agreement does not fall within the scope of the relevant competition law and that hence no clearance is required; or


(ii)	shall have issued a written statement or decision unconditionally permitting the execution and performance of this Agreement; or


(iii)	shall have issued a written statement or decision permitting the execution and performance of this Agreement conditionally, however, provided that this Condition for Completion 5.1 a sub (iii) shall only be considered as being satisfied, when the Purchaser has notified the Sellers in writing that it explicitly accepts these conditions imposed by the relevant Competition Authorities; or


(iv)	shall not have issued a written statement or decision within the applicable time periods under the relevant competition laws thereby implying that unconditional clearance has been given; or


(v)	shall have waived the applicable waiting period, provided that the Parties agree to undo the execution of the Agreement if any relevant Competition Authority issues, within the applicable decision period, a written statement or decision that definitively prohibits the execution and performance of this Agreement or makes the execution thereof subject to the fulfillment of conditions;


b.	the Dutch works council of the Group shall have rendered its unconditional positive or neutral advice for the Transaction, whereby the Sellers and the Purchaser shall use reasonable efforts to;


(i)	negotiate in good faith any changes to this Agreement that may be necessary or useful for obtaining such advice, provided that neither of the Parties shall be obliged to accept any such amendment; and


(ii)	cooperate with and provide all necessary information and assistance reasonably required by the Dutch works council.


c.	no Material Adverse Event has occurred prior to or on Completion; and


d.	Sellers will complete the Warrant Cancellation to the satisfaction of the Purchaser.


5.2.	Responsibility for satisfaction of conditions


5.2.1.	The Parties shall co-operate fully and in the most expeditious manner, and will further make all reasonable endeavours to cause the fulfilment of the conditions precedent as soon as possible, but ultimately on the Long Stop Date. The Parties shall promptly cooperate and

provide all necessary information as reasonably required by any government, authority or court in relation with the conditions precedent or which are otherwise necessary, proper or advisable in relation therewith. It is expressly agreed between the Parties, that the competition notification process is for the risk and account of the Purchaser and any remedy implemented or agreed to shall have no effect on the Purchase Price.

5.2.2.

All filings, requests and enquiries relating to the satisfaction of the condition precedent set out in Clause 5.1.a shall be dealt with by the Purchaser also on behalf of, and in close consultation with, the Sellers. The Purchaser shall make all reasonable endeavours following execution of this Agreement to make all necessary filings to obtain the required approval as soon as permitted under the relevant competition laws, shall consult with the Sellers timely before submitting any filings, communications or offers to the relevant competition authorities, and shall not submit any filings, communications or offers to the relevant Competition Authorities without the Sellers' prior written consent. Seller A and its representatives will be allowed to participate in any discussions, meetings and conference calls with any relevant Competition Authority. All filings, requests and enquiries relating to the satisfaction of the condition precedent set out in Clause 5.1.a, shall be the responsibility and risk of the Purchaser.

5.2.3.

In order to enable the Purchaser to submit a notification to the Competition Authorities, the Sellers acting jointly shall, represented by Seller A, procure that the Group shall fully cooperate with the Purchaser in the competition notification process and provide all information required or useful for such purpose. Without prejudice to the previous sentence, the Sellers shall in particular, at the reasonable request of the Purchaser:


a.	provide to the Purchaser any information or documentation that may be required by the Purchaser for the competition notification process;


b.	satisfy any requests for additional information and/or documentation made by the relevant Competition Authority;


c.	in their capacity as Sellers co-operate with and assist the Purchaser to procure the satisfaction of the condition as described in Clause 5.1 (a) and in particular assist the Purchaser in answering any questions raised by relevant Competition Authority without undue delay before, during and after the (pre-) notification proceedings; and

unless requested by the relevant Competition Authority avoid any separate contact with the relevant Competition Authority and, if contact with the relevant Competition Authority is to occur, ensure that it will inform the Purchaser of any contact with the relevant Competition Authority (if possible, in advance) and provide copies of all exchanges and information given to the relevant Competition Authority.


5.2.4.	The Purchaser and the Sellers shall and the Sellers shall procure that the Group Companies make all reasonable endeavours to procure that the Condition for Completion set out in Clause 5.1.a is satisfied in the first phase of the procedures promulgated by the relevant

Competition Authorities, and in any case as soon as possible. Without prejudice to the generality of the foregoing, the Purchaser shall not be obliged to fulfil any conditions of any Competition Authority, but it may reasonably consider all reasonable remedies or actions that may be required to obtain the unconditional consent for the Transaction of the relevant Competition Authorities.

5.2.5.

The Purchaser shall bear all filing fees and other costs incurred in relation to any competition or similar filing required to be made in any jurisdiction in connection with the Purchaser's acquisition of the Shares. The Purchaser shall also bear all costs, penalties and fines resulting from not filing in any jurisdiction where it is determined that filing should have taken place unless such failure to file was attributable to the Sellers or the Group Companies not complying with their respective obligations under Clause 5.2.1 or Clause 5.2.3.


5.3.	Satisfaction or waiver of Conditions for Completion

Each Party will notify the other Parties in writing within five (5) Business Days once it becomes aware of (i) the satisfaction of any of the Conditions for Completion on or (ii) any circumstance that will or is likely to result in a failure to satisfy any of the Conditions for Completion, accompanied by the relevant documentation describing the nature of such circumstance.


5.4.	Long Stop Date

5.4.1.

To the extent that a fact, matter or event occurs that qualifies as a Material Adverse Event and is capable of remedy in full by the Sellers or the Group Companies prior to the Long Stop Date, Completion will be suspended until such remedy has taken place and the Purchaser shall afford the Sellers and the Group Companies a reasonable period of time, which will not exceed thirty (30) days as of the date that the Purchaser has been notified of such Material Adverse Event or such Material Adverse Event has come to its attention, to remedy the Material Adverse Event (provided always that such remedy shall be at the sole cost and expense of the Sellers and that the Sellers shall indemnify the Purchaser for all costs and expenses reasonably and properly incurred and any losses or liabilities that the Purchaser may suffer as a result of such remedy or actions taken in order to seek to remedy such matter). If the Sellers and the Group Companies fail to remedy the Material Adverse Event with in the reasonable period of time afforded by the Purchaser, the Parties may at their individual discretion, without being or becoming liable to the other Parties and without prejudice to any of their rights or claims (including any right to claim payment of damages), through a written notification to the other Parties terminate this Agreement with immediate effect, except for the Surviving Clauses which shall survive such termination indefinitely.


5.4.2.	If the Condition for Completion set out in Clause 5.1.a has not been fulfilled, and where applicable not continues to be fulfilled, ultimately at 17.00 CET on the last Business Day prior to the Long Stop Date, the Parties may at their individual discretion, without prejudice

to any of their rights or claims (including any right to claim payment of damages), through a written notification to the other Parties:


a.	propose to postpone the Long Stop Date to another date (whereby Clause 5.4.3 needs to be observed); or


b.	terminate this Agreement with immediate effect, except for the Surviving Clauses which shall survive such termination indefinitely and Purchaser shall be obliged to pay to the Company a break fee in the amount of:

(i)

EUR 5,850,000 (five million eight hundred fifty thousand euro) within five (5) Business Days of the date of the termination of this Agreement if the relevant Competition Authorities have conditionally permitted the execution and performance of this Agreement but the Purchaser has not accepted such condition as envisaged in Clause 5.1.a(iii), and such condition imposed by the relevant Competition Authority would have entailed a change to the Purchaser's business (including the Group) that on an annual basis would have had a negative impact on the aggregate turn over of the Purchaser's business (including the Group) of less than EUR 15,000,000 (fifteen million euro); or

(ii)

EUR 2,340,000 (two million three hundred forty thousand euro) within five (5) Business Days of the date of the termination of this Agreement if the relevant Competition Authorities have conditionally permitted the execution and performance of this Agreement but the Purchaser has not accepted such condition as envisaged in Clause 5.1.a(iii), and such condition imposed by the relevant Competition Authority would have entailed a change to the Purchaser's business (including the Group) that on an annual basis would have had a negative impact on the aggregate turn over of the Purchaser's business (including the Group) of EUR 15,000,000 (fifteen million euro) or more;

5.4.3.

Should the competent Competition Authorities in the UK have not (unconditionally or conditionally) cleared or prohibited the Transaction by the date set out in Clause 5.4.2, the Parties shall be obliged to agree to postpone Completion in accordance with Clause 5.4.2.a until such time when the competent Competition Authorities in the UK have either (conditionally or unconditionally) cleared or prohibited the Transaction, but in any case not beyond 30 September 2018. Thereafter, Clause 5.4.2 applies unconditionally.


5.4.4.	The break fee under Clause 5.4.2b shall be paid by the Purchaser to the Company without any set off, deduction or withholding. The break fee under Clause 5.4.2 b shall be the only recourse of Sellers and/or the Group Companies in case of a termination of this Agreement in accordance with this Clause 5.4.2.

5.4.5.

The right to terminate this Agreement under this Clause 5.4 shall not be available to any Seller or the Purchaser if such Party is in breach of or has breached its obligations under Clause 5.1.b, 5.1.c, 5.1.d, Clause 5.2 , or Clause 5.3, or has materially breached any of its other obligations under this Agreement, and such breach has contributed materially to the non-satisfaction of the relevant condition for Completion.

5.4.6.

If the Conditions for Completion set out in Clause 5.1 other than 5.1.a and 5.1.c have not been fulfilled, and where applicable not continue to be fulfilled, ultimately at 17.00 CET on the last Business Day prior to the Long Stop Date, the Parties may at their individual discretion, without being or becoming liable to the other Parties and without prejudice to any of their rights or claims (including any right to claim payment of damages), through a written notification to the other Parties:


a.	propose to postpone the Long Stop Date to another date (it being agreed that no Party shall be obliged to agree to such postponement); or

terminate this Agreement with immediate effect, except for the Surviving Clauses which shall survive such termination indefinitely and without prejudice to all other rights or remedies available, including the right to claim damages (whereby in case of a termination by the Sellers in accordance with Clause 5.4.2 b, only the Company shall be entitled to the break fee (if any) and neither the Sellers nor the Group Companies shall be entitled to any damages), it being understood however, that the right to terminate this Agreement under this Clause 5.4.6 shall not be available to any Seller or the Purchaser if such Party is in breach of or has breached its obligations under Clause 5.1 or has materially breached any of its other obligations under this Agreement, and such breach has contributed materially to the non-satisfaction of the relevant condition for Completion.


5.5.	Execution of Notary Letter

Ultimately on the last Business Day prior to the Completion Date (as defined below) the Parties and any other relevant party shall sign the notary letter substantially in the form attached as Schedule 5.5 (the " Notary Letter ").


5.6.	W&I Insurance Policy

5.6.1.

The Purchaser confirms that it has, prior to the date of this Agreement, duly executed the W&I Insurance Policy (as defined below), and that the W&I Insurance Policy is therefore in full force and effect as of signing of this Agreement (but subject to Completion). A copy of the executed W&I Insurance Policy, and of a cost confirmation of the W&I Insurance Premium, have been attached to this Agreement as Schedule 5.6 . The Purchaser will provide the Sellers with the W&I Insurance Premium cost confirmation ultimately two (2) Business Days before the Completion Date.


5.6.2.	The W&I Insurance Premium shall be borne in equal parts by the Purchaser on the one hand and by the Sellers on the other hand as set out in Clause 2.4 up to an aggregate

amount of EUR 400,000 (four hundred thousand euro) (exclusive of any Tax) and any part of the W&I Insurance Premium in excess of EUR 400,000 (four hundred thousand euro) will be borne solely by the Purchaser.


5.6.3.	The W&I Insurance Premium shall be paid to the insurer and/or the relevant broker in accordance with the terms of the Notary Letter. For the avoidance of doubt, the amount of the invoice relating to the Sellers' share of the W&I Insurance Premium as determined in accordance with Clause 5.6.2 shall be deducted from the Purchase Price in accordance with Clause 2.4.1.c.


6.	COMPLETION


6.1.	Date and place

Subject to Clause 5, Completion shall occur at the Amsterdam offices of Eversheds Sutherland at 11.00 a.m. on the fifth (5th) Business Day after the conditions for Completion as set out in Clause 5 have been satisfied (and where applicable continue to be satisfied), or such later date determined on the basis of Clause 6.4.a or any other date agreed in writing by the Parties.


6.2.	Payment

The Purchaser shall procure that no later than one (1) Business Day prior to the Completion Date, the Purchase Price minus the Escrow Amount, the W&I Insurance Premium, the Refinancing Amounts and the Escrow Amount are received by the Notary in the Notary’s Account, in immediately available funds and with value on the Completion Date, this transfer being sufficient to instruct and authorise the Notary:

subject to the Deed of Transfer having been executed, to hold the Purchase Price minus the Escrow Amount, the W&I Insurance Premium, the Refinancing Amounts and the Escrow Amount for and on behalf of respectively the Sellers, the insurer and/or the relevant broker, the Financing Banks and the Escrow Agent, and to transfer them to the Sellers, the insurer and/or the relevant broker, the Financing Banks and the Escrow Agent in accordance with Clause 6.3.d; or


b.	if the Deed of Transfer is not executed at 23:59 CET on the Completion Date, to return the Purchase Price minus the Escrow Amount, the W&I Insurance Premium, the Refinancing Amounts and the Escrow Amount to the Purchaser, all in accordance with the Notary Letter.


6.3.	Completion events

After confirmation by the Notary that the Purchase Price and the Refinancing Amounts have been received in the Notary’s Account, the following shall occur on the Completion Date, in the order stated in this Clause 6.3:


a.	each of the Purchaser and the Sellers shall, and the Sellers shall procure that the Group Companies shall, perform or procure the performance of the actions allocated to it in the completion agenda (the " Completion Agenda ") attached as Schedule 6.3.a in the order stated therein;


b.	the Sellers shall deliver to the Purchaser the waiver and amendment agreement regarding the lease of Brink Towing Systems B.V. of the premises in Staphorst, the Netherlands, substantially in the form attached as Schedule 6.3.b ;


c.	the Sellers and the Purchaser shall cause the Shares to be transferred to the Purchaser by way of execution of the Deed of Transfer; and

upon execution of the Deed of Transfer, the Notary shall transfer the Purchase Price minus the Escrow Amount to the Sellers (and/or any of their Affiliates) as the Sellers will direct, the W&I Insurance Premium to the insurer and/or the relevant broker, the Refinancing Amounts in relation to the Bank Financing to the Financing Banks and the Escrow Amount to the Escrow Agent, all in accordance with the Notary Letter.


6.4.	Breach of Completion obligations

If any Party fails to comply with any of its obligations under Clause 6.3, each of the non-defaulting Parties shall be entitled, in addition and without prejudice to all other rights and remedies available to it (including any right to claim payment of damages), through a written notification to the defaulting Party:

to require the defaulting Party to proceed with, and effect, Completion to the extent practicable (taking into consideration the defaults that have occurred) and set a new date for the finalization of Completion through the effecting of the remaining obligations and actions as set out in the Completion Agenda on such date provided that Completion may not be deferred to beyond the Long Stop Date, in which event:


(i)	the provisions of this Agreement shall apply as if that later date were the date originally set for Completion (and, for the avoidance of doubt, it is agreed that in that event the Completion Date shall, for the purposes of this Clause 6.4, be on this later date and that the Parties’ rights under this Clause 6.4 shall remain in effect); and


(ii)	if the Purchaser is the defaulting Party, in addition to any other accrued interest, an amount equal to the commercial statutory interest ( wettelijke handelsrente ) as defined in article 6:119a of the Dutch Civil Code (at the then applicable rate) shall accrue on the Purchase Price from the date originally set for Completion until the date of payment of the Purchase Price; or


b.	to terminate this Agreement with immediate effect by way of written notice to the other Parties, in which case the Surviving Clauses shall survive such termination indefinitely.


7.	POST-COMPLETION COVENANTS


7.1.	Further assurances

On or after Completion, each Party shall, at its own expense, execute and perform (or procure to be executed and performed by any other relevant person) all such deeds, documents, acts and activities as may from time to time reasonably be required in order to vest all the Shares in the Purchaser or as otherwise may be necessary to give full effect to this Agreement.


7.2.	Retention of records

For a period of seven (7) years after the Completion Date, the Purchaser shall retain all books, records and other written information relating to the Group and, to the extent reasonably required by the Sellers, the Purchaser shall allow the Sellers access to such books, records and written information, including the right to make copies, at all times at the Sellers’ own expense.


8.	SELLERS’ WARRANTIES


8.1.	Each Seller, in relation only to itself and not in any way to any of the other Sellers, represents and warrants ( garandeert ) to the Purchaser that, save as Fairly Disclosed in the Disclosed Information, the following statements are, and will be, true and accurate on the date of this Agreement and at Completion:

Capacity and consequences of sale


a.	The Sellers have been duly incorporated and validly exist under the Laws of the Netherlands, and have the necessary corporate capacity and power to enter into this Agreement and to perform its obligations under this Agreement.


b.	No Seller has been dissolved or is involved in any procedure for division. No resolution or decision been adopted, petition submitted or proceedings initiated to such effect.


c.	No Seller has been declared bankrupt or insolvent or granted a moratorium of payments, nor are there any petitions, proceedings, notices or requests to this effect.


d.	All corporate and (where applicable) other action required to be taken by the Sellers to authorise the execution and performance of this Agreement has been duly taken.

As far as the Sellers are aware, no notices, reports or filings are required to be made by it in connection with the transaction contemplated by this Agreement and no consents, approvals, registrations, authorisations or permits are required to be obtained by it in connection with the execution and performance of its obligations under this Agreement, all except as explicitly set out in this Agreement.


f.	This Agreement comprises obligations that are legal, valid and binding on the Sellers by the Purchaser against the Sellers in accordance with the terms thereof.


g.	The execution, delivery and performance by the Sellers of this Agreement and the consummation by the Sellers of the transactions contemplated in this Agreement do not and shall not:


(i)	violate or conflict with a provision of Law applicable to it;


(ii)	require any consent or approval of, or filing with or notice to, a governmental authority under a provision of Law applicable to it, except as set out in this Agreement; or


(iii)	violate a provision of the organisational documents of the Sellers.


a.	The Sellers are the sole legal and beneficial owner ( juridische en economische eigenaar ) of the Shares sold by them under this Agreement, except for Seller B and Seller C who have issued depositary receipts of the Shares held by them, which depositary receipt will be cancelled at Completion;


b.	The Shares have been duly issued, placed and fully paid-up and are, or will be at Completion, free from Encumbrances.


c.	The Shares constitute the entire issued and outstanding share capital of the Company.


d.	There is no action, lawsuit or legal proceeding or investigation pending or threatened against any of the Sellers before any court or arbitrator or any Authority, agency or official that would prohibit the Sellers from entering into their obligations under this Agreement.

Group Companies, Corporate


a.	The Group Companies have been duly incorporated and validly exist under the Laws of their respective jurisdictions.


b.	No Group Company has been dissolved or is involved in any procedure for division. No resolution or decision has been adopted, petition submitted or proceedings initiated to such effect.


c.	No Group Company has been declared or applied for bankrupt or insolvent or granted or applied for granting a moratorium of payments, nor are there any petitions, proceedings, notices or requests to this effect and no receiver has been appointed as regards the Group Companies.


d.	The entire issued and outstanding share capital of all Subsidiaries is held directly or indirectly by the Company.


e.	The shares in the Subsidiaries have been duly issued, placed and fully paid-up. There is no obligation to make additional capital contributions. All capital increases and any

capital reductions by the Group Companies were carried out in accordance with the applicable provisions under the laws and the applicable articles of association.


f.	The shares in the Subsidiaries are, or will be at Completion, free from Encumbrances (other than any Permitted Encumbrances, if any). Upon Completion, the Purchaser will acquire indirectly the shares in the Subsidiaries without restrictions and free and clear of third party rights and other Encumbrances (other than any Permitted Encumbrances, if any).

No person has the right (whether exercisable now or in the future and whether contingent or not) to call for the conversion, issue, registration, sale or transfer, amortisation or repayment of the share capital or any other security giving rise to a right over, or an interest in, the capital of any Group Company under any option, agreement or other arrangement (including conversion rights and rights of pre-emption). No Group Company has any grant outstanding to any third party, including employees, to grant shares or give rights to shares or rights financial instruments that give the recipient economic benefits similar or equal to the holder of shares.


h.	No depositary receipts have been issued or promised with respect to any of the shares in the capital of any Subsidiary, nor do any third parties have any other type of beneficial interest in or relating thereto.

No Group Company has promised or is obliged to take any participation, equity interest, or other securities in any legal entity other than another Group Company, or is, has promised or is obliged to be a party to any joint venture, partnership or other corporation, whether incorporated or unincorporated, or is, has promised or is obliged to be a party to any other arrangement in relation to the sharing of income, profits, losses or expenses.


8.2.	The Sellers represent and warrant to the Purchaser that, save as Fairly Disclosed in the Disclosed Information, the Sellers’ Warranties set out in Schedule 8.2 are, and will be, true and accurate on the date of this Agreement.

8.3.

The Purchaser agrees that, save to the extent explicitly covered by a Sellers’ Warranty, no warranty, guarantee or any other form of comfort, whether express or implied, is given to the Purchaser concerning the Shares, the Group, Business, any part of the Disclosed Information and/or any aspect of the transactions contemplated by this Agreement. The Purchaser agrees that no warranty, guarantee or any other form of comfort, whether express or implied, is given relating to any forward looking statements, forecasts, estimates, interpretations, analysis, projections, whether or not part of the Disclosed Information.


9.	TAX COVENANT

The provisions of Schedule 9 shall apply in respect of Tax.


10.	CLAIMS AND LIMITATION OF LIABILITY


10.1.	Liability for Breaches

10.1.1.

If and to the extent that a Seller is or the Sellers are liable for a Breach, the relevant Seller or the Sellers shall, on a pro rata part basis (calculated in reference to the part of the Purchase Price received by the Sellers as set out in the Notary Letter as set out in the Notary Letter) subject to the limitations set out in this Agreement (including this Clause 10), pay to the Purchaser the amount of the Loss incurred.


10.1.2.	If and to the extent a Breach is capable of being remedied, no liability for such Breach shall exist to the extent the relevant Breach has been remedied during a period of forty (40) Business Days after the relevant Claim has been notified to the Sellers in accordance with Clause 10.2.


10.1.3.	The provisions of this Clause 10 set forth the exclusive remedies of the Purchaser for a Breach and the Purchaser shall have no other rights vis-à-vis the Sellers, neither by contract nor by law.

10.1.4.

Save to the extent this Agreement explicitly provides otherwise, each Seller is only liable for its own performance under this Agreement and shall not bear any liability for the performance or non-performance of any of the other Sellers. It is explicitly agreed that the Sellers shall not be liable for any obligation under this Agreement on a joint and several basis ( hoofdelijk ) and only on a pro rata part basis (calculated in reference to the part of the Purchase Price received by the Sellers as set out in the Notary Letter as set out in the Notary Letter).


10.2.	Procedure for Claims

If a member of the Purchaser’s Group becomes aware of a fact, circumstance or matter that does or may give rise to a Claim or a Breach, the Purchaser shall, within thirty (30) Business Days of the date on which the Purchaser has actual knowledge of the relevant fact, circumstance or matter, (i) notify the Sellers in writing of the possible Claim or Breach, (ii) – as far as reasonably possible - set out in reasonable detail the fact, circumstance or matter giving rise to this potential Claim or Breach and (iii) indicate the Purchaser’s and the Group’s bona fide estimate of the amount of Loss involved. Except as set out in this Agreement, a failure by the Purchaser and/or the Group to duly notify the Sellers in accordance with this Clause 10.2 shall not limit the Purchaser’s rights under this Agreement but shall reduce the Losses by the amount of the Losses attributable to such failure or delay.


10.3.	Thresholds


10.3.1.	The Sellers shall not be liable for a Breach unless:


a.	the Loss for the Purchaser for such individual Breach exceeds an amount equal to EUR 120,000 (one hundred twenty thousand euro) (a " Qualifying Claim "); and


b.	the aggregate amount of all Qualifying Claims exceeds an amount equal to EUR 600,000 (six hundred thousand euro). In the event the aggregate amount of all Qualifying Claims exceeds the aforementioned threshold, the Sellers’ liability shall extend to the total of all Qualifying Claims and not just to the excess.


10.4.	Maximum liability and recourse

10.4.1.

The Parties acknowledge that the W&I Insurance Policy aims to provide coverage to the Purchaser in relation to Claims for any Breach, and that except as explicitly set out herein, the W&I Insurance Policy and the Escrow Amount shall be the sole and exclusive source of remedy for any Losses pursuant to a Breach for which the Sellers would otherwise become liable under or in connection with this Agreement, including any payments due in connection with the Sellers’ Warranties and/or Clause 9 ( Tax covenant ), but save for in case the aggregate liability of the Sellers exceeds an amount of 30 (thirty) million Euro or such claim is the consequence of fraud or wilful misconduct by any of the Sellers on or prior to Completion. In this respect the maximum aggregate liability of each of the Sellers shall be limited as follows:

for Breaches of the Seller’s Warranties as set out in Schedule 8.2 and for Breaches under Clause 9 ( Tax covenant ), the Sellers' aggregate liability shall not exceed an amount of 30 (thirty) million Euro (except to the extent resulting from fraud or wilful misconduct by the Sellers), it being agreed that the Purchaser shall exclusively rely on the Escrow Amount and the W&I Insurance Policy for the payment of any Losses under or in connection with any Breach of the Sellers' Warranties, included in Schedule 8.2 and/or the Tax covenant in Clause 9;

the maximum aggregate liability of each of the Sellers for Breaches of the Sellers' Warranties as set out in Clause 8.1 shall not exceed its pro rata part (calculated in reference to the part of the Purchase Price received by it as set out in the Notary Letter) of the Purchase Price, it being agreed that the Purchaser shall only be entitled to Claim against the Sellers under or in relation to Clause 8.1 for (1) any Loss up to the retention amount under the W&I Insurance Policy equal to the amount stated in Clause 10.3.1.b, and (2) in excess of the coverage envisaged to be provided under the W&I Insurance Policy stated in this Clause 10.4.1; and


c.	the maximum aggregate liability of any Seller in relation to any other claims under this Agreement shall not exceed its pro rata part (calculated in reference to the part of the Purchase Price received by it as set out in the Notary Letter) of the Purchase Price.

10.4.2.

The Purchaser furthermore agrees and acknowledges in connection herewith that it shall not make, and waives any right it may have to make, any Claim for compensation for a Loss due to a Breach except as set out in Clause 10.4.1, and that neither (i) any failure on the part of the Purchaser’s Group to enter into, or to comply with the terms of, the W&I Insurance Policy, nor (ii) any unavailability at any time of the W&I Insurance Policy, or of any recourse

thereunder for whatever reason, shall increase the Sellers’ liability pursuant to or in relation to this Agreement in any way, except in the event of fraud or wilful misconduct by the Sellers by the Sellers.


10.5.	Time limitation


10.5.1.	All Claims shall be barred and unenforceable unless such Claim is filed in accordance with Clause 10.2 within twenty-four (24) months from the Completion Date, except for:


a.	Claims in respect of a Breach of any of the Sellers’ Warranties as set out in Clause 8.1, which shall be barred and unenforceable unless such Claim is filed within five (5) years from the Completion Date; and


b.	Claims under Clause 9 ( Tax covenant ) and the Sellers’ Warranties in paragraph 7 ( Tax ) of Schedule 8.2 , which shall also be barred and unenforceable unless such Claim is filed within six (6) months after the applicable statutory period has lapsed.


10.5.2.	A Claim against the Sellers shall be barred and unenforceable unless the Purchaser initiates legal proceedings against the (relevant) Seller(s) by initiating proceedings with the competent courts in Amsterdam against them regarding such Claim within six (6) months of the date on which the Purchaser or the Purchaser’s Group becomes aware of the relevant fact, circumstance or matter.


10.6.	Exclusions


10.6.1.	The Sellers shall not be liable and shall not be obliged to pay any amount under this Agreement in relation to any Claim (and the Sellers’ liability shall be reduced accordingly) if and to the extent that:


a.	a specific provision or provisions relating to the facts, circumstances or matters giving rise to the Claim has or have been made in the Audited Accounts or the Interim Accounts, a copy of which is attached to this Agreement as Schedule 10.6.1.a ;


b.	such amount has already been taken into account in the determination of the Purchase Price;


c.	the Loss is actually recovered or reasonably recoverable in accordance with Clause 10.9 from a third party, and/or is recovered or recoverable under an insurance policy (excluding for the avoidance of doubt the W&I Insurance Policy);


d.	the Breach is Fairly Disclosed in the Disclosed Information;


e.	the alleged Loss or liability is contingent only, unless and until it becomes an actual liability which is due and payable;


f.	the Claim would not have arisen had there not been (i) an amendment to any applicable Law (including certain developments in case law or the interpretation of any applicable Law) or (ii) the entering into force of any applicable Law after the Effective Date;


g.	the Claim would not have arisen had there not been (i) an amendment to the IFRS or Dutch GAAP accounting principles that entered into force after the Effective Date, or (ii) an amendment to the accounting principles of the Group that the Purchaser implemented after the Completion Date;


h.	the alleged Loss or liability is caused or increased by the failure of any member of the Purchaser's Group or any of its employees, agents or successors, to prevent or mitigate the Loss or liability; and/or

the alleged Loss is caused or increased by any voluntary act, omission, transaction, negligence, intentional misconduct or arrangement carried out by, at the request of, or with the explicit written consent of any member of the Purchaser's Group, including but not limited to (i) any admission of liability vis-à-vis a third party without the Sellers’ prior written consent (and, also if no admission of liability takes place, any settlement entered into by any Group Company with any third party without the Sellers’ prior written consent), (ii) any cessation or change in the nature or conduct of the Business following the date of this Agreement, and (iii) any act or omission which is specifically contemplated by this Agreement or any other document entered into in connection with the Transaction.


10.7.	No double claims and no double recovery


10.7.1.	The Sellers shall not be liable under this Agreement more than once in respect of the same Loss.


10.7.2.	The Purchaser shall be entitled to make more than one claim arising out of the same subject matter, fact, event or circumstance, but shall not be entitled to recover a Loss or obtain payment more than once in respect of any Breach.


10.8.	Positive effects

The Sellers shall not be liable and shall not be obliged to pay any amount under this Agreement in relation to any Claim (and the Sellers’ liability shall be reduced accordingly) if and to the extent that the Purchaser and/or any member of the Purchaser’s Group will or may realise any corresponding savings or other net financial benefit, including any Tax Benefit, and in the calculation of any amounts payable by a Seller in connection with a Claim such amounts shall be calculated on an after Tax basis to the effect that any amount payable in relation to a Claim shall be reduced by an amount equal to any current or future positive effect of Taxation in relation to the facts, circumstances or matters giving rise to the Claim for any member of the Purchaser's Group, including a positive effect relating to a Tax saving, reduction or reimbursement.


10.9.	Third party recovery

If the Sellers (or any of their Affiliates) have paid an amount in connection with a Claim and the Purchaser subsequently receives from a third party an amount which indemnifies or

compensates the Purchaser for its Loss or a part of the Loss in connection with that Claim and more specifically with respect to the amount that Sellers paid, the Purchaser shall repay to the Sellers the amount so recovered (after deduction of reasonable external fees, costs and expenses made in relation to the recovery) (in such proportion as they will direct) within five (5) Business Days after receipt thereof. The Purchaser shall make all reasonable endeavours to recover all relevant amounts from a third party, in the event that it is aware or Sellers have informed Purchaser of the facts, circumstances or matters on the basis of which a third party will have to compensate the Purchaser its Loss, however at no time and under no circumstances shall the Purchaser be required to take an action that is materially prejudicial to the Purchaser’s or the relevant Group Companies’ goodwill.


10.10.	Conduct of Third Party Claims


10.10.1.	The following shall apply in relation to any Third Party Claim:


a.	the Purchaser and the relevant Group Companies shall notify the Sellers of the relevant Third Party Claim within twenty (20) Business Days of the date upon becoming actually aware thereof;


b.	upon request the Purchaser shall, and shall procure that the relevant Group Companies shall, make available to the Sellers all such information as the Sellers may reasonably require for assessing the relevant Third Party Claim; and


c.	the Purchaser shall not, and shall procure that the relevant Group Companies shall not, make any admission of liability, agreement, settlement or compromise in relation to the Third Party Claim without the prior written approval of the Sellers (such approval not to be unreasonably withheld or delayed);

however at no time the Purchaser shall under no circumstances be required to take an action that is materially prejudicial to the Purchaser's or the relevant Group Companies' goodwill.


10.10.2.	The Purchaser shall, and shall procure that the relevant Group Companies shall:


a.	keep the Sellers informed in all reasonable detail of the progress of and any relevant development in relation to the Third Party Claim and reasonably consult with the Sellers in relation to the conduct of the Third Party Claim, including any appeal, dispute, compromise or defence in relation thereto; and


b.	at all times take into account the reasonable interests of all of the Sellers, the Purchaser, and the Group, and not cease to defend the Third Party Claim or make any admission of liability, agreement or compromise in relation to the Third Party Claim without the prior written consent of the Sellers, such consent not to be unreasonably withheld, delayed or made conditional.


11.	DUE DILIGENCE INVESTIGATION / AWARENESS OF CLAIMS


11.1.	The Sellers shall have no obligation to update any (part of the) Disclosed Information as of the date of this Agreement.

11.2.

The Purchaser confirms that it is, on the date of this Agreement, not aware of any fact, circumstance or matter that constitutes a Breach. Unless the Purchaser notifies the other Parties in writing in accordance with the provisions of this Agreement upon becoming aware of any fact, circumstance or matter that qualifies as a Breach following the date of this Agreement, the Purchaser shall be deemed to have confirmed that it is, on the Completion Date, not aware of any fact, circumstance or matter that constitutes a Breach.


12.	ESCROW, CONTINUED EXISTENCE OF SELLER A

12.1.

As security and as source of recourse for a Breach, the Sellers, the Purchaser and the Escrow Agent shall on Completion Date enter into the escrow agreement substantially in the form as attached to this agreement as Schedule 12 (the " Escrow Agreement "). It is agreed that subject to the terms and conditions of the Escrow Agreement an amount equal to EUR 600,000 (six hundred thousand euro) (the " Escrow Amount ") will be paid into in the Escrow Account following Completion by the Notary in accordance with Clause 6.3 and the Notary Letter. The costs associated with the services of the Escrow Agent will be borne in equal parts by the Purchaser on the one hand and the Sellers on the other hand.

12.2.

Seller A confirms towards the Purchaser that it and its investment fund will not be liquidated and will have sufficient assets to cover its liabilities hereunder for a period of at least two (2) years following the Completion Date, or that – if any liquidation of Seller A is undertaken prior to that date – it will ensure that it has reasonable market practice tail-end liability insurance in place for the benefit of its creditors to cover Seller A's liability in excess of the Escrow Amount.


13.	PURCHASER’S WARRANTIES


13.1.	The Purchaser represents and warrants ( garandeert ) to the other Parties that the Purchaser’s Warranties set out in Schedule 13.1 are, and will be, true and accurate on the date of this Agreement at Completion.


13.2.	If and to the extent that the Purchaser is liable as a result of a breach of the Purchaser’s Warranties, the Purchaser shall pay the Sellers the amount of the Loss incurred.


14.	NON-COMPETE AND NON-SOLICIT


14.1.	Non-Compete


14.1.1.	Seller A covenants in relation to itself and its Affiliates, and for Mr H. Geerts (who shall countersign this Agreement in acknowledgement), to the Purchaser and each other member of the Purchaser’s Group that it shall not and he shall not, directly or indirectly:


a.	during a period of two (2) years following the Completion Date, open or acquire any direct or indirect interest in any undertaking which is engaged in a business which competes with the Business or shall otherwise carry or be employed or engaged in such a business in any territory into which the Group has made sales or otherwise generated revenue; or

during a period of two (2) years following the Completion Date, induce or attempt to induce any person who is at Completion a supplier of goods or services to a Group Company to cease to supply, or to restrict or vary the terms of supply, to that Group Company, or canvass or solicit orders for goods of a similar type to those being dealt in or for services similar to those being provided by any Group Company at Completion from any person who is at Completion or has been at any time within the year prior to Completion a customer of a Group Company, except as previously approved by the Purchaser in writing.


14.1.2.	Seller A acknowledges that the Purchaser is accepting the benefit of the covenants contained in Clause 14.1 both on its own behalf and on behalf of each Group Company with the intention that the Purchaser may claim against Seller A, on behalf of any such person for loss sustained by that person as a result of any breach of any of the covenants contained in Clause 14.1.


14.2.	Non-solicit

Except as prior approved by the Purchaser in writing, during a period of two (2) years following the Completion Date each Seller undertakes to the Purchaser that it shall not for its own account or in conjunction with or on behalf of any person, firm, company, or through targeted activities of any recruitment agency solicit or entice away or endeavour to solicit or entice away from any Group Company any Key Employee, other than through general advertising campaigns not specifically targeted at any such individual.


15.	CONFIDENTIALITY


15.1.	No Party shall disclose or use any information regarding or in relation to the Agreement or the business of any other Party or any of its Affiliates, except:


a.	to the extent required by applicable Law or stock exchange regulations or any governmental authority and, to the extent reasonably possible, after consultation with the other Party about the timing and content of such disclosure;


b.	to professional advisors bound by a duty of confidentiality, to the extent necessary for any lawful purpose;


c.	to the extent that the information is public knowledge without a breach of this Agreement and/or any applicable confidentiality agreement;


d.	as required to conduct the defence of a claim of a third party or to initiate or conduct any dispute on the basis of, and in accordance with, this Agreement; and/or


e.	for public announcements agreed between the Parties and made or sent by a Party to advise the press, employees, customers, suppliers or agents of the Group of the acquisition of the Shares and the Business.


16.	MISCELLANEOUS


16.1.	Notices

Notwithstanding the right of each of the Parties to give notice in any other valid manner, notices shall be deemed to have been validly given if they have been sent, either by prepaid registered mail (with return receipt requested) or by courier (with proof of delivery), to the following addresses (unless and until a Party notifies the other Party in accordance with this Clause 16.1 of another address:



If to Seller A:
Cooperatief H2 Equity Partners Fund IV Holding W.A.
Attn: the Board
Oosteinde 19
1017 WT Amsterdam
The Netherlands

If to Seller B:
Stichting Administratiekantoor Brink I
Attn: the Board
Oosteinde 19
1017 WT Amsterdam
The Netherlands

If to Seller C:
Stichting Administratiekantoor Brink II
Attn: the Board
Oosteinde 19
1017 WT Amsterdam
The Netherlands

If to the Purchaser:
Cequent Nederland Holdings B.V.
Attn: the Board
Prins Bernhardplein 200
1097 JB Amsterdam
The Netherlands


16.2.	Assignment

No Party may assign any part of its rights and/or obligations arising under this Agreement to any person without the prior written consent of the other Parties. In the event of an assignment to an Affiliate, such consent shall not be unreasonably withheld and the assigning Party shall in any case remain jointly and severally liable with the assignee. Upon such assignee ceasing to be an Affiliate, the relevant Party having made the assignment shall procure that any rights and/or obligations so assigned shall be reassigned to it by such assignee. Sellers hereby consent to the assignment of any claims of Purchaser under this Agreement to any reputable banks or other reputable financial institutions as collateral for any debt assumed by Purchaser or any Affiliate of Purchaser in connection with the financing of the Purchase Price or any of the obligations of Purchaser under this Agreement.


16.3.	Costs and expenses

Each Party shall bear its own costs, charges and expenses in relation to the negotiation, preparation, execution and implementation of this Agreement. Any Permitted Leakage shall be borne by the Group. All fees and other costs in connection with the Notary and/or any filings required in any jurisdiction (including any and all fines and penalties related thereto), or any stamp duty, transfer tax, or similar Tax or duty of a documentary nature due by reason only of the execution and implementation of this Agreement, shall be exclusively borne by the Purchaser.


16.4.	Entire agreement

This Agreement constitutes the entire agreement and understanding of the Parties with respect to its subject matter and replaces and supersedes all prior agreements, arrangements, undertakings or statements regarding such subject matter.


16.5.	Exclusion Title 1 Book 7 Dutch Civil Code

The Parties hereby agree to exclude the applicability of Title 1 of Book 7 of the Dutch Civil Code to the extent legally possible.


16.6.	Amendment

Any amendment or variation of this Agreement is not valid unless it is agreed between all Parties in writing. Each Party waives its right to seek amendment of this Agreement in court or in any other manner.


16.7.	Partial invalidity

If any provision of this Agreement is or becomes invalid or non-binding, the Parties shall remain bound by all other provisions hereof. In that event, the Parties shall replace the invalid or non-binding provision by provisions that are valid and binding and that have, to the greatest extent possible, a similar effect as the invalid or non-binding provision, given the contents and purpose of such provision and this Agreement.


16.8.	Waiver

No Party shall be deemed to have waived any of its rights under this Agreement unless such waiver has been made explicitly and in writing. Any waiver of any rights relating to a violation of the obligations contained in this Agreement shall not constitute a waiver of such rights relating to future violations contained in this Agreement.


16.9.	No rescission / nullification

Except as explicitly otherwise provided for in Clause 5 or 6.4.b, each Party hereby waives the right:


a.	to rescind ( ontbinden ), nullify ( vernietigen ) or otherwise terminate or amend this Agreement in whole or in part by way of an out-of-court declaration ( buitengerechtelijke verklaring ) or in any other manner; or


b.	to seek the rescission ( ontbinding ) or nullification ( vernietiging ) or amendment in whole or in part of this Agreement in court.


16.10.	Effects of termination

If this Agreement is terminated in accordance with its terms:


a.	all documents and records that relate to a Seller or the Group and that were furnished to the Purchaser or its advisors in anticipation of Completion shall be returned to the relevant Seller or the relevant Group Company, as the case may be, and the Purchaser shall not retain any copies of such documents and records; and


b.	the Surviving Clauses shall survive such termination.


16.11.	Counterparts

This Agreement may be entered into by a Party by way of executing a separate counterpart, but it shall not be effective until each Party has executed at least one counterpart. Each counterpart, when executed, shall constitute an original, and all the counterparts shall together constitute one and the same instrument.


17.	GOVERNING LAW AND DISPUTE SETTLEMENT


17.1.	This Agreement shall be governed by and construed in accordance with the laws of the Netherlands.


17.2.	Except as otherwise provided in this Agreement, all disputes arising out of or in connection with this Agreement shall, if no amicable settlement can be reached between the Parties, in first instance be exclusively submitted to the competent courts in Amsterdam.


17.3.	For the purpose of this Agreement, including for the serving of any litigation documents in connection with this Agreement, the Parties elect to have their domiciles at the addresses referred to in Clause 16.1.

- Signature page to follow –

Signature page – Project Aurora SPA

Thus agreed upon and executed.



/s/ H. Geerts___________________________
COOPERATIEF H2 EQUITY PARTNERS FUND IV HOLDING W.A.
By: H2 Equity Partners Management Fund IV B.V.
Function: director
By: H2 Equity Partners B.V.
Function: director
By: Mainstreet Management B.V.
Function: director
By: H. Geerts
Function: director
Date: 13/12/2017
Place: Amsterdam
/s/ H. Geerts___________________________		/s/ H. Geerts___________________________
STICHTING ADMINISTRATIEKANTOOR BRINK I		STICHTING ADMINISTRATIEKANTOOR BRINK II
By: H2 Equity Partners B.V.		By: H2 Equity Partners B.V.
Function: director		Function: director
By: Mainstreet Management B.V.		By: Mainstreet Management B.V.
Function: director		Function: director
By: H. Geerts		By: H. Geerts
Function: director		Function: director
Date: 13/12/2017		Date: 13/12/2017
Place: Amsterdam		Place: Amsterdam
/s/ Jay S. Goldbaum_____________________		/s/ Paul C. Caruso ______________________
CEQUENT NEDERLAND HOLDINGS B.V.		CEQUENT NEDERLAND HOLDINGS B.V.
By: Jay Samuel Goldbaum		By: Paul Charles Caruso
Function: Director B		Function: Director A
Date: 13/12/2017		Date: 13/12/2017
Place: Amsterdam		Place: Amsterdam

SCHEDULE 1.1 DEFINITIONS

In this Agreement, save where explicitly provided otherwise, capitalised words and expressions have the following meanings:



Accounting Principles	means the accounting principles, policies, treatments, practices and categorisations (including in relation to the exercise of accounting discretion and judgement) that were used in the preparation of the last Audited Accounts;
Accounts Date	means 31 December 2016;
Additional Leakage	means any Leakage except for (i) Permitted Leakage, and (ii) Leakage that is deducted from the Purchase Price;
Affiliates	an "Affiliate" of any person means any other person who, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such person; and for these purposes "controlling person" means any person who controls any other person; "control" (including the terms "controlling", "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management, policies or activities of a person whether through the ownership of securities, by contract or agency or otherwise; and for these purposes the term "person" is deemed to include a company and a partnership; for the avoidance of doubt, "Affiliate" includes shareholders holding an interest of at least 50%, subsidiaries ( dochtermaatschappijen ) and group companies ( groepsmaatschappijen ) within the meaning of Sections 2:24a and 2:24b respectively of the Dutch Civil Code;
Agreement	this share purchase agreement;
Anti-Bribery Law	means any Law applicable to the Group and each of its Affiliates that relates to bribery or corruption;
Applicable Law	means any state or local statute, law, ordinance or code, or any written rules, regulations or administrative interpretations issued by any Authority pursuant to any of the foregoing, and any order, writ, injunction, directive, judgment or decree of a court of competent jurisdiction applicable to a member of the Group
Audited Accounts	means the consolidated audited accounts of the Group as per 31 December 2016;
Authority	means any supranational, national, provincial, municipal or other governmental authority or court of a relevant jurisdiction (including any subdivision thereof);
Bank Financing	means (i) the Group's senior facility with ABN Amro Bank N.V. and NIBC Bank N.V. and (ii) a mezzanine facility with Stichting Bewaarder DeltaLloyd Mezzanine;



Breach	any breach of any Sellers’ Warranty and the occurrence of an event that may give rise to a payment under the Tax covenant in Clause 9 ;
Brink SA Buy Out	has the meaning given in Clause 2.4.1.e;
Business	the business activities as carried on by the (members of the) Group as at the Completion Date, as set out in Recital C;
Business Day	any day (other than a Saturday or a Sunday) on which banks are open for normal banking business in the Netherlands;
Company	has the meaning given in Recital A;
Claim	any claim for a breach of Warranties made by the Purchaser under this Agreement against the Sellers;
Competition Authority	means the competition authorities in Germany;
Completion	has the meaning given in Clause 2.2;
Completion Agenda	has the meaning given in Clause 6.3.a;
Completion Date	has the meaning given in Clause 2.2;
Confidentiality Agreement	has the meaning given in Recital D;
Data Protection Law	means the Directive 95/46/EC of the European Parliament, the Personal Data Protection Act ( Wet bescherming Persoonsgegevens ) and any such data protection regulations and laws (i) that implement any of the foregoing; and (ii) as may be in force pursuant to any Applicable Law;
Data Room	the electronic data room made available to the Purchaser and its advisors during the period ending on the date hereof, containing information and documents in relation to the Shares, the Business, the Group and its assets and liabilities (including the questions raised and answers provided in relation to the Due Diligence Investigation), the contents of which data room are in whole stored on a DVD to be attached hereto as Schedule E . Parties acknowledge that the DVD attached to this Agreement will be provided to Purchaser following execution hereof as a result of which Purchaser was not able to asses whether the information stored on the DVD is the same as the information provided in the Data Room. In order to enable Purchaser to make such an assessment of the information stored on the DVD, Parties acknowledge and agree that the Data Room will be frozen as of the date hereof but will remain available until Completion. In the event that the information that is stored on the DVD differs from the information in the Data Room, the DVD shall be revised in order to ensure that the information stored on it is identical to the information in the Data Room as at the date hereof.
Deed of Transfer	has the meaning given in Clause 2.2, and will be executed substantially in the form attached as Schedule 2.2 ;
Delta Lloyd Warrant	means certain warrants, dated as of 30 July 2015, issued by the Company to Stichting Bewaarder Delta Lloyd Mezzanine Fund for the issuance of 3.1% of the shares to Stichting Bewaarder Delta Lloyd Mezzanine Fund;



Disclosed Information	all documents and written information that have been available to the Purchaser in connection with the Due Diligence Investigation prior to the date of this Agreement, in (i) the Data Room and (ii) the Vendor Due Diligence Reports, provided that any information indicated under (i) and (ii) (iii) shall only considered disclosed to the extent that the information is stored at the DVD (Schedule E);
Due Diligence Investigation	the Purchaser’s due diligence investigation; as described in Recital E;
Effective Date	has the meaning given in Clause 2.3;
Employees	means the employees of the Group Companies;
Encumbrance	any mortgage, pledge, right of pre-emption, option, claim, right to acquire, conversion right, third party right, right of set-off, right of counterclaim, title retention or conditional sale arrangement or if it regards a share in a company an arrangement to hold a share in trust and any voting rights granted to third parties in relation to the shares;
Escrow Account	the account of the Escrow Agent under the Escrow Agreement;
Escrow Agreement	has the meaning given in Clause 12;
Escrow Agent	ABN Amro Bank N.V. (Escrow Services);
Escrow Amount	has the meaning given in Clause 12;
Equity Value	has the meaning given in Clause 2.4;
Fairly Disclosed	means disclosed in sufficient detail to enable a reasonably acting purchaser with the assistance of professional advisers to make a reasonably informed assessment of the facts, matters or information concerned and their nature and effect;
Financing Banks	means ABN Amro Bank N.V., NIBC Bank N.V. and Stichting Bewaarder Delta Lloyd Mezzanine Fund;
Governmental Entity	means any international, European Union, national, provincial or local governmental body, regulatory body or authority exercising an executive, legislative, judicial, regulatory, administrative or other governmental function with jurisdiction in respect of the relevant matter;
Group	has the meaning given in Recital B;
Group Companies	has the meaning given in Recital B, and each of them individually a " Group Company ";
Independent Expert	has the meaning given in Clause 3.3.2;
Intellectual Property	means trademarks, service marks, trade names, domain names, logos, patents, inventions, design rights, copyrights, database rights and all other similar rights in any part of the world, including know-how, and where such rights are obtained or enhanced by registration, any registration of such rights and applications and rights to apply for such registrations;
Interim Accounts	means the interim accounts as per 30 September 2017, as attached hereto as Schedule 10.6.1.a ;
Interim Accounts Date	means 30 September 2017;



Key Employee	means each of the following individuals: Mr R. Martens, Mr B. van Ittersum, Mr P. van Buren, Mr K. Buyst, Mr O. Irdel, Mr Vaanholt, Mr. Flanderijn, Mr. Mussche and Mr E. Naber;



Leakage	means, unless constituting Permitted Leakage, any of the following items taking place in the period as of the Effective Date and up to and including the Completion Date: a. any dividends or other distributions, whether by way of share redemption, share capital reduction or otherwise, and any other payment in respect of any share capital of any Group Company, in each case whether in cash or in kind, paid or made by any Group Company to and for the benefit of any of the Sellers or their Affiliates (excluding the Group Companies); b. any waiver or forgiveness of any indebtedness or liability owed by any of the Sellers or their Affiliates (excluding the Group Companies) to any Group Company, or any indebtedness or liability incurred by any of the Group Companies for no consideration or a consideration which is not at arm’s length to any of the Sellers or their Affiliates (excluding the Group Companies); c. any payments made (or assets transferred or liabilities assumed, indemnified or incurred for the benefit of) (other than as described in (a) and (b) above) by any Group Company to or to the benefit of Sellers or any of their Affiliates (excluding the Group Companies) which is not in the ordinary course of business and/or not at arm’s length and/or not on a basis that is consistent with past practice; d. any bonus (in cash or in kind) or other emolument (including, for the avoidance of doubt, management fees, gifts and employment contracts) paid or payable to any director, employee, advisor or consultant of any of the Sellers or their Affiliates or any of the Group Companies incurred or reimbursed by, or charged to, any of the Group Companies, as an incentive to complete, or triggered by, the Transaction; e. the payments made or to be made, or costs, expenses or liabilities incurred or to be incurred by the Sellers, their Affiliates or the Group Companies, in relation to the Transaction for the servicing of the Data Room, and the engagement of Houthoff Coöperatief U.A., Deloitte Transaction Services and Houlihan Lokey (except to the extent such payments, costs, expenses or liabilities are for the Purchaser’s account or the Group’s account pursuant to the terms of this Agreement) (the " Transaction Costs "); f. the payments made or to be made, or costs, expenses or liabilities incurred by the Group Companies in relation to transaction costs for the Brink SA Buy Out (except where it relates to Seller provided funding for the Brink SA Buy Out); g. the payments made or to be made, or costs, expenses or liabilities incurred or to be incurred by the Sellers, their Affiliates or the Group Companies, in relation to Spencer Stuart (it being acknowledged and agreed that (1) the Purchaser shall not have, and shall not seek, access to the Spencer Stuart work product; and (2) if the Purchaser in any way acts on any information contained the Spencer Stuart work product, this item shall be deemed to have been Permitted Leakage as at Completion, and the Purchaser shall duly and fully reimburse the Sellers); h. any amount of Restatement Costs that were not approved in writing by the Purchaser; i. any amount in which the Brink SA Management Fees exceed the amount of 250,000 Euro; j. any agreement, arrangement or commitment to give effect to any of the matters referred to in a up to and including i above; and k. any Tax Liability in respect of any of the items referred to in a. up to and including j. above; whereby the Parties agree that any such amounts reimbursed to the Group Companies by or on behalf of the Sellers or any of their respective Affiliates prior to Completion will not be considered Leakage;



Leakage Notice	has the meaning given in Clause 3.2.1;
Leakage Tax Benefit	in respect of each Leakage item: a. the amount of VAT recoverable or off-settable by any Group Company in connection with the Leakage item; plus b. such portion of the Leakage item which is deductible for corporate income tax purposes multiplied by twenty-five percent (25%);
Leased Real Estate	has the meaning given in Section 13.3 of Schedule 8.2 ;
Licensed Intellectual Property Rights	has the meaning given in Section 16.2 of Schedule 8.2 ;
Litigation	any claim, action, arbitration, mediation, hearing, investigation, proceeding, litigation or suit;
Long Stop Date	30 June 2018;
Loss	means the aggregate of all payments necessary for the Purchaser and/or the (relevant) Group Companies to be brought in the position it or they would have been in, if the Breach had not occurred to be calculated in accordance with the provisions of sections 6:95 et seq. of the Dutch Civil Code, without applying any transaction multiple;
Material Adverse Event	one or a series of related events in any of the Group Companies, having a negative impact (after considering any funds which can be obtained by any Group Company under the insurance policies of the Group Companies existing on the date hereof - excluding for the avoidance of doubt the W&I Insurance) on the Group Companies' aggregate EBITDA in excess of EUR 3,000,000 (three million euro) on an annualized basis during the period starting on the date of this Agreement until Completion, provided, however that any such adverse event shall not be taken into account for determination of a Material Adverse Event if it results from (i) general economic conditions or conditions or events affecting companies generally in the industry in which the Group Companies are active at the date hereof, (ii) general economic or regulatory, legislative or political conditions or securities, credit, financial or other capital markets conditions, in any jurisdiction, (iii) any change in Law, regulation or generally accepted accounting principles (or interpretations thereof), in any jurisdiction applicable to the Business (iv) as a consequence of the announcement of the Transaction, including but not limited to a customer terminating its relationship with the Group as a consequence of the announcement of the Transaction, (v) any action permitted under this Agreement, or (vi) any facts or circumstances or currently ongoing litigation known prior to the date of this Agreement to the Party invoking the relevant provision against the other Parties which could reasonably be expected to have such effect, and it being agreed that the mere failure by the Group to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period shall not in and of itself constitute a Material Adverse Event, it being acknowledged that it can be the result of a Material Adverse Event;
Net Additional Leakage Amount	has the meaning given in Clause 3.3.1;
Net Leakage Amount	has the meaning given in Clause 3.1;



Notary	Mr P.J.A. Goedvolk civil law notary of Eversheds-Sutherland, the Netherlands, or any of his deputies;
Notary Letter	has the meaning given in Clause 5.5, and will be executed substantially in the form attached to this Agreement Schedule 5.5 ;
Notary’s Account	NL31 INGB 0020 0709 93 at ING Bank Amsterdam for the attention of Eversheds Sutherland B.V. Notariaat kwaliteitsrekening ;
Own Intellectual Property Rights	has the meaning given in Section 16.1 of Schedule 8.2 ;
Owned Real Estate	has the meaning given in Section 13.1 of Schedule 8.2 ;
Parties	has the meaning given in the preamble of this Agreement;
Pension Scheme	means the statutory pension schemes, which an employer and/or an employee needs to contribute to under the laws of the respective country in which a Group Company operates;
Permits	has the meaning given in Schedule 8.2 ;
Permitted Encumbrance	means any Encumbrance pursuant to the Bank Financing arrangements, which Encumbrances are to be released at Completion in accordance with the Refinancing;
Permitted Leakage	means any payments and/or costs incurred in connection with: a. (i) any management fees payable to the Sellers or any of their Affiliates in the ordinary course of the Business to the extent such management fees related to periods prior to the Completion Date and (ii) in relation to the management fees of Seller A or any of its Affiliates related to the periods prior to the date on which the Brink SA Buy Out was materially agreed up (which shall be deemed to have occurred upon the entering into of binding Brink SA Buy Out transaction documentation, subject only to Completion of the Transaction) to an amount of 250,000 Euros (annualized) (the " Brink SA Management Fees "); a. any action explicitly allowed under this Agreement; and/or b. any action otherwise explicitly allowed by the Purchaser;
Product Recalls	has the meaning given in Section 7.1 of Schedule 8.2 ;
Purchase Price	has the meaning given in Clause 2.4;
Purchaser	has the meaning given in the preamble of this Agreement under IV;
Purchaser’s Group	the Purchaser and its Affiliates (including, as from Completion, each Group Company), including each of their employees, representatives, agents or successors in title;
Purchaser’s Warranties	the Purchaser’s warranties as set out in Schedule 13.1 ;
Qualifying Claim	has the meaning given in Clause 10.3.1.a;
Refinancing Amounts	has the meaning given in Clause 2.6.2;



Release Letter	means a letter from a provider of Bank Financing including bank, financial institute or any other lender, confirming (a) the amounts that the Group Companies owe and will become due upon cancellation of the financial arrangements with that bank, financial institute or lender, including, but not limited to, the principle amount of debt, the interest accrued up to Completion Date, the costs, any penalties, and (b) the full and unconditional release of any collateral over any of the Shares and assets of the Group Companies at the full repayment of the outstanding debt at Completion and (c) the full release of each of the Group Companies from all and any obligations to that bank, financial institute and/or lender upon settlement of the outstanding debt at Completion;
Seller A	has the meaning given in the preamble of this Agreement under I;
Seller B	has the meaning given in the preamble of this Agreement under II;
Seller C	has the meaning given in the preamble of this Agreement under III;
Sellers	means the Parties so designated in the preamble of this Agreement and each of them a " Seller ";
Sellers’ Warranties	the warranties as set out in Clause 8.1 and in Schedule 8.2 , and each of them a " Sellers’ Warranty ";
Shares	has the meaning given in Recital A;
Subsidiaries	Brink Group B.V., ACS Systems B.V., Brink Towing Systems B.V., Brink Towing Systems SARL, Brink Towing Systems Ltd., Brink Towing Systems A/S, Brink Towing Systems SP zoo, Brink Towing Systems (pty) Ltd, Brink Towing Systems (Thailand) Co. Ltd.;
Surviving Clauses	the following Clauses: 1 ( Definitions and Interpretation ), 5.4 ( Long Stop Date ), 6.4 ( Breach of Completion obligations ), 13.2 ( Confidentiality ), 16 ( Miscellaneous ) and 17 ( Governing law and dispute settlement );
Tax Authority	any local or national authority in any jurisdiction having the power to impose or collect Tax;
Tax Benefit	has the meaning given in Clause 4 of Schedule 9 ;
Tax Issue	has the meaning given in Clause 6.5 of Schedule 9 ;
Tax Liability	a liability of any Group Company to make an actual payment of Tax;
Tax or Taxation	any and all forms of taxation, social security charges, duties, imposts and other levies of whatever nature, including income tax, corporate income tax, capital tax, wage tax, real property tax, transfer tax, registration tax, value added tax, stamp duty, national social security contributions and employee social security contributions, customs and excise duties, environmental taxes and duties, dividend withholding tax, including any interest, penalties, surcharges, fines or other additions thereto separately or jointly due, payable, levied, imposed upon or claimed to be owned in any relevant jurisdiction, whether directly payable to any relevant Tax Authority or payable pursuant to any relevant tax sharing arrangement or agreement (including tax unity obligations and tax sharing agreements);
Tax Refund	has the meaning given in Clause 4.a of Schedule 9 ;



Third Party Claim	a Breach existing as a result of, or in connection with, a liability or alleged liability by any of the Group Companies to a third party not being one of the Group Companies;
Transaction	has the meaning given in Recital E;
VAT	any Tax levied by reference to added value, sales and/or consumption, including but not limited to value added tax ( omzetbelasting ) as stipulated in the 1968 Value Added Tax Act ( Wet op de omzetbelasting 1968 );
Vendor Due Diligence Reports	the vendor due diligence reports prepared in the course of the Transaction and provided to the Purchaser of: a. Deloitte Transaction Services (Financial/Tax/Pensions); and b. Houthoff (Legal), including the schedules and annexes thereto;
Warrant Cancellation	means the repurchase, for cash, and/or termination of the Delta Lloyd Warrant by the Company or the Sellers such that the Delta Lloyd Warrant is terminated and no warrants remain outstanding thereunder with effect from Completion;
W&I Insurance Policy	means the insurance policy issued by AIG Europe Ltd., with the Purchaser as policyholder and beneficiary to provide coverage to the Purchaser in relation to any breach of the Sellers' Warranties or the Tax indemnity included in Schedule 9 , and which policy has been attached to this Agreement as Schedule 5.6 ;
W&I Insurance Premium	means the insurance premium, costs and expenses including Taxes due in connection with the W&I Insurance Policy, the draft invoice (or cost confirmation) relating to which has been attached to this Agreement as Schedule 5.6 .

SCHEDULE 2.4.1 EXAMPLE CALCULATION OF THE PURCHASE PRICE ADJUSTMENT FOR THE BRINK SA BUY OUT

Example 1

If the purchase price for the Brink SA Buy Out Amounts to EUR 6,000,000 and is entirely funded in the form of equity provided by the Sellers, the Purchase Price is increased with:


a.	EUR 6,000,000 (bridge amount) minus EUR 6,000,000 (Brink SA Buy Out purchase price); plus


b.	EUR 6,000,000 (equity funding by the Sellers),

on the balance resulting in an increase of the Purchase Price of EUR 6,000,000.

Example 2

If the purchase price for the Brink SA Buy Out Amounts to EUR 6,000,000 and is funded in the form of a EUR 3,000,000 equity contribution provided by the Sellers and EUR 3,000,000 debt, the Purchase Price is increased with:


a.	EUR 6,000,000 (bridge amount) minus EUR 6,000,000 (Brink SA Buy Out purchase price); plus


b.	EUR 3,000,000 (equity funding by the Sellers),

on the balance resulting in an increase of the Purchase Price of EUR 3,000,000.

Example 3

If the purchase price for the Brink SA Buy Out Amounts to EUR 9,000,000 and is funded in the form of a EUR 6,000,000 equity contribution provided by the Sellers and EUR 3,000,000 debt, the Purchase Price is increased with:


a.	EUR 6,000,000 (bridge amount) minus EUR 9,000,000 (Brink SA Buy Out purchase price); plus


b.	EUR 6,000,000 (equity funding by the Sellers),

on the balance resulting in an increase of the Purchase Price of EUR 3,000,000.

Example 4

If the purchase price for the Brink SA Buy Out Amounts to EUR 9,000,000 and is funded entirely in the form of debt, the Purchase Price is decreased with:


c.	EUR 6,000,000 (bridge amount) minus EUR 9,000,000 (Brink SA Buy Out purchase price); plus


d.	EUR nil (equity funding by the Sellers),

on the balance resulting in a decrease of the Purchase Price of EUR 3,000,000.

SCHEDULE 8.2 SELLERS' WARRANTIES

The Sellers represent and warrant to the Purchaser that, save as Fairly Disclosed in the Disclosed Information, the Sellers’ Warranties set out below are, and will be, true and accurate on the date of this Agreement


1.	Group Companies / Corporate


1.1.	The Group Companies were and are entitled, pursuant to the applicable provisions of corporate law, to manage their respective current Business as they are managed in the past and are managed at present.

1.2.

No attachment has been levied on, and no receiver has been appointed in relation to, any of the Group Company's properties, assets or enterprise. There are no circumstances which would justify the institution of such proceedings or any actions seeking to void or challenge this Agreement under any insolvency laws. None of the Group Companies has ceased or suspended its payments nor entered into or offered any debt settlement agreements or similar arrangements with creditors.

1.3.

The copies of the articles of association and other constitutional and corporate documents as set out in the Disclosed Information are, in all respects, true, accurate, complete, and not misleading and the Group Companies have at all times acted in accordance with such documents. No resolutions have been made by any corporate body to amend any of the constitutional and corporate documents of any of the Group Companies. The articles of association and other constitutional documents are fully effective and enforceable.


1.4.	No shareholder's resolutions or managing board resolutions have been adopted in respect of any Group Company but not yet carried out or put into effect. In particular, any and all dividends or distributions declared have been made or paid in accordance with the relevant articles of association and applicable statutory provisions.


1.5.	Each of the Group Companies has properly kept record of all meetings of shareholders and managing directors.


2.	Audited Accounts and Interim Accounts


2.1.	The Audited Accounts and Interim Accounts:


a.	give a true and fair view ( getrouw beeld ) of, the size and composition of the assets and liabilities, the financial condition and results of operation of the Group and/or the relevant Group Company at the Accounts Date and of the results of the Group and/or the relevant Group Company for the financial period ended on the Accounts Date; and


b.	have been prepared applying the accounting policies consistently applied in the financial statements of the relevant Group Company in the previous three (3) financial years.


2.2.	The Audited Accounts have been prepared in accordance with Dutch statutory requirements and applicable Law.


2.3.	The Interim Accounts have been prepared in accordance with IFRS.


2.4.	Paragraph 2.1 above applies mutatis mutandis with respect to the individual accounts of the Subsidiaries as per December 31, 2016 which are not Dutch law governed, whereby in this regard the reference to Dutch law shall be replaced by the laws of the respective country in which such Subsidiary is incorporated.


2.5.	As far as the Sellers are aware, since the Interim Accounts Date, no fact, matter or circumstance has occurred which resulted in any change or amendment to any of the Interim Accounts being required pursuant to the method used in preparing the relevant Interim Accounts.


2.6.	The Group Companies have in the past three (3) years duly and timely filed their respective Audited accounts.


2.7.	The corporate and financial records, books of account, minute books, shareholders' register and other books and records of the Group Companies, whatever the form in which they exist:


a.	are up to date and contain all matters to be recorded under applicable law or applicable accounting rules;


b.	have always been kept in accordance with the statutory provisions;


c.	have always been kept in a correct and adequate manner in accordance with sound business practice; and


d.	are in the possession of the Group Companies,

and no notice or allegation to the contrary has been received by any Group Company and to the Sellers' best knowledge there is no fact, circumstance or matter on the basis of which such notice or allegation should reasonably be expected.


2.8.	All documents that any Group Company was required to file with or deliver to any trade register in the past three (3) years have been correctly made up and duly filed and delivered.


3.	Events since the Accounts Date


3.1.	Since the Accounts Date and up to the date of this Agreement, each of the Group Companies has conducted the Business consistent with past practice and in the ordinary course, so as to maintain it as a going concern, including but not limited in relation to the payments of creditors and the collection of debts and the purchase of stock and inventory.


3.2.	Since the Accounts Date none of the Group Companies has taken any actions set out in Clause 4.2.1 (applying the threshold set out in Clause 4.2.2).


4.	Financing, debtors and creditors, grants and subsidies


4.1.	Other than as Fairly Disclosed in the Disclosed Information:


a.	none of the Group Companies is a party to any overdraft, loan or credit facility; and


b.	there are no outstanding interest bearing loans and credits and there is no other interest bearing indebtedness (including money raised by promissory note or debt factoring) nor is there any agreement to enter into such arrangements;


c.	no Group Company has any interest bearing debts (whether present or future, and whether in relation to lending money or otherwise) other than debts incurred in the ordinary course of the Business.


4.2.	The Group Companies have not undertaken any action which may or will constitute an event of default under, or prejudice or negatively affect, any loan facility, overdraft facility, or other financial facility of the Group Companies.


4.3.	The Disclosed Information contains a complete and accurate list of all the bank accounts of the Group Companies, including details of the authorised signatories. No third party, not being a Group Company, shares any of the Group Companies' bank accounts.


4.4.	The Disclosed Information completely and correctly sets out the debtors to the Group as at the date of such information. None of these debts has been released, factored or discounted such that the debtor involved has paid, or will pay, less than the full amount of this debt.

4.5.

No Group Company is party to or liable under (whether on a contingent basis or not) any guarantee, indemnity, suretyship, or other similar commitment in relation to any party which is not a Group Company, and no such guarantee, indemnity, suretyship, or other similar commitment given by or for the benefit of a Group Company by a party which is not a Group Company is outstanding, other than a guarantee for the benefit of the customs authority in the amount of EUR 7,000.


4.6.	No Group Company has created or agreed to create any Encumbrance over any of its properties or assets, nor has any person made any claim to be entitled to any such Encumbrance, other than Permitted Encumbrances or in the ordinary course of business.


4.7.	No Group Company has applied for or received, any material grant or subsidy from any Governmental Entity or other person. No Group Company is or as a consequence of this Agreement will be under any obligation to repay any grants or subsidies.


5.	Assets


5.1.	The Group Companies own all the assets listed in the Audited Accounts, Interim Accounts and all assets acquired by it since Effective Date, except the assets it disposed of in the ordinary course of the Business, and none of these owned items is subject to any

Encumbrance or to any agreement or commitment to give or create any Encumbrance, save for Permitted Encumbrances.


5.2.	The assets owned, licensed, leased or otherwise used by the Group Companies comprise all the assets required for the continuation of its Business as carried on at the date of this Agreement. All such assets are in the possession or otherwise under the control of the Group Companies.


5.3.	Each of the assets owned, held or used by the Group Companies is in good repair and in good condition, taking into account normal wear and tear.


5.4.	The Group Companies:


a.	do not use any assets belonging to any of the Sellers or any of their respective Affiliates in the course of the Business, other than the locations leased from the Sellers and or the Seller's Affiliates;


b.	have in the past three (3) years not acquired any assets from any of the Sellers or any of their respective Affiliates; and


c.	have in the past three (3) years not sold or transferred any assets used in the course of the Business to any of the Sellers or any of their respective Affiliates.


6.	Contracts


6.1.	The Disclosed Information contains full and complete copies (including any amendments) of all written contracts with all material suppliers and customers of any Group Company


6.2.	The Disclosed Information contains a complete list of the top 9 largest customers (for the purposes of this paragraph 6 a " major customer ") and the top 9 suppliers (for the purposes of this paragraph 6 a " major supplier ") of the Group Companies as measured by the business volume (excluding VAT) for the financial year 2016.


6.3.	No person who was a major customer or a major supplier of a Group Company during the last financial year has ceased to trade or do business with the relevant Group Company, or substantially reduced its trade or business with the relevant Group Company, or changed the terms of its trade or business with the relevant Group Company, or indicated in writing an intention to do any of the same.


6.4.	All contracts to which any of the Group Companies is a party at the date of this Agreement:


a.	are valid and binding obligations of the parties thereto;


b.	the terms thereof have been complied with in all material respects by the relevant Group Company and by any other party to such contracts.


6.5.	No Group Company has in the 12 months prior to the date of this Agreement received written notice that it is in default under any Contract. To Sellers’ best knowledge, there are no

circumstances reasonably likely to give rise to a default of a Group Company in the performance of its obligations under a contract.


6.6.	No dispute or other judicial, arbitral or regulatory proceedings with a value of more than EUR 100,000 (one hundred thousand euro) exists in relation to any of the contracts referred to in paragraph 6.1, and no written notice has been received by any Group Company stating that any Group Company has been in material breach of any such contract.


6.7.	No Litigation with a value of more than EUR 100,000 (one hundred thousand euro) exists in relation to any of the contracts referred to in paragraph 6.1, and no written notice has been received by any Group Company stating that any Group Company has been in material breach of any such contract.


6.8.	No written notice of termination or of intention to terminate has been received by a Group Company in respect of any of the contracts referred to in paragraph 6.1.


6.9.	No Group Company is, nor was it in the three (3) years preceding the date of this Agreement, a party to or liable in respect of any agreement, arrangement or obligation that was not part of the Disclosed Information and that is or was made other than in the ordinary and usual course of the Business.


7.	Product Liability

7.1.

The Group Companies have not produced, sold, otherwise distributed into the stream of commerce or provided for use to third parties, any products or performed services and other work in a manner that could to Sellers' best knowledge lead to liability or other obligations under product liability, warranties or other legal grounds, and to Sellers' best knowledge no such forms of liabilities or obligations exist. Third parties do not have any claims against the Group Companies based on product liability, breach of warranty or other legal grounds in connection with the production, sale, distribution or licensing of products or the performance of services and other work.

7.2.

Sellers have made available to the Purchaser in the Disclosed Information copies of all material complaints and notices of alleged material defects or adverse reactions with respect to the products produced, sold, otherwise distributed into the stream of commerce or provided for use to third parties by the Group Companies. In the last five (5) years prior to the date of this Agreement, except for the product recalls set out in the Disclosed Information (the " Product Recalls "), no Group Company has voluntarily, or as a result of a legal obligation, recalled or removed from the market any product or has improved such product as part of a recall campaign or has issued a product warning to customers or consumers.


7.3.	The Product Recalls, have been settled in full and no (residual) liability of any Group Company exists in relation to the facts, circumstances or matters on the basis of which such product recalls took place.


7.4.	To the knowledge of the Sellers, the products of the Group Companies have been produced, sold or otherwise distributed into the stream of commerce or provided for use to third parties in compliance with Applicable Law and applicable regulatory approvals.


8.	Tax


8.1.	The Group Companies have been duly registered for Tax purposes in their country of incorporation.


8.2.	In the past three (3) years, the Group Companies have, in all respects, each duly and timely filed all Tax Returns they were required to file and all such Tax Returns are true, correct and complete in all aspects and no penalties have been incurred.


8.3.	All records which the Group Companies are required to keep for Tax purposes are duly kept.


8.4.	No Group Company has any agency, branch office, or other place of business or permanent establishment outside its country of incorporation, except for Brink Towing Systems B.V. which has a branch office in Germany and Brink Towing Systems S.a.r.l. which has a branch office in Italy.


8.5.	No non-routine investigations or inquiries by any competent Tax Authority are pending, have been announced in writing or to the best of Sellers' knowledge are expected with respect to any Group Company.


8.6.	In the current financial year and the previous three (3) financial years, none of the Dutch Companies have claimed or have been granted an exemption from Tax in connection with a reorganization or merger.


9.	Disputes and litigation

9.1.

The Group Companies are not involved in Litigation related to civil law, tax law, administrative law, criminal law or disciplinary rules, including investigations of any public, supervisory or implementing authority of any relevant jurisdiction, in respect of which, separately or together, an amount is involved of more than EUR 100,000 (hundred thousand euro). To the best of Sellers' best knowledge, no such disputes, proceedings and/or investigations are threatened.


9.2.	No outstanding, unfulfilled or unsatisfied judgment, decree, order or award by any court, tribunal or arbitrator has been made against, and not been appealed by, any Group Company or any person for which any Group Company may be liable (including but not limited to officers, directors, and employees).


10.	Employees


10.1.	The Data Room contains a complete overview of the applicable terms and conditions of employment of all the Employees as per the date of that overview, setting out in any event:


a.	(redacted) personal details (age);


b.	employer;


c.	function and department;


d.	form of employment (temporary or indefinite time);


e.	date of commencement of employment; and


f.	fixed monthly salary and other entitlements.


10.2.	No person previously employed or engaged by any Group Company has a right to continued or renewed employment by that Group Company.

10.3.

As of the date of this Agreement, no Key Employee nor any Group Company has given or has indicated its intention to give notice of termination, and no circumstances exist which give any Key Employee or the respective Group Company a right to terminate or modify any terms of his or her employment with the Group Companies and the execution of this Agreement or the transactions contemplated therein do not trigger any such rights of any Key Employee.


10.4.	No person, other than the registered managing directors as Fairly Disclosed in the Disclosed Information and/or any trade register, is authorised to act for, or to bind or to act as agent or attorney, for a Group Company.

10.5.

The Group Companies have at all times complied with all statutory obligations and in all material respects with all (other) contractual obligations towards the Employees; in particular, but without limitations, each Group Company has duly and fully performed all payment and other obligations owed to their workers and employees when those obligations became due and each Group Company has made all social and tax payments with respect to Employees when they became due.


10.6.	There is no stock option scheme in place at any Group Company. There are no other incentive or bonus schemes applicable to the Employees other than the incentive and bonus schemes Fairly Disclosed in the Disclosed Information. No employee of any Group Company is entitled to any remuneration calculated by reference to sales, turnover, or profits of any Group Company.

10.7.

No proposal, assurance or commitment has been communicated to the Employees, trade unions or works council regarding any change to the terms of employment, working conditions or benefits and no negotiations with Employees, trade unions, works councils related thereto take place, other than in the ordinary course of business or at an individual level for Employees who are not Key Employees. No such change will take place as a result

of this Agreement or the effectuation of the transactions contemplated herein, and no contracts with Employees contain any change-of-control provisions that would be triggered by the Transaction and would result in any additional right being provided to any such Employee or any additional obligation on any of the Group Companies.


10.8.	No Group Company has made any loan or advance which is still outstanding to any Employee or any person formerly employed by any Group Company, except for the loan made by the Company to Mr Gutridge with a principal amount of EUR 45,000 which will be repaid at Completion.

10.9.

Since 1 January 2015 no Group Company is or has been involved in any strike or industrial or trade dispute with any trade union, works council or other body representing Employees, except for a one day strike at Brink Towing Systems S.a.r.l. in January of 2016. Other than as set out in the Disclosed Information and/or pursuant to applicable collective bargaining agreements ( CAO's ), no agreements exist between any Group Company and any trade unions, any works council or other body representing employees.

10.10.

All collective bargaining agreements or any other agreements in any other legal form under the laws of any jurisdiction which restrict the Group Companies freedom to dismiss any of their employees or to change the terms of employment of their employees (including restrictions in the form of an obligation to make, in the case of dismissals or changes to terms of employment, any payments) (the " Collective Agreements ") between any Group Company on the one hand and any trade union, works councilor other employee representative body were Fairly Disclosed in the Disclosed Information.

10.11.

All agreements and other commitments, whether of an individual or collective nature and including commitments based on works custom, regarding employee benefits such as anniversary, holiday or jubilee payments, bonuses, profit participation or other variable remuneration elements and stock options, stock appreciation rights or similar rights, except for Pension Schemes, were Fairly Disclosed in the Disclosed Information.


11.	Pensions

11.1.

The Disclosed Information provides all pension and retirement schemes to which any of the Group Companies is a party. The Group is in compliance with (i) any statutory obligation to participate in any state or branch or industry pension fund or early retirement fund and the current Pension Schemes with respect of all employees which are subject to such obligations and (ii) early retirement legislation, pension schemes and other benefit arrangements that apply to their employees.


11.2.	The Disclosed Information provides all the obligations the Group has vis à vis their current and former employees with respect to pension and/or early retirement and/or other benefit arrangements. All financial obligations which are due in respect of the Pension Schemes, or any requirements of the relevant Authorities in relation thereto, have been fully paid or

adequately provided for in the Accounts. As far as the Sellers are aware, no additional obligations for any of the Group Companies in relation to the Pension Schemes are triggered as a result of the Transaction.


11.3.	The Group Companies have fully and timely satisfied their obligations vis-à-vis the Employees and the pension administrator(s) and duly and timely paid all amounts (including contributions, premiums and expenses) payable, or sufficiently provided for such obligation as current liability in the ordinary course in the Audited Accounts and Interim Accounts.


11.4.	There are no pending claims or actions (other than routine claims for benefits) in respect of the pension arrangement(s) offered to the Employees, nor are any such claims or actions threatened or do any circumstances exist which might give rise to any such claim or action.


11.5.	There is no change or termination in progress or communicated to the Employee, works councils or trade unions with respect to the current pension schemes in place or with respect to any other similar arrangements.


11.6.	The Group Companies have not received any written notice stating that there is a (statutory) obligation to participate in any branch industry or otherwise obligatory pension fund in respect of any Employee or former employee of the Group Companies.


12.	Insurance


12.1.	In relation to each insurance policy taken out by any Group Company, the following applies:


a.	the insurance policy is in full force and effect;


b.	all premiums payable in the past three (3) years have been duly paid; and


c.	there has been no act or omission that could make any insurance policy void or voidable.


12.2.	No Group Company has been refused insurance during the past three (3) years.


12.3.	No notifications have been received with regard to the non-renewal of any insurance policy or continuation or renewal on less favourable terms and conditions.


12.4.	To the Sellers' best knowledge, there are no circumstances which may nullify any Insurance Policy.


13.	Real estate

13.1.

The Disclosed Information sets out a true and complete list for each Group Company of all real estate owned or co-owned by such Group Company or similar right in favor of such Group Company (including any option or obligation to acquire), and correctly states for each such piece of real estate the location, applicable land register or other identification data, size, use, type of legal title, co-owners, if any, and encumbrances (the real estate listed or to be listed in the Disclosed Information the " Owned Real Estate ").

13.2.

The Owned Real Estate is not encumbered except for Permitted Encumbrances. There exist no regulations or legally binding transactions that impose any payment obligations or other obligations on the Group Companies in relation to the Owned Real Estate. Third parties have not built over the Owned Real Estate, and nothing has been built over any real property of third parties. The owners of the Owned Real Estate are not subject to any enforceable third party rights to use or occupy the Owned Real Estate. The existing statutory or transactional encumbrances of and the obligations arising from the Owned Real Estate do not impede the use of the Owned Real Estate, as such use exists on the date of this Agreement and as it is required to continue the Business operations in the same manner and scope as they are currently conducted.


13.3.	The Disclosed Information sets out a true and complete list of (i) the real property ( onroerende zaken ) that is leased or otherwise used (except for the Owned Real Estate) by any of the Group Companies and (ii) the real property with respect to which any of the Group Companies has an option or contractual obligation to lease (collectively the " Leased Real Estate ").


13.4.	All lease agreements relating to any of the Leased Real Estate leased by the Group Companies are in full force and effect, and the Group Companies are not in breach of any material obligations under any relevant agreement. The Group Companies have at all times duly paid the rent payable in relation to the Leased Real Estate.


13.5.	No real estate other than the Owned Real Estate and the Leased Real Estate is currently used by or necessary for any Group company to conduct its business as conducted on the date of this Agreement.


13.6.	There is no dispute or proceeding regarding any Owned or Leased Real Estate leased or used by the Group Companies, and to the best of Sellers' knowledge, there is no fact, circumstance or matter which is likely to give rise to any such claim or proceeding.


13.7.	No Group Company is under any obligation to carry out material improvements or repairs of all or part of any Leased Real Estate by the Group Companies, nor has any Group Company received any order or instruction with respect to any such improvements or repairs.


13.8.	None of the Owned or Leased Real Estate has suffered from any event rendering the real estate not suitable for its current use in the Business.


13.9.	Each Group Company has fully and timely complied with all material applicable environmental Laws and zoning plans and Laws.


13.10.	No Group Company has made renovation or alteration of any of the Leased Real Estate other than on the basis of and in accordance with the prior consent of the relevant landlord.


13.11.	No Group Company is a party to a lease which either cannot be terminated by it in accordance with any Law or its terms, or cannot be so terminated without it incurring any penalty or other liability.


13.12.	To the best of Sellers’ knowledge, there is no major item of expenditure already incurred by the landlord of any Leased Real Estate or expected to be incurred within the next twelve (12) months which is recoverable in whole or in part from any Group Company.


13.13.	The Owned or Leased Real Estate and the buildings thereon are not polluted and/or contaminated with any hazardous substances (as such terms are defined in applicable environmental Law) to the extent that any immediate remediation obligation exist assuming the continuation of the Business as undertaken as at the date of this Agreement.


13.14.	There have not been any complaints, whether formally or informally, against any Group Company about noise, smells, pollution, or other inconveniences caused by any Group Company, nor is it to the Sellers' best knowledge, likely that those complaints will be made in respect of any period before the Completion Date.


13.15.	No Governmental Authority has given any directive, order or notice to the Group Companies which could impose an obligation to the Group Companies to make any improvements and/or repairs of the Owned or Leased Real Estate.


13.16.	No Group Company has received any written claim, notice or information from any Governmental Authority in connection with:


a.	any (possible) pollution of the Owned or Leased Real Estate or the facilities thereon; or


b.	non-compliance with environmental Law at the Owned or Leased Real Estate and facilities used by the Group Companies.

13.17.

The plant and machinery, vehicles, fixtures and fittings, furniture, tools and other equipment used in connection with the business of each Group Company are in a good and safe state of repair and condition and satisfactory working order and have been regularly maintained to a good standard and in accordance with any safety regulations usually observed in relation to them, all taking into account reasonable wear and tear.

13.18.

To the Sellers' best knowledge, the present use of any of the Owned or Leased Real Estate is not and will not be restricted or impaired by any supranational, national, provincial, municipal or other laws, regulations or other rule of general application or administrative, criminal or civil decisions, orders, measures, guidelines, announcements, published plans or intended policies ( beleidsvoornemens ) and other acts or practices, emanating from any Authority.


14.	Information technology


14.1.	In the twelve (12) months prior to the date of this Agreement, there have been no failures or breakdowns of any computer hardware or software, or other computer or communication systems, used or licensed exclusively in relation to the Business, which have materially affected the Business.

14.2.

The Group Companies own, or have valid licences or other rights to use, all computer hardware and computer software necessary for the continuation of the Business of each Group Company as at the date of this Agreement (subject to required investments, expenses and capital expenditure as Fairly Disclosed in the Disclosed Information). All such licenses are in full force and effect and have been complied with in all material respects.


14.3.	There is no dispute or proceeding regarding any computer hardware or software, or other computer or communication systems used in the Business, and to the Sellers' best knowledge, there is no fact, circumstance or matter which is likely to give rise to any such dispute.


14.4.	Each Group Company has in its possession, or has all necessary rights to use the source code and all related technical and other information required to enable its appropriately skilled employees or those of a third party of its choice to maintain, update, upgrade and support bespoke software used in the computer hardware or software, or other computer or communication systems of the Group.


14.5.	Except as Fairly Disclosed in the Disclosed Information, each Group Company is the owner of all Intellectual Property relating to the design (including interaction design) and layout of its websites, its mobile applications and other bespoke software used in the computer hardware or software, or other computer or communication systems of the Group.


14.6.	The IT systems are not wholly or materially dependent on any facilities which are not under the ownership or control of the Group or to which the Group does not have sufficient license or contractual rights to use.


14.7.	The Group has taken precautions to preserve the integrity, security and availability of the IT systems and all information and data stored on them.


15.	Data Protection


15.1.	To the best of Sellers' knowledge each Group Company has valid registrations under Data Protection Laws and it has at all times complied with the Data Protection Laws together with all applicable codes of practice and/or guidance issued by or with the approval of applicable national data protection authorities, including:


a.	where necessary, the requirements relating to notification and/or registration of processing of Personal Data;


b.	all subject access requests from data subjects;


c.	where necessary, the obtaining of consent to data processing and/or direct marketing activity;


d.	the requirement to implement appropriate technical and organizational measures against unauthorized or unlawful processing of Personal Data and against accidental loss or destruction of, or damage to, Personal Data; and


e.	where necessary, the obtaining of agreements with any data processors which require them to fully comply with Data Protection Laws at all material times.


15.2.	None of Group Companies received any written notice from any Authority or individual alleging it has breached any Data Protection Laws.


15.3.	The Group has written policies and procedures in place which are designed to assist it to comply as much as currently reasonably possible with all Data Protection Laws, including its data security obligations.


15.4.	No requests from data subjects under relevant Data Protection Laws for access to data held by a Group Company are outstanding.


16.	Intellectual Property, ownership, authorised use


16.1.	The Intellectual Property, the sole and unencumbered holder of which is a Group Company or to which one or more Companies has or collectively have exclusive and perpetual rights of use that are not limited either geographically or in terms on content (the " Own Intellectual Property Rights ") is set out in the Disclosed Information.

16.2.

The Disclosed Information contains a list of all licenses to, and other rights of use in, Intellectual Property Rights, which were granted to a Group Company and which are not a part of the Own Intellectual Property Rights defined in paragraph 16.1 (the " Licensed Intellectual Property Rights "). The Disclosed Information also contains information about the licensor, type, scope, duration, any limitations and other material terms of use as well as any license fees or royalties owed by the Group Company in question. Any contract, under which a third party granted a license, is valid and enforceable. To the Sellers' best knowledge, there are no facts or circumstances that serve as a basis for terminating a license of a Licensed Intellectual Property Right.


16.3.	The Intellectual Property that is material to the Business as conducted at the date of this Agreement is either legally owned by, validly licensed to, or used under the authority of the owner, by the relevant Group Companies.


16.4.	All Owned and Licensed Intellectual Property Rights are valid, subsisting and enforceable in accordance with their terms.


16.5.	All fees, annuities and other costs and charges in relation to the maintenance of all registered Intellectual Property that is material to the Business as conducted at the date of the Agreement have been duly and timely paid and nothing has been done or omitted to cause the lapse of registration or pendency of such Intellectual Property.

16.6.

To the best of Sellers' knowledge, the Group Companies' Intellectual Property that is material to the Business is not the subject of any claim, invalidity, challenge or opposition by any third party and is not being infringed upon by any third party. Other than as Fairly Disclosed in the Disclosed Information, no Group Company has granted to any third party any right or interest or encumbered in respect of the Intellectual Property owned by or licensed to the Group Companies.


16.7.	There is no dispute or proceeding regarding any Intellectual Property, and:


a.	to the best of Sellers' knowledge, there is no fact, circumstance, allegation, suggestion, indication or matter which is likely to give rise to any such dispute; and


b.	the activities and the products manufactured or sold by the Group Companies do not infringe any Intellectual Property Rights of any third party.

16.8.

No trade secrets material to the business of the Group as currently conducted have been authorised to be disclosed or have been disclosed by any Group Company to any person other than pursuant to a confidentiality or non-disclosure agreement restricting the disclosure and use of such trade secrets, and except where required by Law, or at the request of an Authority. Each Group Company has taken all reasonably necessary steps to protect and preserve the confidentiality of all trade secrets.


16.9.	No claim has been made by an employee, contractor or third party in any of the Intellectual Property Rights and all employment agreements, development agreements, consulting agreement, contractor agreements and the like under which any Intellectual Property was developed includes an enforceable assignment of such IP rights to the applicable Group Company.


17.	Legal compliance


17.1.	The Group Companies have in the past three (3) years acted in compliance with all applicable material Laws.


17.2.	All licences, permits, consents, authorisations, certificates and registrations material to the Business as conducted by the Group Companies (collectively and, where appropriate, individually) at the date of this Agreement (the " Permits ") have been obtained, are in force, and are being complied with in all material respects.


18.	Information

To the best of Sellers' knowledge, no information has not been included in the Due Diligence Information that would make any Disclosed Information untrue or inaccurate in any respect.


19.	Anti-Bribery and Corruption


19.1.	None of the Group Companies has, at any time in the last five years before the date of this Agreement:

made, given, authorised or offered, or promised to make, give, authorise or offer any financial or other advantage (including any payment, loan, gift or transfer of anything of value), directly or indirectly, to or for the use or benefit of any government official (or to another person at the request or with the assent or acquiescence of such government official), or any other natural or legal person, in order to assist such Group Company in improperly obtaining or retaining business for or with any person, in improperly directing business to any person, or in securing any improper advantage; or


b.	taken any other action which would to the Sellers' best knowledge violate applicable Anti-Bribery Law.


19.2.	The Company requires each Group Company to act in accordance with the requirements of applicable Anti-Bribery Law and uses all reasonable endeavours to procure that they do so.

19.3.

To the Sellers' best knowledge, no Group Company is or has at any time in the last five years before the date of this Agreement been the subject of any investigation, inquiry or litigation, administrative or enforcement proceedings by any governmental authority or any customer regarding any offence or alleged offence under any Anti-Bribery Law and no such investigation, inquiry, litigation or proceeding has been threatened or are pending, and there are no circumstances likely to give rise to any such investigation, inquiry, litigation or proceedings.

SCHEDULE 9 TAX


1.	Tax Indemnity


1.1.	The Sellers shall, on a pro rata basis (calculated in reference to the part of the Purchase Price received by it as set out in the Notary Letter) indemnify and hold the Purchaser harmless ( vrijwaren en volledig schadeloosstellen ) from and against:


a.	any Tax Liability for which a Group Company is liable as a result of any event occurring before the Effective Date (other than Tax arising in respect of income, profits or gains earned on or after Effective Date as a result of such an event) or in respect of any profits earned or revenues realized before the Effective Date; and


b.	any out of pocket costs or expenses incurred by the Purchaser or a Group Company in connection with a Tax Liability referred to in the preceding paragraph a or in connection with any action taken in avoiding, resisting or settling any such Tax Liability.


1.2.	Any payment by the Sellers under Clause 1.1 of this Schedule 9 shall be deemed to be an adjustment of the Purchase Price and treated accordingly by the Parties in all relevant respects.


2.	Exclusions


2.1.	The indemnity contained in Clause 1.1 of this Schedule 9 shall not cover any Tax Liability to the extent that:


a.	a specific allowance, provision or reserve has been made in in respect of such specific Tax Liability in the Audited Accounts and Interim Accounts, that Tax Liability was accrued, reduced the value of an asset, or was noted or referred to in the Audited Accounts and Interim Accounts; or

the Tax Liability arises or is increased as a result of any change, on or after the Effective Date, in Tax rates or the passing of or any change in Law or generally accepted accounting practice, or a change in interpretation on the basis of case law, regulation, directive or requirement, or a change in the administrative practice of any Tax Authority or any withdrawal of any extra-statutory concession by a Tax Authority; or


c.	the Tax Liability would not have arisen but for, or is increased by, a transaction, action or omission carried out or effected by any member of the Purchaser's Group (for the avoidance of doubt including the Group Companies) or any other Person connected with any of them, including directors, officers, employees, advisors, agents or successors in title at any time after the Completion Date; or


d.	the Tax Liability arises as a result of the Purchaser or any member of the Purchaser's Group (for the avoidance of doubt including the Group Companies) not complying with its obligations under the Agreement or any ancillary agreements; or


e.	the Tax Liability is due in relation to any taxable period or portion of any taxable period that starts after the Effective Date; or


f.	recovery has been made (including, for the avoidance of doubt, the right to recover Taxes from employees), or the Tax Liability is otherwise compensated for without cost to the Purchaser, a Group Company or any other member of the Purchaser's Group, including under the Sellers' Warranties.


2.2.	The provisions of this Clause 2 shall mutatis mutandis apply to limit or reduce the liability of the Sellers in respect of claims under the Sellers’ Warranties insofar as it relates to Tax.


3.	Due date for payment

A payment to be made by Seller under to Clause 1.1 of this Schedule 9 shall be made within ten (10) Business Days after the earlier of (i) the date on which a compromise or settlement had been reached between Parties with respect to a claim on basis of Clause 1.1 of this Schedule 9 (ii) the date on which a full and final settlement agreement has been reached with the relevant Tax Authority with respect to a Tax Liability subject to a claim on basis of Clause 1.1 of this Schedule 9 or (iii) the date on which a final decision is made on appeal with respect to a Tax Liability subject to a claim on basis of clause 1.1 of this Schedule 9 against which no appeal is permitted ( uitspraak in kracht van gewijsde ).


4.	Tax Benefit

The indemnification payment obligation of the Sellers pursuant to Clause 1.1 of this Schedule 9 shall be reduced by:


a.	any a rebate, refund or repayment in respect of Tax actually received by any Group Company (a " Tax Refund ");


b.	any reduction of Tax actually owing by any Group Company; or

the net present value of any future Tax Refund actually received and reductions of Tax (including but not limited to reductions in the form of (deemed) depreciations or allowances) at the level of any Group Company or any other member of the Purchaser's Group. The net present value of such future Tax Refund and reduction will be calculated (i) using a discount rate equal to 3%, (ii) as per the date any amount is due by the Seller to the Purchaser and (iii) on the basis of the then prevailing relevant tax rate;

((a) through (c) each a " Tax Benefit ")

to the extent that the Tax Refund or reduction of Tax is connected with the facts on which the Purchaser's Claim pursuant to Clause 1.1 of this Schedule 9 is based.


5.	Mitigation


5.1.	The Purchaser shall take, and shall procure that each Group Company takes all reasonable measures required to mitigate, reduce or eliminate any Tax Liability.


6.	Preparation of Tax Returns

6.1.

The Seller shall cause each Group Company to prepare and file (or procure the preparation and filing of) all Tax Returns in respect of each Group Company in a manner and on a basis consistent with past practice, except required otherwise by Law, in respect of each Group Company to the extent that these are required to be filed on or before Completion and will not be filed without the prior written consent of the Purchaser, not to be unreasonably withheld.


6.2.	The Purchaser shall cause each Group Company to prepare and file (or procure the preparation and filing of) all Tax Returns in respect of each Group Company to the extent that these are required to be filed after Completion.


6.3.	The Seller and the Purchaser shall provide each Group Company such information and render such assistance as is necessary and reasonable to ensure the properly and timely completion and filing of such Tax Returns.


6.4.	Conduct of Tax claims

6.5.

Upon becoming aware of any pending audit, investigation, assessment or other any other action by any Tax Authority which gives or may give rise to any Tax Liability (" Tax Issue ") relating to any taxable year or period beginning on or before the Effective Date, the Purchaser shall give written notice to the Sellers of such Tax Issue without unreasonable delay. This notice shall set out such information as is available and as is reasonably necessary to enable the other party to assess the merits of the Tax Issue.

6.6.

The Seller shall be entitled at its own expense to resist the Tax Issue in the name of the relevant Group Company and to have the conduct of any appeal, dispute, compromise or defense of the Tax Issue and of any incidental negotiations and the Purchaser will give, and procure the relevant Group Company to give, the Sellers all reasonable co-operation, access and assistance for the purposes of considering and resisting the Tax Issue.


6.7.	The Sellers shall give the Purchaser drafts of all communications it intends to make in relation to the Tax Claim at least ten (10) Business Days before the communication is made, shall make such amendments as the Purchaser shall reasonably request before it makes such communication and shall produce and promptly provide the Purchaser with copies of

all communications, including notes of telephone attendances and meetings, relating to the Tax Issue.


6.8.	The Sellers shall not settle any Tax Issue unless the Purchaser shall have consented in writing to the Sellers to the terms of the settlement, such consent not to be unreasonably withheld.

6.9.

The Purchaser and the relevant Group Company shall be free to pay or settle the Tax Issue on such terms as they may in their absolute discretion think fit and without prejudice to their rights and remedies under this schedule if within twenty (20) Business Days of service of the notice under this paragraph the Sellers fail to notify the Purchaser of its intention to dispute the Tax issue or notifies the Purchaser that it does not wish to have the conduct of the Tax Issue.


6.10.	Limitations


6.11.	For the avoidance of doubt it is agreed that the limitations set forth in Clause 10.4, 10.5, and 10.7 of the Agreement shall apply with respect to claims made under the provisions of this Schedule 9 .

SCHEDULE 13.1 PURCHASER'S WARRANTIES


1.	Capacity and consequences of sale


1.1.	The Purchaser has been duly incorporated and validly exists under the Laws of its jurisdiction and has the necessary corporate capacity and power to enter into this Agreement and to perform its obligations under this Agreement.


1.2.	All corporate and (where applicable) other action required to be taken by the Purchaser to authorise the execution and performance of this Agreement has been duly taken.

1.3.

Other than as contemplated by this Agreement, as far as the Purchaser is aware, no notices, reports or filings are required to be made by the Purchaser in connection with the Transaction and no consents, approvals, registrations, authorisations or permits are required to be obtained by the Purchaser in connection with the execution and performance of its obligations under this Agreement, all except as explicitly set out in this Agreement.


1.4.	This Agreement comprises obligations that are legal, valid and binding on the Purchaser and enforceable by the Sellers against the Purchaser in accordance with the terms thereof.

1.5.

The execution, delivery, performance and consummation by the Purchaser of this Agreement do not and shall not: (i) violate or conflict with a provision of Law applicable to the Purchaser, (ii) require any consent or approval of, or filing with or notice to, a governmental authority under a provision of Law applicable to the Purchaser, except as set out in this Agreement or (iii) violate a provision of the organisational documents of the Purchaser.


1.6.	At Completion the Purchaser will be able to pay the Purchase Price (including the Escrow Amount), the W&I Insurance Premium and the Refinancing Amounts from its available cash in accordance with Clause 6.2.

Exhibit 21.1

Horizon Global Corporation Significant ⁽¹⁾ Subsidiary List

Horizon Global Americas Inc. (Delaware corporation)

Cequent UK Limited (United Kingdom)

Horizon Global Holdings Australia Pty. Ltd. (Australia)

TriMotive Asia Pacific Limited (Thailand)

Westfalia - Automotive GmbH (Germany)

Certain companies may also use trade names or other assumed names in the conduct of their business.

⁽¹⁾ As defined in Rule 1-02(w) of Regulation S-X, and other more significant operating companies as determined by management

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-205195 on Form S-8 and Registration Statement No. 333-215178 on Form S-3 of our report dated March 10, 2017, relating to the financial statements and financial statement schedule of Horizon Global Corporation and subsidiaries (which report expresses an unqualified opinion on the financial statements and includes an explanatory paragraph referring to the financial statements prior to June 30, 2015, being prepared from the records of TriMas Corporation and for the period subsequent to June 30, 2015, being prepared from the records of Horizon Global Corporation on a stand-alone basis), appearing in this Annual Report on Form 10-K of Horizon Global Corporation for the year ended December 31, 2016.

/s/ Deloitte & Touche LLP

Detroit, Michigan

March 1, 2018

Exhibit 31.1

Certification

Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

(Chapter 63, Title 18 U.S.C. Section 1350(A) and (B))

I, A. Mark Zeffiro, certify that:


1.	I have reviewed this annual report on Form 10-K of Horizon Global Corporation;


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(s) and I am 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(s) 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.

Date: March 1, 2018



/s/ A. MARK ZEFFIRO
A. Mark Zeffiro Chief Executive Officer

Exhibit 31.2

Certification

Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

(Chapter 63, Title 18 U.S.C. Section 1350(A) and (B))

I, David G. Rice, certify that:


1.	I have reviewed this annual report on Form 10-K of Horizon Global Corporation;


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(s) and I am 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(s) 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.

Date: March 1, 2018



/s/ DAVID G. RICE
David G. Rice Chief Financial Officer

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Horizon Global Corporation (the "Company") on Form 10-K for the period ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, A. Mark Zeffiro, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:


1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 1, 2018



/s/ A. MARK ZEFFIRO
A. Mark Zeffiro Chief Executive Officer

Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Horizon Global Corporation (the "Company") on Form 10-K for the period ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David G. Rice, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:


1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 1, 2018



	/s/ DAVID G. RICE
	David G. Rice Chief Financial Officer