UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
☐ 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: 001-38912
 
AVANTORLOGOA08.JPG
Avantor, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
82-2758923
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Radnor Corporate Center, Building One, Suite 200
100 Matsonford Road
Radnor, Pennsylvania 19087
(Address of principal executive offices) (zip code)
(610) 386-1700
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.01 par value
 
AVTR
 
New York Stock Exchange
6.250% Series A Mandatory Convertible Preferred Stock, $0.01 par value
 
AVTR PRA
 
New York Stock Exchange
 


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☐ Large Accelerated Filer ☐ Accelerated Filer ☒ Non-accelerated Filer ☐ Smaller reporting company ☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
On April 21, 2020, 574,929,861 shares of common stock, $0.01 par value per share, were outstanding.


Avantor, Inc. and subsidiaries
Form 10-Q for the quarterly period ended March 31, 2020
Table of contents
 
Page
ii
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29
29
 
 
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34

i
Table of contents

Glossary
 
Description
we, us, our
Avantor, Inc. and its subsidiaries
2019 Plan
the Avantor, Inc. 2019 Equity Incentive Plan, a stock-based compensation plan
Adjusted EBITDA
our earnings or loss before interest, taxes, depreciation, amortization and certain other adjustments
Annual Report
our annual report on Form 10-K for the year ended December 31, 2019
AMEA
Asia, Middle-East and Africa
AOCI
accumulated other comprehensive income or loss
cGMP
Current Good Manufacturing Practice
EURIBOR
the basic rate of interest used in lending between banks on the European Union interbank market
FASB
the Financial Accounting Standards Board of the United States
GAAP
United States generally accepted accounting principles
high single-digit
7 - 9%
LIBOR
the basic rate of interest used in lending between banks on the London interbank market
low double-digit
10 - 19%
low single-digit
1 - 3%
MCPS
6.250% Series A Mandatory Convertible Preferred Stock
mid single-digit
4 - 6%
RSU
restricted stock unit
SEC
the United States Securities and Exchange Commission
SG&A expenses
selling, general and administrative expenses
Specialty procurement
Product sales related to customer procurement services
VWR
VWR Corporation and its subsidiaries, a company we acquired in November 2017

ii
Table of contents

Cautionary factors regarding forward-looking statements
This report contains forward-looking statements. All statements other than statements of historical fact included in this report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “can,” “could,” “may,” “should,” “would,” “will,” the negatives thereof and other words and terms of similar meaning.
Forward-looking statements are inherently subject to risks, uncertainties and assumptions; they are not guarantees of performance. You should not place undue reliance on these statements. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct.
In the first quarter of 2020, we updated our risk factors to reflect new developments in the scale and scope of the new global coronavirus pandemic under Part II, Item 1A, “Risk Factors.” You should also understand that the following important factors, in addition to those discussed under “Risk Factors” in our Annual Report, as such risk factors may be updated from time to time in our periodic filings with the SEC and in this report, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:
•
disruptions to our operations;
•
competition from other industry providers;
•
our ability to implement our growth strategy;
•
our ability to anticipate and respond to changing industry trends;
•
adverse trends in consumer, business, and government spending;
•
our dependence on sole or limited sources for some essential materials and components;
•
our ability to successfully value and integrate acquired businesses;
•
our products’ satisfaction of applicable quality criteria, specifications and performance standards;
•
our ability to maintain our relationships with key customers;
•
our ability to maintain our relationships with distributors;

iii
Table of contents

•
our ability to maintain consistent purchase volumes under purchase orders;
•
our ability to maintain and develop relationships with drug manufacturers and contract manufacturing organizations;
•
the impact of new laws, regulations, or other industry standards;
•
changes in the interest rate environment that increase interest on our borrowings;
•
adverse impacts from currency exchange rates or currency controls imposed by any government in major areas where we operate or otherwise;
•
our ability to implement and improve processing systems and prevent a compromise of our information systems;
•
our ability to protect our intellectual property and avoid third-party infringement claims;
•
exposure to product liability and other claims in the ordinary course of business;
•
our ability to develop new products responsive to the markets we serve;
•
the availability of raw materials;
•
our ability to avoid negative outcomes related to the use of chemicals;
•
our ability to maintain highly skilled employees;
•
adverse impact of impairment charges on our goodwill and other intangible assets;
•
fluctuations and uncertainties related to doing business outside the United States;
•
our ability to obtain and maintain required regulatory clearances or approvals may constrain the commercialization of submitted products;
•
our ability to comply with environmental, health and safety laws and regulations, or the impact of any liability or obligation imposed under such laws or regulations;
•
our indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt or contractual obligations;
•
our ability to generate sufficient cash flows or access sufficient additional capital to meet our debt obligations or to fund our other liquidity needs; and
•
our ability to maintain an adequate system of internal control over financial reporting.
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. In addition, all forward-looking statements speak only as of the date of this report. We undertake no obligations to update or

iv
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revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise other than as required under the federal securities laws.

v
Table of contents

PART I — FINANCIAL INFORMATION
Item 1.
Financial statements
Avantor, Inc. and subsidiaries
Index to unaudited condensed consolidated financial statements

1

Avantor, Inc. and subsidiaries
Unaudited condensed consolidated balance sheets
(in millions)
March 31, 2020
 
December 31, 2019
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
346.3

 
$
186.7

Accounts receivable, net of allowances of $24.6 and $18.6
1,041.1

 
988.8

Inventory
686.1

 
711.2

Other current assets
123.1

 
134.8

Total current assets
2,196.6

 
2,021.5

Property, plant and equipment, net of accumulated depreciation of $321.3 and $307.8
556.0

 
557.0

Other intangible assets, net (see note 8)
4,097.7

 
4,220.2

Goodwill
2,736.4

 
2,769.4

Other assets
199.5

 
205.2

Total assets
$
9,786.2

 
$
9,773.3

Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Current portion of debt
$
14.3

 
$
93.5

Accounts payable
610.9

 
560.2

Employee-related liabilities
114.0

 
114.3

Accrued interest
135.0

 
74.2

Other current liabilities
252.4

 
232.3

Total current liabilities
1,126.6

 
1,074.5

Debt, net of current portion
5,040.4

 
5,023.0

Deferred income tax liabilities
767.4

 
785.4

Other liabilities
411.7

 
428.2

Total liabilities
7,346.1

 
7,311.1

Commitments and contingencies, see note 10

 

Stockholders’ equity:
 
 
 
MCPS including paid-in capital, 20.7 shares outstanding
1,003.7

 
1,003.7

Common stock including paid-in capital, 574.9 and 572.8 shares outstanding
1,748.0

 
1,748.1

Accumulated deficit
(158.3
)
 
(203.7
)
Accumulated other comprehensive loss
(153.3
)
 
(85.9
)
Total stockholders’ equity
2,440.1

 
2,462.2

Total liabilities and stockholders’ equity
$
9,786.2

 
$
9,773.3


See accompanying notes to the unaudited condensed consolidated financial statements.
2

Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of operations
(in millions, except per share data)
Three months ended March 31,
2020
 
2019
Net sales
$
1,519.0

 
$
1,480.1

Cost of sales
1,017.1

 
1,004.9

Gross profit
501.9

 
475.2

Selling, general and administrative expenses
343.5

 
337.6

Operating income
158.4

 
137.6

Interest expense
(94.5
)
 
(128.6
)
Other income (expense), net
0.8

 
(5.1
)
Income before income taxes
64.7

 
3.9

Income tax expense
(17.7
)
 
(10.1
)
Net income (loss)
47.0

 
(6.2
)
Accumulation of yield on preferred stock
(16.1
)
 
(71.8
)
Net income (loss) available to common stockholders
$
30.9

 
$
(78.0
)
 
 
 
 
Earnings (loss) per share:
 
 
 
Basic
$
0.05

 
$
(0.59
)
Diluted
$
0.05

 
$
(0.59
)
Weighted average shares outstanding:
 
 
 
Basic
573.7

 
132.8

Diluted
581.3

 
132.8


See accompanying notes to the unaudited condensed consolidated financial statements.
3

Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of comprehensive income or loss
(in millions)
Three months ended March 31,
2020
 
2019
Net income (loss)
$
47.0

 
$
(6.2
)
Other comprehensive loss:
 
 
 
Foreign currency translation — unrealized loss
(68.8
)
 
(8.9
)
Derivative instruments:
 
 
 
Unrealized gain (loss)
1.6

 
(0.3
)
Reclassification of gain into earnings
(0.1
)
 
(0.3
)
Defined benefit plans:
 
 
 
Unrealized gain (loss)
0.4

 
(0.1
)
Reclassification of gain into earnings
(0.1
)
 
(0.2
)
Other comprehensive loss before income taxes
(67.0
)
 
(9.8
)
Income tax effect
(0.4
)
 
0.2

Other comprehensive loss
(67.4
)
 
(9.6
)
Comprehensive loss
$
(20.4
)
 
$
(15.8
)

See accompanying notes to the unaudited condensed consolidated financial statements.
4

Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of stockholders’ equity or deficit
(in millions)
Stockholders’ equity (deficit)
MCPS including paid-in capital
 
Common stock including paid-in capital
 
Accumulated deficit
 
AOCI
 
Total
Shares
 
Amount
 
Shares
 
Amount
Balance at December 31, 2019
20.7

 
$
1,003.7

 
572.8

 
$
1,748.1

 
$
(203.7
)
 
$
(85.9
)
 
$
2,462.2

Cumulative effect of adopting new accounting standard
—

 
—

 
—

 
—

 
(1.6
)
 
—

—

(1.6
)
Comprehensive income (loss)
—

 
—

 
—

 
—

 
47.0

 
(67.4
)
 
(20.4
)
Stock-based compensation expense
—

 
—

 
—

 
9.2

 
—

 
—

 
9.2

Accumulation of yield on preferred stock
—

 
—

 
—

 
(16.1
)
 
—

 
—

 
(16.1
)
Exercise of stock options
—

 
—

 
2.1

 
6.8

 
—

 
—

 
6.8

Balance at March 31, 2020
20.7

 
$
1,003.7

 
574.9

 
$
1,748.0

 
$
(158.3
)
 
$
(153.3
)
 
$
2,440.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
—

 
$
—

 
132.8

 
$
(2,746.8
)
 
$
(238.4
)
 
$
(66.5
)
 
$
(3,051.7
)
Cumulative effect of adopting new accounting standard
—

 
—

 
—

 
—

 
(3.1
)
 
—

 
(3.1
)
Comprehensive loss
—

 
—

 
—

 
—

 
(6.2
)
 
(9.6
)
 
(15.8
)
Stock-based compensation expense
—

 
—

 
—

 
4.0

 
—

 
—

 
4.0

Accumulation of yield on preferred stock
—

 
—

 
—

 
(71.8
)
 
—

 
—

 
(71.8
)
Balance at March 31, 2019
—

 
$
—

 
132.8

 
$
(2,814.6
)
 
$
(247.7
)
 
$
(76.1
)
 
$
(3,138.4
)

See accompanying notes to the unaudited condensed consolidated financial statements.
5

Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of cash flows
(in millions)
Three months ended March 31,
2020
 
2019
Cash flows from operating activities:
 
 
 
Net income (loss)
$
47.0

 
$
(6.2
)
Reconciling adjustments:
 
 
 
Depreciation and amortization
96.5

 
98.3

Stock-based compensation expense
8.4

 
4.8

Provision for accounts receivable and inventory
13.6

 
7.7

Deferred income tax benefit
(4.2
)
 
(21.5
)
Amortization of deferred financing costs
6.9

 
10.4

Foreign currency remeasurement loss
6.7

 
7.2

Changes in assets and liabilities:
 
 
 
Accounts receivable
(80.1
)
 
(54.2
)
Inventory
5.3

 
(41.2
)
Accounts payable
67.0

 
5.4

Accrued interest
60.8

 
59.7

Other assets and liabilities
24.5

 
5.5

Other, net
0.7

 
(0.9
)
Net cash provided by operating activities
253.1

 
75.0

Cash flows from investing activities:
 
 
 
Capital expenditures
(12.6
)
 
(12.4
)
Other
0.7

 
4.5

Net cash used in investing activities
(11.9
)
 
(7.9
)
Cash flows from financing activities:
 
 
 
Debt borrowings
—

 
3.6

Debt repayments
(63.8
)
 
(109.7
)
Payments of dividends on preferred stock
(16.1
)
 
—

Other
6.8

 
—

Net cash used in financing activities
(73.1
)
 
(106.1
)
Effect of currency rate changes on cash
(8.5
)
 
(1.8
)
Net change in cash and cash equivalents
159.6

 
(40.8
)
Cash, cash equivalents and restricted cash, beginning of period
189.3

 
187.7

Cash, cash equivalents and restricted cash, end of period
$
348.9

 
$
146.9


See accompanying notes to the unaudited condensed consolidated financial statements.
6

Avantor, Inc. and subsidiaries
Notes to unaudited condensed consolidated financial statements
1.
Nature of operations and presentation of financial statements
We are a global manufacturer and distributor that provides products and services to customers in the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries.
Basis of presentation
We have prepared these condensed consolidated financial statements pursuant to SEC regulations whereby certain information normally included in GAAP financial statements has been condensed or omitted. The financial information presented herein reflects all adjustments (consisting only of normal, recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of the results to be expected for the full year.
We believe that the disclosures included herein are adequate to make the information presented not misleading in any material respect when read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report. Those audited consolidated financial statements include a summary of our significant accounting policies, updates to which are included in note 2.
Principles of consolidation
All intercompany balances and transactions have been eliminated from the financial statements.
Reclassifications
In 2019, we changed our presentation of disaggregated net sales (see note 5) to depict the product line categories that are regularly used by management. Product sales associated with our service offerings, referred to as specialty procurement, have been reclassified from third party materials & consumables and combined with net sales from services into the services & specialty procurement product line for all periods presented.
Use of estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported throughout the financial statements. Actual results could differ from those estimates.
Global coronavirus outbreak
The ongoing coronavirus outbreak known as COVID-19 has adversely affected global economies, financial markets and the overall environment in which we do business, and the

7

extent to which it may impact our future results of operations and overall financial performance remains uncertain. We will continue to monitor for developments as the outbreak continues.
2.
Summary of significant accounting policies
Interim update to segment reporting policy
Effective as of and for the quarter ended March 31, 2020, our Chief Executive Officer, who is our chief operating decision maker, changed the measure he uses to evaluate segment profitability from Management EBITDA to Adjusted EBITDA. All disclosures relating to segment profitability, including those for comparative periods, have been revised as a result of this change.
3.
New accounting standards
New tax standard
In December 2019, the FASB issued a new standard to simplify the accounting for income taxes by removing certain exceptions to the existing guidance and also providing for additional clarification. This standard encompasses multiple amendments, and requires adoption either retrospectively, prospectively, or using a modified retrospective approach, depending on the amendment. For the amendments in which we are given the choice between adopting retrospectively or on a modified retrospective basis, we expect to adopt on a modified retrospective basis. All other amendments will be adopted using the method prescribed by the standard. The standard is effective on January 1, 2021 and we are currently evaluating its impact.
New credit losses standard
In June 2016, the FASB issued a new standard that modifies the recognition of credit losses related to financial assets. Under the new standard, an entity must measure and record its total expected credit losses, rather than recording such losses when it is probable that they have occurred, as was required under the previous standard. We adopted the new guidance on January 1, 2020 using a modified retrospective approach applied to our portfolio of trade receivables as of that date. On the adoption date, we (i) recorded a $1.6 million cumulative effect adjustment to increase accumulated deficit, (ii) increased our allowance for credit losses to accounts receivable by $2.2 million, and (iii) recognized a $0.6 million reduction to deferred income tax liabilities.
Other
There were no other new accounting standards that we expect to have a material impact to our financial position or results of operations upon adoption.

8

4.
Earnings or loss per share
The following table presents the reconciliation of basic and diluted earnings per share for the three months ended March 31, 2020:
(in millions, except per share data)
Earnings (numerator)
 
Weighted average shares outstanding (denominator)
 
Earnings per share
Basic
$
30.9

 
573.7

 
$
0.05

Dilutive effect of stock-based awards
—

 
7.6

 
 
Diluted
$
30.9

 
$
581.3

 
$
0.05

For the three months ended March 31, 2020, diluted earnings per share included accumulation of yield on preferred stock of $16.1 million and excluded 73.9 million of common stock equivalents under the MCPS because they were anti-dilutive to the calculation.
For the three months ended March 31, 2019, basic and diluted loss per share calculations were the same because we reported a net loss available to common stockholders. Stock options for 21.0 million shares of common stock were excluded from the calculation of diluted loss per share because their effect would have been anti-dilutive.
5.
Segment financial information
We report based on three geographic segments based on customer location: Americas, Europe and AMEA. Each segment manufactures and distributes solutions for the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries. Corporate costs are managed on a standalone basis and not allocated to segments.

9

The following table presents information by reportable segment:
(in millions)
Three months ended March 31,
2020
 
2019
Net sales:
 
 
 
Americas
$
899.1

 
$
857.3

Europe
544.0

 
542.1

AMEA
75.9

 
80.7

Total
$
1,519.0

 
$
1,480.1

Adjusted EBITDA:
 
 
 
Americas
$
190.0

 
$
166.3

Europe
91.7

 
89.7

AMEA
13.4

 
18.5

Corporate
(32.3
)
 
(26.5
)
Total
$
262.8

 
$
248.0

The amounts above exclude inter-segment activity because it is not material. All of the net sales for each segment are from external customers.
The following table presents the reconciliation of Adjusted EBITDA from net income or loss, the nearest measurement under GAAP:
(in millions)
Three months ended March 31,
2020
 
2019
Net income (loss)
$
47.0

 
$
(6.2
)
Interest expense
94.5

 
128.6

Income tax expense
17.7

 
10.1

Depreciation and amortization
96.5

 
98.3

Net foreign currency loss from financing activities
1.6

 
6.2

Restructuring and severance charges
1.2

 
5.5

VWR transaction, integration and planning expenses
3.6

 
6.3

Other
0.7

 
(0.8
)
Adjusted EBITDA
$
262.8

 
$
248.0


10

The following table presents net sales by product line:
(in millions)
Three months ended March 31,
2020
 
2019
Proprietary materials & consumables
$
533.1

 
$
487.7

Third party materials & consumables
604.6

 
605.2

Services & specialty procurement
178.0

 
168.4

Equipment & instrumentation
203.3

 
218.8

Total
$
1,519.0

 
$
1,480.1

6.
Supplemental disclosures of cash flow information
The following tables present supplemental disclosures of cash flow information:
(in millions)
March 31, 2020
 
December 31, 2019
Cash and cash equivalents
$
346.3

 
$
186.7

Restricted cash classified as other assets
2.6

 
2.6

Total
$
348.9

 
$
189.3

(in millions)
Three months ended March 31,
2020
 
2019
Cash flows from operating activities:
 
 
 
Cash paid for income taxes, net
$
12.2

 
$
19.7

Cash paid for interest
27.2

 
58.6

Cash paid under operating leases
10.0

 
13.5

Cash paid under finance leases
1.3

 
1.1

Cash flows from financing activities:
 
 
 
Cash paid under finance leases
1.1

 
1.4


11

7.
Inventory
The following table presents the components of inventory:
(in millions)
March 31, 2020
 
December 31, 2019
Merchandise inventory
$
411.3

 
$
445.2

Finished goods
112.4

 
104.4

Raw materials
123.3

 
125.1

Work in process
39.1

 
36.5

Total
$
686.1

 
$
711.2

8.
Other intangible assets
The following table presents the components of other intangible assets:
(in millions)
March 31, 2020
 
December 31, 2019
Gross value
 
Accumulated amortization
 
Carrying value
 
Gross value
 
Accumulated amortization
 
Carrying value
Customer relationships
$
4,499.6

 
$
692.4

 
$
3,807.2

 
$
4,547.7

 
$
641.3

 
$
3,906.4

VWR trade name
261.1

 
136.1

 
125.0

 
264.3

 
123.3

 
141.0

Other
180.4

 
107.2

 
73.2

 
182.8

 
102.3

 
80.5

Total finite-lived
$
4,941.1

 
$
935.7

 
4,005.4

 
$
4,994.8

 
$
866.9

 
4,127.9

Indefinite-lived
92.3

 
 
 
 
 
92.3

Total
$
4,097.7

 
 
 
 
 
$
4,220.2

9.
Restructuring and severance
The following table presents restructuring and severance charges by plan:
(in millions)
Three months ended March 31,
2020
 
2019
2017 restructuring program
$
1.2

 
$
5.1

Other
—

 
0.4

Total
$
1.2

 
$
5.5

During the first quarter of 2020, there were no material updates to our liabilities or expense under the 2017 restructuring program.
10.
Commitments and contingencies
Our business involves commitments and contingencies related to compliance with environmental laws and regulations, the manufacture and sale of products and litigation. The ultimate resolution

12

of contingencies is subject to significant uncertainty, and it is reasonably possible that we will experience adverse outcomes related to these matters.
Environmental laws and regulations
Our environmental liabilities are subject to changing governmental policy and regulations, discovery of unknown conditions, judicial proceedings, method and extent of remediation, existence of other potentially responsible parties and future changes in technology. We believe that known and unknown environmental matters, if not resolved favorably, could have a material effect on our financial position, liquidity and profitability.
Mallinckrodt indemnification
In 2010, New Mountain Capital acquired us from Covidien plc in accordance with a stock purchase agreement dated May 25, 2010. At that time, we were organized as Mallinckrodt Baker, Inc. or MBI. Pursuant to the terms of that agreement, we are entitled to various levels of indemnification with respect to environmental liabilities involving the former MBI operations. In 2013, in connection with the Covidien plc divestiture of Mallinckrodt Group S.a.r.l and Mallinckrodt LLC, together “Mallinckrodt,” and by a second amendment to the stock purchase agreement dated June 6, 2013, but effective upon the consummation of the divestiture, Covidien plc assigned its obligations as described herein to Mallinckrodt, and Mallinckrodt assumed those obligations from Covidien plc. As a result of the stock purchase agreement and assignment, Mallinckrodt is contractually obligated to indemnify and defend us for all off-site environmental liabilities (for example, Superfund or CERCLA liabilities) arising from the pre-closing disposal of chemicals or wastes by former MBI operations.
In connection with environmental liabilities arising from pre-closing noncompliance with environmental laws, Mallinckrodt is contractually obligated to reimburse us for a percentage of the total liability, with such reimbursements made through disbursements from a $30.0 million environmental escrow established at the time of the closing. Specifically, Mallinckrodt will be responsible for reimbursement of 80% of the total costs up to $40.0 million of such environmental liabilities. Mallinckrodt will then be responsible for reimbursement of 50% of the next $40.0 million of such environmental liabilities. If such environmental liabilities exceed $80.0 million in the aggregate, Mallinckrodt will be responsible for reimbursement of 100% of such liabilities up to the next $30.0 million in the aggregate. Currently, reimbursements are 80% of the amounts spent by us, with reimbursements and settlements to date exceeding $12.0 million. In addition, in connection with operation and maintenance activities required pursuant to administrative consent orders and subsequently issued remedial action permits involving our Phillipsburg, New Jersey, facility, amounts in excess of a small annual threshold are also subject to reimbursement, currently at the 80% level.
Other noteworthy matters
The New Jersey Department of Environmental Protection has ordered us to remediate groundwater conditions near our plant in Phillipsburg, New Jersey. This matter is covered by the indemnification arrangement previously described. At March 31, 2020, our accrued obligation

13

under this order is $4.1 million, which is calculated based on expected cash payments discounted at rates ranging from 0.1% in 2020 to 1.3% in 2045. The undiscounted amount of that obligation is $4.5 million.
In 2016, we assessed the environmental condition of our chemical manufacturing site in Gliwice, Poland. Our assessment revealed specific types of soil and groundwater contamination throughout the site. We are also monitoring the condition of a closed landfill on that site. These matters are not covered by our indemnification arrangement because they relate to an operation we subsequently acquired. At March 31, 2020, our balance sheet includes a liability of $3.3 million for remediation and monitoring costs. That liability is estimated primarily on expected remediation payments discounted through 2020 and is not materially different than its undiscounted amount.
Manufacture and sale of products
Our business involves risk of product liability, patent infringement and other claims in the ordinary course of business arising from the products that we produce ourselves or obtain from our suppliers, as well as from the services we provide. Our exposure to such claims may increase to the extent that we expand our manufacturing operations or service offerings.
We maintain insurance policies to protect us against these risks, including product liability insurance. In many cases the suppliers of products we distribute have indemnified us against such claims. Our insurance coverage or indemnification agreements with suppliers may not be adequate in all pending or any future cases brought against us. Furthermore, our ability to recover under any insurance or indemnification arrangements is subject to the financial viability of our insurers, our suppliers and our suppliers’ insurers, as well as legal enforcement under the local laws governing the arrangements.
We have entered into indemnification agreements with customers of our self-manufactured products to protect them from liabilities and losses arising from our negligence, willful misconduct or sale of defective products. To date, we have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.
Litigation
At March 31, 2020, there was no outstanding litigation that we believe would result in material losses if decided against us, and we do not believe that there are any unasserted matters that are reasonably possible to result in a material loss.
11.
Debt
In the first quarter of 2020, we entered into a new receivables facility as described further below. The new receivables facility replaces our previous facility, which was set to expire on November 20, 2020. We also amended our senior secured credit facilities. The amendment reduced the annual interest rate margins on our term loans by 0.75%. The cost to complete the amendment was not material.

14

The following table presents information about our debt:
(dollars in millions)
March 31, 2020
 
December 31, 2019
Interest terms
 
Rate
 
Amount
 
Receivables facility
LIBOR plus 0.90%
 
1.89
%
 
$
—

 
$
55.5

Senior secured credit facilities:
 
 
 
 
 
 
 
Euro term loans
EURIBOR plus 2.50%
 
2.50
%
 
383.3

 
391.8

U.S. dollar term loans
LIBOR plus 2.25%
 
3.85
%
 
675.5

 
677.2

4.75% secured notes
fixed rate
 
4.75
%
 
550.4

 
561.2

6% secured notes
fixed rate
 
6.00
%
 
1,500.0

 
1,500.0

9% unsecured notes
fixed rate
 
9.00
%
 
2,000.0

 
2,000.0

Finance lease liabilities
71.9

 
59.2

Other
0.1

 
4.5

Total debt, gross
5,181.2

 
5,249.4

Less: unamortized deferred financing costs
(126.5
)
 
(132.9
)
Total debt
$
5,054.7

 
$
5,116.5

Classification on balance sheets:
 
 
 
Current portion of debt
$
14.3

 
$
93.5

Debt, net of current portion
5,040.4

 
5,023.0

Credit facilities
The following table presents availability under our credit facilities:
(in millions)
March 31, 2020
Receivables facility
 
Revolving credit facility
 
Total
Current availability
$
300.0

 
$
250.0

 
$
550.0

Undrawn letters of credit outstanding
(12.9
)
 
(1.6
)
 
(14.5
)
Outstanding borrowings
—

 
—

 
—

Unused availability
$
287.1

 
$
248.4

 
$
535.5

 
 
 
 
 
 
Maximum availability
$
300.0

 
$
250.0

 
$
550.0

Current availability under the receivables facility depends upon maintaining a sufficient borrowing base of eligible accounts receivable. At March 31, 2020, $470.4 million of accounts receivable were available as collateral under the facility.
Receivables facility
The receivables facility is with a commercial bank, functions like a line of credit and matures on March 27, 2023. Borrowings are secured by accounts receivable which are sold by certain of our domestic subsidiaries to a special-purpose consolidated subsidiary. As a result, those receivables

15

are not available to satisfy the claims of other creditors. We bear the risk of collection on those receivables and account for the receivables facility as a secured borrowing.
Debt covenants
Our debt agreements include representations and covenants that we consider usual and customary, and our receivables facility and senior secured credit facilities include a financial covenant that becomes applicable for periods in which we have drawn more than 35% of our revolving credit facility under the senior secured credit facilities. When applicable, we may not have combined borrowings on our senior secured credit facilities and secured notes in excess of a pro forma net leverage ratio, as defined. We were in compliance with this covenant at March 31, 2020.
12.
Accumulated other comprehensive income or loss
The following table presents changes in the components of AOCI:
(in millions)
Foreign currency translation
 
Derivative instruments
 
Defined benefit plans
 
Total
Balance at December 31, 2019
$
(62.3
)
 
$
(0.5
)
 
$
(23.1
)
 
$
(85.9
)
Unrealized (loss) gain
(68.8
)
 
1.6

 
0.4

 
(66.8
)
Reclassification of gain into earnings
—

 
(0.1
)
 
(0.1
)
 
(0.2
)
Income tax effect
—

 
(0.4
)
 
—

 
(0.4
)
Balance at March 31, 2020
$
(131.1
)
 
$
0.6

 
$
(22.8
)
 
$
(153.3
)
 
 
 
 
 
 
 
 
Balance at December 31, 2018
$
(59.0
)
 
$
1.1

 
$
(8.6
)
 
$
(66.5
)
Unrealized loss
(8.9
)
 
(0.3
)
 
(0.1
)
 
(9.3
)
Reclassification of gain into earnings
—

 
(0.3
)
 
(0.2
)
 
(0.5
)
Income tax effect
—

 
0.2

 
—

 
0.2

Balance at March 31, 2019
$
(67.9
)
 
$
0.7

 
$
(8.9
)
 
$
(76.1
)
The reclassifications and income tax effects shown above were immaterial to the financial statements. The reclassifications were made to either cost of sales or SG&A expenses depending upon the nature of the underlying transaction.

16

13.
Stock-based compensation
The following table presents the components of stock-based compensation expense:
(in millions)
Classification
 
Three months ended March 31,
 
2020
 
2019
Stock options
Equity
 
$
3.9

 
$
3.8

RSUs
Equity
 
4.9

 
0.2

Optionholder awards
Liability
 
0.3

 
0.8

Other
Both
 
(0.7
)
 
—

Total
$
8.4

 
$
4.8

Balance sheet classification:
 
 
 
Equity
$
9.2

 
$
4.0

Liability
(0.8
)
 
0.8

At March 31, 2020, unvested awards under the 2019 Plan have remaining stock-based compensation expense of $113.1 million to be recognized over a weighted average period of 2.0 years.
At March 31, 2020, 11.2 million shares were available for future issuance under the 2019 Plan.
Stock options
The following table presents information about outstanding stock options:
(options and intrinsic value in millions)
Number of options
 
Weighted average exercise price per option
 
Aggregate intrinsic value
 
Weighted average remaining term
Balance on December 31, 2019
22.7

 
$
15.04

 
 
 
 
Granted
4.8

 
17.55

 
 
 
 
Exercised
(2.1
)
 
3.32

 
 
 
 
Forfeited
(0.4
)
 
17.79

 
 
 
 
Balance on March 31, 2020
25.0

 
16.44

 
$
49.6

 
7.5 years
Expected to vest
11.4

 
18.14

 
0.2

 
9.1 years
Exercisable
13.6

 
15.03

 
49.4

 
6.1 years
In the first quarter of 2020, we granted stock options that have a 10-year contractual life and will vest annually over three to four years, subject to the recipient continuously providing service to us through each such date.

17

The following table presents weighted-average information about stock options granted:
 
Three months ended March 31, 2020
Grant date fair value per option
$
5.41

Assumptions used to determine grant date fair value:
 
Expected stock price volatility
28
%
Risk free interest rate
1.4
%
Expected dividend rate
nil

Expected life of options
6.2 years

The following table presents other information about stock options:
(in millions)
Three months ended March 31, 2020
Fair value of options vested
$
0.7

Intrinsic value of options exercised
27.5

Tax benefit of options exercised
7.1

RSUs
The following table presents information about unvested RSUs:
(awards in millions)
Number of awards
 
Weighted average grant date fair value per award
Balance on December 31, 2019
5.2

 
$
13.97

Granted
1.3

 
17.40

Forfeited
(0.3
)
 
13.45

Balance on March 31, 2020
6.2

 
14.73

In the first quarter of 2020, we granted restricted stock units that will vest annually over three to four years, subject to the recipient continuously providing service to us through each such date.

18

14.
Other income or expense, net
The following table presents the components of other income or expense, net:
(in millions)
Three months ended March 31,
2020
 
2019
Net foreign currency loss from financing activities
$
(1.6
)
 
$
(6.2
)
Income related to defined benefit plans
2.3

 
1.3

Other
0.1

 
(0.2
)
Other income (expense), net
$
0.8

 
$
(5.1
)
15.
Income taxes
The following table presents the relationship between income tax expense or benefit and income or loss before income taxes:
(in millions)
Three months ended March 31,
2020
 
2019
Income tax expense
$
(17.7
)
 
$
(10.1
)
Income before income taxes
64.7

 
3.9

Income tax expense or benefit in the quarter is based upon the estimated income or loss for the full year. The composition of the income or loss in different countries and adjustments, if any, in the applicable quarterly periods influences our expense or benefit.
The relationship between pretax income or loss and income tax expense or benefit is greatly affected by the impact of losses for which we cannot claim a tax benefit, non-deductible expenses, and other items that increase tax expense without a relationship to income, such as withholding taxes and changes with respect to uncertain tax positions. Our effective tax rate decreased from the prior period as a result of higher operating income as well as lower charges related to valuation allowances.
16.
Financial instruments and fair value measurements
Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable and debt.
Assets and liabilities for which fair value is only disclosed
The carrying amount of cash and cash equivalents was the same as its fair value and is a Level 1 measurement. The carrying amounts for trade accounts receivable and accounts payable approximated fair value due to their short-term nature and are Level 2 measurements.

19

The following table presents the gross amounts, which exclude unamortized deferred financing costs, and the fair values of debt instruments:
(in millions)
March 31, 2020
 
December 31, 2019
Gross amount
 
Fair value
 
Gross amount
 
Fair value
Receivables facility
$
—

 
$
—

 
$
55.5

 
$
55.5

Senior secured credit facilities:
 
 
 
 
 
 
 
Euro term loans
383.3

 
354.8

 
391.8

 
397.4

U.S. dollar term loans
675.5

 
578.8

 
677.2

 
685.2

4.75% secured notes
550.4

 
528.9

 
561.2

 
599.7

6% secured notes
1,500.0

 
1,567.9

 
1,500.0

 
1,603.2

9% unsecured notes
2,000.0

 
2,119.7

 
2,000.0

 
2,241.7

Finance lease liabilities
71.9

 
71.9

 
59.2

 
59.2

Other
0.1

 
0.1

 
4.5

 
4.5

Total
$
5,181.2

 
$
5,222.1

 
$
5,249.4

 
$
5,646.4

The fair values of debt instruments are based on standard pricing models that take into account the present value of future cash flows, and in some cases private trading data, which are level 2 measurements.
Item 2.
Management’s discussion and analysis of financial condition and results of operations
In addition to historical financial information, this discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our results may differ materially from those contained in or implied by any forward-looking statements. You should carefully read “Cautionary factors regarding forward-looking statements” for additional information. Also, please refer to the “Factors and current trends affecting our business and results of operations” for discussion concerning the ongoing coronavirus outbreak known as COVID-19.
Basis of presentation
Pursuant to SEC rules for reports covering interim periods, we have prepared this discussion and analysis to enable you to assess material changes in our financial condition and results of operations since December 31, 2019, the date of our Annual Report. Therefore, we encourage you to read this discussion and analysis in conjunction with the Annual Report.
Overview
We are a leading global provider of mission critical products and services to customers in the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries. We have global operations and an extensive product portfolio. We strive to enable customer success through innovation, cGMP manufacturing and comprehensive service offerings. The depth and breadth of our portfolio provides our customers a comprehensive range

20

of products and services and allows us to create customized and integrated solutions for our customers.
In the first quarter of 2020, we recorded net sales of $1,519.0 million, net income of $47.0 million and Adjusted EBITDA of $262.8 million. We also generated net sales growth of 2.6% and organic net sales growth of 4.1% compared to the same period in 2019. See “Reconciliations of non-GAAP measures” for a reconciliation of net income to Adjusted EBITDA and “Results of operations” for a reconciliation of net sales growth to organic net sales growth.
Factors and current trends affecting our business and results of operations
The following updates the factors and current trends disclosed in the Annual Report. These updates could affect our performance and financial condition in future periods.
Our results are being impacted by the ongoing global coronavirus outbreak
The COVID-19 pandemic has adversely affected global economies, financial markets and the overall environment in which we do business as further described in Part II, Item 1A, “Risk Factors.” The outbreak had a mixed impact on first quarter results in our three regions as described further in the “Results of operations” section.
Key indicators of performance and financial condition
To evaluate our performance, we monitor a number of key indicators including certain non-GAAP financial measurements that we believe are useful to investors, creditors and others in assessing our performance. These measurements should not be considered in isolation or as a substitute for reported GAAP results because they may include or exclude certain items as compared to similar GAAP-based measurements, and such measurements may not be comparable to similarly-titled measurements reported by other companies. Rather, these measurements should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business.
The key indicators that we monitor are as follows:
•
Net sales, gross margin, operating income and net income or loss. These measures are discussed in the section entitled “Results of operations;”
•
Organic net sales growth, which is a non-GAAP measure discussed in the section entitled “Results of operations.” Organic net sales growth eliminates from our reported net sales the impacts of earnings from any acquired or disposed businesses and changes in foreign currency exchange rates. We believe that this measurement is useful to investors as a way to measure and evaluate our underlying commercial operating performance consistently across our segments and the periods presented. This measurement is used by our management for the same reason. Reconciliations to the change in reported net sales, the most directly comparable GAAP financial measure, are included in the section entitled “Results of operations.”

21

•
Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP measures discussed in the section entitled “Results of Operations.” Adjusted EBITDA is used by investors to measure and evaluate our operating performance exclusive of interest expense, income tax expense, depreciation, amortization and certain other adjustments. Adjusted EBITDA margin is Adjusted EBITDA divided by net sales as determined under GAAP. We believe that these measurements are useful to investors as a way to analyze the underlying trends in our core business consistently across the periods presented. This measurement is used by our management for the same reason. A reconciliation of net income or loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA is included in the section entitled “Reconciliations of non-GAAP measures;”
•
Cash flows from operating activities, which we discuss in the section entitled “Liquidity and capital resources—historical cash flows.”
Results of operations
We present results of operations in the same way that we manage our business, evaluate our performance and allocate our resources. We also provide discussion of net sales and Adjusted EBITDA by geographic segment based on customer location: Americas, Europe and AMEA. Corporate costs are managed on a standalone basis and not allocated to segments.
Executive summary
(dollars in millions)
Three months ended March 31,
 
Change
2020
 
2019
 
Net sales
$
1,519.0

 
$
1,480.1

 
$
38.9

Gross margin
33.0
%
 
32.1
%
 
90 bps

Operating income
$
158.4

 
$
137.6

 
$
20.8

Net income (loss)
47.0

 
(6.2
)
 
53.2

Adjusted EBITDA
262.8

 
248.0

 
14.8

Adjusted EBITDA margin
17.3
%
 
16.8
%
 
50 bps

Net sales growth, gross margin improvement and lower interest expense each contributed to strong performance in the first quarter of 2020 compared to 2019, reflecting the continued execution of our business model.

22

Net sales
(in millions)
Three months ended March 31,
 
Reconciliation of net sales growth to organic net sales growth
 
Net sales growth
 
Foreign currency impact
 
Organic net sales growth
2020
 
2019
 
 
 
Americas
$
899.1

 
$
857.3

 
$
41.8

 
$
(4.5
)
 
$
46.3

Europe
544.0

 
542.1

 
1.9

 
(15.8
)
 
17.7

AMEA
75.9

 
80.7

 
(4.8
)
 
(0.7
)
 
(4.1
)
Total
$
1,519.0

 
$
1,480.1

 
$
38.9

 
$
(21.0
)
 
$
59.9

Net sales increased $38.9 million or 2.6%, which included $21.0 million or 1.5% of unfavorable foreign currency impact. Organic net sales growth was $59.9 million or 4.1% and was driven by similar amounts of volume and pricing growth.
In Americas, net sales increased $41.8 million or 4.9%, which included $4.5 million or 0.5% of unfavorable foreign currency impact. Organic net sales growth was $46.3 million or 5.4% and was driven by similar amounts of volume and pricing growth. Additional information by end market is as follows:
•
Biopharma — Sales grew in the high-single digits. Production and research and development accounts experienced double digit growth driven by sales of chemicals and personal protective equipment, partially offset by a decline in equipment & instrumentation due to impacts from COVID-19.
•
Healthcare — Sales were flat year over year. We experienced strong growth in medical/clinical laboratories that was offset by our proprietary silicones business, which performed according to expectations but had a challenging comparison due to robust growth in the prior year.
•
Education and government — We experienced low single-digit contraction due to university lab and school shut-downs related to COVID-19, partially offset by high-single digit growth in government driven by consumables and chemicals.
•
Advanced technologies & applied materials — Sales grew mid-single digits driven by strength in microelectronics and aerospace and defense platforms, coupled with modest growth in food and beverage and petroleum industries.
In Europe, net sales increased $1.9 million or 0.3%, which included $15.8 million or 3.0% of unfavorable foreign currency impact. Organic net sales growth was $17.7 million or 3.3%, due to volume growth and favorable pricing in nearly equal parts. Additional information by end market is as follows:
•
Biopharma — We experienced high single-digit growth driven by sales of personal protective equipment and chemicals from new account wins. That growth was partially

23

offset by lower sales of equipment & instrumentation as customers delayed discretionary capital spending following the COVID-19 outbreak.
•
Healthcare — We experienced high single-digit growth due to strong sales of personal protective equipment following the COVID-19 outbreak.
•
Education & government — Sales declined in the mid single-digits from closures of various academic institutions as a result of the COVID-19 outbreak. This was partially offset by growth in sales of personal protective equipment to government entities.
•
Advanced technologies & applied materials — We experienced low single-digit contraction as general market conditions and equipment & instrumentation sales slowed following the COVID-19 outbreak.
In AMEA, net sales decreased $4.8 million or 5.9% due to lower sales of laboratory supplies and diagnostic products in India due to COVID-19 related shutdowns and logistics challenges. Additional information by end market is as follows:
•
Biopharma — Despite strong demand in biopharma production, we experienced high single digit contraction driven by logistics constraints in India relating to COVID-19.
•
Advanced technologies & applied materials — We experienced low single-digit growth driven by semiconductor growth, partially offset by lower production chemicals and equipment & instrumentation sales.
Gross margin
 
Three months ended March 31,
 
Change
2020
 
2019
 
Gross margin
33.0
%
 
32.1
%
 
90 bps
The increase in gross margin included 20 basis points from more favorable prices relative to cost inflation and 70 basis points of favorable product mix, reflecting sales of our higher margin personal protective equipment and proprietary materials products.
The global restructuring program initiated following the VWR acquisition contributed a total of $25.9 million to 2020 gross profit and included more favorable prices relative to cost inflation, product cost reductions and productivity improvements from leaner footprints and operating practices.

24

Operating income
(in millions)
Three months ended March 31,
 
Change
2020
 
2019
 
Gross profit
$
501.9

 
$
475.2

 
$
26.7

Operating expenses
343.5

 
337.6

 
5.9

Operating income
$
158.4

 
$
137.6

 
$
20.8

Operating income increased primarily from higher gross profit, as previously discussed. This was partially offset by an increase in operating expenses primarily from $3.6 million of additional stock-based compensation expense from new awards issued after our May 2019 initial public offering, other incremental public company expenses and cost inflation.
Net income or loss
(in millions)
Three months ended March 31,
 
Change
2020
 
2019
 
Operating income
$
158.4

 
$
137.6

 
$
20.8

Interest expense
(94.5
)
 
(128.6
)
 
34.1

Other income (expense), net
0.8

 
(5.1
)
 
5.9

Income tax expense
(17.7
)
 
(10.1
)
 
(7.6
)
Net income (loss)
$
47.0

 
$
(6.2
)
 
$
53.2

Net income increased primarily due to higher operating income, as previously discussed, and lower interest expense. Interest expense declined with the application of proceeds from our initial public offering and operating cash flows to reduce outstanding borrowings and interest rate reductions from the repricing of our term loans.
Adjusted EBITDA and Adjusted EBITDA margin
For a reconciliation of Adjusted EBITDA to the most directly comparable measure under GAAP, see “Reconciliations of non-GAAP financial measures.”

25

(in millions)
Three months ended March 31,
 
Change
2020
 
2019
 
Adjusted EBITDA:
 
 
 
 
 
Americas
$
190.0

 
$
166.3

 
$
23.7

Europe
91.7

 
89.7

 
2.0

AMEA
13.4

 
18.5

 
(5.1
)
Corporate
(32.3
)
 
(26.5
)
 
(5.8
)
Total
$
262.8

 
$
248.0

 
$
14.8

 
 
 
 
 
 
Adjusted EBITDA margin
17.3
%
 
16.8
%
 
50 bps

Adjusted EBITDA increased $14.8 million or 5.9%, which included an unfavorable foreign currency translation impact of $2.4 million or 1.1%. The reasons for the remaining growth of $17.2 million, or 7.0%, are discussed below.
In the Americas, Adjusted EBITDA grew $23.7 million or 14.2% from the improvements to net sales previously discussed, coupled with gross margin expansion driven by favorable product mix and productivity improvements.
In Europe, Adjusted EBITDA increased $2.0 million or 2.2% from volume growth, more favorable prices relative to cost inflation and a favorable mix of customers and products. The growth in Adjusted EBITDA also reflected operating expense savings primarily related to headcount reduction and facility footprint optimization. These factors were partially offset by both unfavorable foreign currency translation and transactional impact.
In AMEA, Adjusted EBITDA decreased $5.1 million or 27.5% reflecting lower sales and unfavorable working capital adjustments.
In Corporate, Adjusted EBITDA was reduced primarily related to increases in stock-based compensation and increased compliance costs related to becoming a public company.

26

Reconciliations of non-GAAP financial measures
The following table presents the reconciliation of net income or loss to Adjusted EBITDA:
(in millions)
Three months ended March 31,
2020
 
2019
Net income (loss)
$
47.0

 
$
(6.2
)
Interest expense
94.5

 
128.6

Income tax expense
17.7

 
10.1

Depreciation and amortization
96.5

 
98.3

Net foreign currency loss from financing activities
1.6

 
6.2

Restructuring and severance charges
1.2

 
5.5

VWR transaction, integration and planning expenses
3.6

 
6.3

Other
0.7

 
(0.8
)
Adjusted EBITDA
$
262.8

 
$
248.0

Liquidity and capital resources
We fund short-term cash requirements primarily from operating cash flows and cash availability under our receivables facility. Most of our long-term financing is from indebtedness.
The ongoing COVID-19 outbreak has dramatically reduced global economic activity and negatively impacted the financial markets. Despite this, in the first quarter of 2020 our results remained strong. We reported $253.1 million of cash provided by operating activities, we ended the quarter with $346.3 million of cash and cash equivalents and our availability under credit facilities was $535.5 million, which included a $50.0 million increase of availability under our receivables facility in the first quarter of 2020. We also have no debt repayments due in the next twelve months other than required term loan repayments of $14.3 million.
Liquidity
The following table presents our primary sources of liquidity:
(in millions)
March 31, 2020
Receivables facility
 
Revolving credit facility
 
Total
Unused availability under credit facilities:
 
 
 
 
 
Current availability
$
300.0

 
$
250.0

 
$
550.0

Undrawn letters of credit outstanding
(12.9
)
 
(1.6
)
 
(14.5
)
Outstanding borrowings
—

 
—

 
—

Unused availability
$
287.1

 
$
248.4

 
$
535.5

Cash and cash equivalents
346.3

Total liquidity
$
881.8


27

We fund short-term cash requirements primarily from operating cash flows and cash availability under our receivables facility. Some of our credit line availability depends upon maintaining a sufficient borrowing base of eligible accounts receivable. We believe that we have sufficient capital resources to meet our liquidity needs. As of March 31, 2020, we were in compliance with our debt covenants.
At March 31, 2020, $160.4 million or 46.3% of our $346.3 million in cash and cash equivalents was held by our non-U.S. subsidiaries and may be subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply.
Historical cash flows
The following table presents a summary of cash provided by (used in) various activities:
(in millions)
Three months ended March 31,
 
Change
2020
 
2019
 
Operating activities:
 
 
 
 
 
Working capital changes*
$
(7.8
)
 
$
(90.0
)
 
$
82.2

Non-cash items
127.9

 
106.9

 
21.0

All other
133.0

 
58.1

 
74.9

Total
253.1

 
75.0

 
178.1

Investing activities
(11.9
)
 
(7.9
)
 
(4.0
)
Financing activities
(73.1
)
 
(106.1
)
 
33.0

Capital expenditures
(12.6
)
 
(12.4
)
 
(0.2
)
 
*
Includes changes to our accounts receivable, inventory and accounts payable balances.

28

Cash flows from operating activities increased $178.1 million in 2020 primarily due to an increase of operating income and reductions in cash paid for interest, income taxes and working capital.
Investing activities increased $4.0 million in 2020, reflecting a fairly consistent capital spending trend but fewer proceeds from the sale of capital assets.
Financing activities used $33.0 million less cash in 2020 primarily due to lower required debt payments following the significant 2019 repayments of our term loan facilities in connection with our initial public offering.
Indebtedness
The following interim update is provided to the disclosures given in the Annual Report.
Our credit facilities provide us access to up to $550 million of additional cash
We have entered into a receivables facility and a revolving credit facility that provide us access to cash to fund short-term business needs. For additional information, see the section entitled “Liquidity” and note 11 to our unaudited condensed consolidated financial statements included in Part I, Item 1 — “Financial statements.”
New accounting standards
For information about new accounting standards, see note 3 to our unaudited condensed consolidated financial statements included in Part I, Item 1 — “Financial statements.”
Item 3.
Quantitative and qualitative disclosures about market risk
There have been no significant changes to the disclosures about market risk included in our Annual Report.
Item 4.
Controls and procedures
Management’s evaluation of disclosure controls and procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2020, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, reported, accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

29

Changes in internal control over financial reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the fiscal quarter ended March 31, 2020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1.
Legal proceedings
In April 2018 the EPA notified us of potential liabilities under the Toxic Substances Control Act and the Emergency Planning and Community Right to Know Act that were identified in March 2017 and June 2017 inspections of our Phillipsburg, New Jersey facility. The alleged violations relate to our failure to timely file reports regarding the Phillipsburg facility. We have also become aware of additional potential liabilities under the Toxic Substances Control Act relating to failure to timely file reports regarding the Paris, Kentucky facility, and relating to export shipments of elemental mercury, which we have voluntarily disclosed to the EPA. We have taken steps to correct these errors and have filed amended reports. Through our cooperation with the EPA, we believe that we will settle the matter for less than $1 million.
For additional information regarding legal proceedings and matters, see note 10 to our unaudited condensed consolidated financial statements included in Part I, Item 1 — “Financial Statements,” which information is incorporated into this item by reference.
Item 1A.
Risk factors
For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019.

In light of developments relating to the coronavirus (COVID-19) pandemic occurring subsequent to the filing of our Annual Report, the Company is supplementing the risk factors discussed in our Annual Report with the following risk factor, which should be read in conjunction with the risk factors contained in our Annual Report.
The scale and scope of the recent coronavirus (COVID-19) outbreak and resulting pandemic is unknown and is expected to adversely impact our business at least for the near term. The overall impact on our business, operating results, cash flows and/or financial condition could be material.
In December 2019, a novel coronavirus disease was reported and in January 2020, the World Health Organization (“WHO”) declared COVID-19 a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic. The COVID-19 pandemic has adversely affected global economies, financial markets and the

30

overall environment in which we do business, and the extent to which it may impact our future results of operations and overall financial performance remains uncertain.
The scale and scope of the COVID-19 pandemic may heighten the potential adverse effects on our business, operating results, cash flows and/or financial condition described in the risk factors contained in our Annual Report on Form 10-K, including the impact of:
•
Significant interruptions in the operations of our manufacturing or distribution centers and logistics providers for the reasons described below;
•
Global and regional economic and political conditions on our production, supply chain, the overall demand for our products and the ability of our customers to purchase and/or pay for our products as a result of the pandemic’s impact on them; Our ability to develop and produce new products and services in an effort to address medical and other requirements as a result of the pandemic;
•
Changes in foreign laws, regulations and regulatory requirements;
•
Limitations on our ability to enforce legal rights and remedies with third parties or partners outside the United States;
•
The risk of regulatory enforcement actions, product defects or claims thereof;
•
Our strategy to pursue strategic acquisitions;
•
Changes within the industries that we serve;
•
Our ability to access raw materials for use in the products we manufacture; and
•
The potential loss of customers or a reduction in orders from a significant number of customers.
In addition, COVID-19 is adversely affecting, and is expected to continue to adversely affect, certain elements of our business (including certain elements of our operations, supply chains and distribution systems) as a result of impacts associated with preventive and precautionary measures that we, other businesses, our communities and governments are taking. In an effort to halt the outbreak of COVID-19, countries throughout the world, including the United States, most European Union member states, India and China, have placed significant restrictions on travel and many businesses have announced extended closures. These restrictions extend to a number of locations where we have significant operations and include shelter in place or stay-at-home orders that require our employees in that area to work from home and avoid unnecessary travel. In addition to existing travel restrictions, jurisdictions may continue to close borders, impose prolonged quarantines and further restrict travel and business activity, which could significantly impact our ability to support our operations and customers, the ability of our employees to get to their workplaces to produce products and provide services and the availability of raw materials for production of our products, as well as significantly hamper our products from moving through the supply chain.

31

Further, in connection with the global outbreak and spread of COVID-19 and in an effort to increase the wider availability of needed medical and other supplies and products, we may elect to, or governments may require us to, allocate our products (for example pursuant to the U.S. Defense Production Act) in a way that adversely affects our regular operations and financial results, results in differential treatment of customers and/or adversely affects our reputation and customer relationships. In addition, unpredictable increases in demand for certain of our products could exceed our capacity to meet such demand, which could adversely affect our financial results and customer relationships and result in negative publicity.
The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, suppliers and partners. Such impact on our business, operating results, cash flows and/or financial condition could be material.
Item 2.
Unregistered sales of equity securities and use of proceeds
None.
Item 3.
Defaults upon senior securities
None.
Item 4.
Mine safety disclosures
Not applicable.
Item 5.
Other information
None.

32

Item 6.
Exhibits
Exhibit no.
 
Exhibit description
 
Method of filing
 
 
Previously filed as Exhibit 10.1 to the Current Report on Form 8-K on January 27, 2020
 
 
Previously filed as Exhibit 10.1 to the Current Report on Form 8-K on March 30, 2020
 
 
Previously filed as Exhibit 10.2 to the Current Report on Form 8-K on March 30, 2020
 
 
Filed herewith
 
 
Filed herewith
 
 
Filed herewith
 
 
Filed herewith
 
 
Furnished herewith
 
 
Furnished herewith
101
 
XBRL exhibits
 
Filed herewith

33

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Avantor, Inc.
 
 
Date: April 29, 2020
By:
/s/ Steven Eck
 
 
Name:
Steven Eck
 
 
Title:
Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)

34


Exhibit 10.4
VWR INTERNATIONAL, LLC
Radnor Corporate Center
Building One, Suite 200
100 Matsonford Road, Radnor, PA 19087
April 2, 2019
Ashish Kulkarni
RE: Amended and Restated Employment Letter Agreement
Dear Ashish:
The following are the amended and restated terms of your employment with VWR International, LLC, effective as of the date hereof, under which you will provide services to Avantor, Inc. and its various affiliates. As used herein, “Avantor” shall collectively refer to VWR International, LLC, Avantor, Inc. and all of their various affiliates.
Position:
Executive Vice President, Chief Technology Officer
 
 
Base Salary:
$400,000 per year, payable in installments on Avantor’s regular payroll dates.
 
 
Duties:
The duties performed by you as of immediately prior to the date of this Agreement.
 
 
Reporting:
You will report solely and directly to the Chief Executive Officer of Avantor.
 
 
Office Location:
Your office will be located in Bridgewater, NJ.
 
 
Annual Bonus:
You will be eligible to participate in Avantor’s Management Incentive Program (MIP) with a target bonus of 75% of base salary.
 
 
Benefits:
You will be entitled to participate in all vacation, health, welfare and other similar benefits available to similarly situated employees of Avantor. You will be entitled to four weeks of vacation annually.

1


Severance/Restrictive Covenants:
If your employment with Avantor is terminated by Avantor without Cause, other than within a two year period following a Change in Control (each as defined on Annex 1), you will be entitled to receive (A) an amount equal to your annual base salary then in effect, payable in equal installments on Avantor’s regular payroll dates during a period of twelve months after such termination, (B) your target bonus, prorated for the year of such termination, payable in equal installments on Avantor’s regular payroll dates during a period of twelve months after such termination and (C) continued health benefits for a period ending on the earlier of (x) your becoming eligible to receive health benefits from a new employer and (y) twelve months after such termination. The payments (and benefits) described in the immediately preceding sentence that are due to be paid (or provided) more than sixty (60) days after your termination are subject to your execution and non-revocation of a general release in the form attached to this Letter Agreement as Annex 2 no later than fifty (50) days after your termination.
 
 
 
If your employment with Avantor or its successor, as applicable, is terminated by you for Good Reason (as defined on Annex 1) or by Avantor without Cause within a two year period following a Change in Control, you will be entitled to receive (A) an aggregate amount equal to 1.5 times the sum of (x) your base salary then in effect, plus (y) your target bonus for the year of such termination, payable in equal installments on Avantor’s regular payroll dates during a period of twelve months after such termination and (B) continued health benefits for a period ending on the earlier of (x) your becoming eligible to receive health benefits from a new employer and (y) eighteen months after such termination. The payments (and benefits) described in the immediately preceding sentence that are due to be paid (or provided) more than sixty (60) days after your termination are subject to your execution and non-revocation of a general release in the form attached to this Letter Agreement as Annex 2 no later than fifty (50) days after your termination.
 
 
 
If your employment is terminated by Avantor by reason of your Disability (as defined on Annex 1), you will be entitled to any compensation and benefits accrued prior to the termination date, including Avantor’s standard applicable disability insurance benefits.
 
 
 
If your employment with Avantor is terminated by reason of your death, your beneficiary or estate, as applicable, will be entitled to any compensation and benefits accrued prior to the termination date, including Avantor’s standard applicable life insurance benefits.
 
 
 
If your employment is terminated by you without Good Reason, you will only be entitled to any compensation and benefits accrued prior to the termination date. Any such resignation shall require that written notice be delivered by you to Avantor at least 90 days prior to your termination and any failure by you to provide such written notice shall be considered a material breach of this Agreement by you.

2


 
If your employment is terminated by Avantor for Cause, you will only be entitled to any compensation and benefits accrued prior to the termination date.
 
 
 
In the event of a termination of your employment for any reason, you agree to be subject to those restrictions set forth on Annex 1 attached hereto, which are a part of this Letter Agreement (the “Employee Covenants”).
 
 
 
You shall be under no obligation to seek other employment for any
reason or to mitigate any severance payments following a
termination of your employment with Avantor for any reason. In
addition, there shall be no offset against amounts due to you upon
termination of your employment with Avantor on account of any
compensation attributable to any employment subsequent to your
employment with Avantor. Subject to the notice requirement as set
forth above, either you or Avantor may terminate your employment
with Avantor at any time.
 
 
 
Except as provided above in this Severance/Restrictive Covenants
section, you shall not be entitled to any other salary, compensation
or benefits from Avantor after termination of your employment with
Avantor, except as otherwise specifically provided for in Avantor’s
employee benefit plans or as otherwise expressly required by
applicable law.
 
 
 
Notwithstanding anything herein to the contrary, if any payments
due hereunder would subject you to any tax imposed under Section
409A of the Internal Revenue Code of 1986, as amended (the
“Code”), as a result of your characterization as a “specified
employee” of Avantor (within the meaning of Treasury Regulation
Section 1.409A-1(i)), then such payments that would otherwise
cause such taxation shall be payable in a single lump sum on the first
business day that is six months following your “separation from
service” (within the meaning of Code Section 409A and the
regulations thereunder), and any remaining payments will be made
in accordance with the foregoing provisions of this section.
 
 
Personal Services Agreement:
The Personal Services, Confidentiality and Inventions Agreement, that you previously executed, in the form attached hereto as Exhibit A, shall remain in full force and effect.
 
 
Entire Agreement:
This Letter Agreement, (including any Annexes attached hereto) and the Personal Services, Confidentiality and Inventions Agreement referenced above set forth the entire understanding between you and Avantor with respect to the subject matter hereof and thereof, and supersede and preempt all prior oral or written understandings and agreements with respect to the subject matter hereof and thereof between you and Avantor and its affiliates, which shall terminate

3


 
and be of no further effect upon the execution of this Letter Agreement.

This Letter Agreement, and all of your rights and duties hereunder, shall not be assignable or delegable by you. Any purported assignment or delegation by you in violation of the foregoing shall be null and void ab initio and of no force and effect. This Letter Agreement may be assigned by Avantor to a person or entity which is a successor in interest to substantially all of the business operations of Avantor, or to a subsidiary or affiliate of Avantor. Upon such assignment, the rights and obligations of Avantor hereunder shall become the rights and obligations of such subsidiary, affiliate or successor person or entity.

 
 
Code Section 409A:
This Letter Agreement will be interpreted to avoid any tax under §409A of the Code. For purposes of §409A, each payment made under this Letter Agreement will be treated as a separate payment. With respect to any reimbursements provided under this Letter Agreement that are subject to §409A, the amount of expenses eligible for reimbursement during a calendar year cannot affect the expenses eligible for reimbursement in any other calendar year.
[Signature page follows]

4


 
VWR INTERNATIONAL, LLC
 
By: /s/ Justin M. Miller
Name: Justin M. Miller
Title: EVP & General Counsel
Accepted and Agreed
 
 
/s/ Ashish Kulkarni
Ashish Kulkarni
Date: 4/4/2019

5


Exhibit A - Personal Services, Confidentiality and Inventions Agreement
See Attached.



VAIL HOLDCO CORP
PERSONAL SERVICES, CONFIDENTIALITY AND INVENTIONS AGREEMENT
THIS AGREEMENT (this “Agreement”) is between Vail Holdco Corp, presently headquartered at Radnor Corporate Center, Building One, Suite 200, 100 Matsonford Road, Radnor, PA 19087 (with its various affiliates, the “Company”) and Ashish Kulkarni (“Executive” or “I”) who is employed by Avantor.
Avantor’s sound business policy requires that its trade secrets, technical and non-technical know-how, business knowledge, plans, systems, business methods, business records and customer relations to be protected and not utilized by any person or firm who competes or wants to compete with Avantor. The parties wish to evidence the terms of the employment relationship between them and particularly to set forth certain restrictions which shall apply to Executive in the event of termination of his/her employment with Avantor.
In consideration of and as part of the terms of employment by Avantor, it is agreed as follows:
1.
Compensation and Benefits. Executive shall be entitled to a salary, annual bonus and other monetary compensation, which shall be established by Avantor at the inception of employment, and may be periodically thereafter adjusted for increase only. Executive shall also be entitled to participate in various Company employee benefit plans (for example, health insurance, retirement, and the like), in accordance with the participation requirements of said plans, and nothing contained herein shall confer benefit eligibility which is in any manner inconsistent with the terms of the benefit plans.
2.
Executive’s General Obligations; Conflicts of Interest. During my employment with Avantor, I agree to devote substantially all my working time during normal business hours to Avantor. During my employment with Avantor, I agree to use my best efforts to perform the duties associated with my position and title with Avantor as Avantor may direct, not to engage in any other business or activity the nature of which shall be determined by Avantor to be competitive with Avantor, its suppliers or its customers and to comply with any Conflict of Interest Policy of Avantor. I acknowledge and agree that I will not serve on the board of directors of any other companies during my employment with Avantor without first obtaining prior written approval from Avantor’s Chief Executive Officer. I further agree to conform to all Company policies, practices, and procedures, to the extent such policies, practices and procedures have been provided to me in writing, as well as lawful directions of Avantor and/or its affiliates as to performance of services for Avantor, to the extent that the same are consistent with my position and title with Avantor.
3.
No Existing Restrictive Agreements. I represent that I am not a party to any contract limiting my present or future right to work for Avantor or to perform such activities as shall be required from time to time by Avantor.
4.
Prior Employer Information. I agree that I will not use improperly or disclose any confidential or proprietary information or trade secrets of my former or current employers, principals, partners, co-venturers, customers, or suppliers, or the vendors or customers of such persons or entities, and I will not violate any nondisclosure or

1


proprietary rights agreement I might have signed in connection with any such employer, person or entity.
5.
Non-Disclosure of Information. I recognize that, in the performance of my duties with Avantor, Confidential Information belonging to Avantor will come into my possession, including, without limitation, information regarding business methods, plan, systems, customer lists and customer relations, vendor lists and vendor relations, cost and pricing information, distribution and logistical information, and other information relating to the business of Avantor that is not known to the general public. I recognize that the business of Avantor is materially dependent upon the relationship between Avantor and its customers who are serviced by its associates and that Avantor has and will entrust me with Confidential Information that must remain the property of Avantor. As used in this Agreement, “Confidential Information” shall mean the trade secrets, technical and non-technical know-how, technical and business knowledge and information, plans and systems, business methods, customer lists and customer relations of Avantor, including but not limited to research, development, manufacturing, purchasing, accounting, data processing, engineering, marketing, merchandising, selling and invoicing, which information is acquired from or through Avantor during the course of my employment by Avantor. “Confidential Information” shall not include any information that is or becomes publicly known or that enters the public domain other than as a result of my breach of my obligations under this Agreement or any other agreement between me and Avantor or its affiliates. I agree that I will not at any time hereafter disclose Confidential Information to third parties or use Confidential Information for any purpose other than to further Avantor’s business, except as is required by law, any court of competent jurisdiction or any governmental agency or authority or recognized subpoena power.
Notwithstanding the above, nothing in this Agreement shall prohibit or impede Executive from communicating, cooperating or filing a complaint with any U.S. federal, state or local governmental or law enforcement branch, agency or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state or local law or regulation, or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation, provided that in each case such communications and disclosures are consistent with applicable law. I understand and acknowledge that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. I understand and acknowledge further that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order. Except as provided in this paragraph or under applicable law, under no circumstance am I authorized to disclose any information covered by Avantor’s attorney-client privilege or attorney work product, or trade secrets, without prior written consent of Avantor.

2


6.
Assignment of Inventions. I will make prompt and full disclosure to Avantor, will hold in trust for the sole benefit of Avantor, and will assign, exclusively to Avantor, all my right, title, and interest in and to any and all inventions, discoveries, designs, developments, improvements, copyrightable material, and trade secrets (collectively herein “Inventions”) that I, solely or jointly, may conceive, develop, or reduce to practice during the period of time I am in the employ of Avantor. I hereby waive and quitclaim to Avantor any and all claims of any nature whatsoever that I now or hereafter may have for infringement of any patent resulting from any patent applications for any Inventions so assigned to Avantor.
My obligation to assign shall not apply to any Invention about which I can prove that:
(a)
it was developed entirely on my own time; and
(b)
no equipment, supplies, facility, services, or trade secret information of Avantor were used in its development; and
(c)
it does not relate (i) directly to the business of Avantor or (ii) to the actual or demonstrably anticipated research or development of Avantor; and
(d)
it does not result from any work performed by me for Avantor.
7.
Excluded and Licensed Inventions. I have attached hereto a list describing all Inventions belonging to me and made by me prior to my employment with Avantor that I wish to have excluded from this Agreement. If no such list is attached, I represent that there are no such Inventions. If in the course of my employment at Avantor, I incorporate into a Company product, process, or machine, an Invention owned by me or in which I have an interest, Avantor is hereby granted and shall have an exclusive royalty-free, irrevocable, worldwide license to make, have made, use, and sell that Invention without restriction as to the extent of my ownership or interest.
8.
Application for Copyrights and Patents. I will execute any proper oath or verify any proper document in connection with carrying out the terms of this Agreement. If, because of my mental or physical condition or for any other reason whatsoever, Avantor is unable to secure my signature to apply for or to pursue any application for any United States or foreign patent or copyright covering Inventions assigned to Avantor as stated above, I hereby irrevocably designate and appoint Avantor and its duly authorized officers and agents as my agent and attorney in fact, to act for me and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of U.S. and foreign patents and copyrights thereon with the same legal force and effect as if executed by me. I will testify at Avantor’s request and expense in any interference, litigation, or other legal proceeding that may arise during or after my employment.
9.
Third Party Information. I recognize that Avantor has received and will receive confidential or proprietary information from third parties subject to a duty on Avantor’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. This information shall be deemed not to include any information that is or becomes publicly known or that enters the public domain other than as a result of my breach of my obligations under this Agreement or any other agreement between me and Avantor or its affiliates. During the term of my employment and thereafter I will


3


not disclose nor use such information for the benefit of anyone other than Avantor or such third party, or in any manner inconsistent with any agreement between Avantor and such third party of which I am made aware, except as is required by law, any court of competent jurisdiction or any governmental agency or authority or recognized subpoena power.
10.
Termination. I acknowledge that this Agreement shall not constitute a contract for employment for any specific period of time, and that either Avantor or I am free to terminate this Agreement, and employment relationship, “at will,” at any time, with or without cause. I agree that upon termination of this Agreement and my employment, for any or no reason, I will promptly return to Avantor all records of Confidential Information, including copies in my possession, and all other physical properties issued to me as an employee, in a reasonable state of function or repair. I will also so return any keys, pass cards, identification cards or other property belonging to Avantor.
11.
Non-Waiver. The failure by Avantor to enforce any of the provisions hereof upon any default by me at a particular time or under certain circumstances shall not be treated as a permanent waiver of such provisions and shall not prevent subsequent enforcement of such provisions upon default by either party.
12.
Irreparable Harm. I agree that any proven breach of this Agreement by me would cause irreparable harm to Avantor for which monetary damages could not adequately compensate. If Avantor proves a breach, irreparable harm shall be presumed and I expressly waive any bonding requirement as a prerequisite to Avantor obtaining injunctive relief. Avantor can also seek damages.
13.
Assignability of This Agreement. The services contracted for between Avantor and me in this Agreement are personal, and therefore I may not assign this Agreement to any other person or entity. This Agreement may, however, be assigned by Avantor to a successor to the business of Avantor or to an affiliate of Avantor.
14.
Severability. It is the intention of the parties that this Agreement shall be enforceable to the fullest extent permitted by local, state, and/or federal law in the jurisdiction in which performance of this Agreement occurs, or in which performance of this Agreement is sought to be enforced. In the event that a court of competent jurisdiction determines that one or more provisions of this Agreement are not enforceable under the provisions of the jurisdiction in which performance occurs or enforcement is sought, such a determination shall not affect the enforceability of the remainder of this Agreement.
15.
Other Agreements. This Agreement, together with the letter agreement, dated April 5, 2018, between me and Avantor (the “Letter Agreement”), sets forth the sole and entire agreement between the parties hereto, and supersedes and replaces any and all prior agreements, whether oral, written, or implied, entered into by me and Avantor, pertaining to my employment, the terms, conditions, and responsibilities thereof, and/or any other subject matter contained in this Agreement or the Letter Agreement. This Agreement and the Letter Agreement shall be considered together as one agreement. There will be no modification of this Agreement, either verbal, implied, written, or otherwise, except through a written agreement signed by me, and an officer of Avantor, which refers to the specific paragraph of this Agreement intended to be modified, and sets forth, in writing, the specific modification of said paragraph. This Agreement and

4


the Letter Agreement will supersede and preempt all prior oral or written understandings and agreements with respect to the subject matter hereof and thereof between me and Avantor and its affiliates (including without limitation, Avantor, Inc. and VWR Corporation and their respective affiliates).
[Signature page follows]

5


WITNESS WHEREFORE, the parties have executed this Agreement as of the 10th day of November, 2017.
/s/ Ashish Kulkarni
 
VAIL HOLDCO CORP
Executive – Signature
 
 
By:
/s/ Joseph Braun
Ashish Kulkarni
Its:
Chief Legal Officer
Executive – Print Name
 



Annex 1 - Employee Covenants
1.Noncompetition, Nonsolicitation and Nondisparagement. You acknowledge that in the course of your employment with Avantor or any of its Subsidiaries or Affiliates you will become familiar with Avantor’s and its Subsidiaries’ and Affiliates’ trade secrets and with other confidential information concerning Avantor and such Subsidiaries and Affiliates and that your services will be of special, unique and extraordinary value to Avantor and such Subsidiaries and Affiliates. Therefore, you agree that:
(a)Noncompetition. During the Employment Period and for a period of twelve months thereafter, you shall not directly or indirectly, anywhere in the world, own, manage, control, participate in, consult with, render services for or enter into employment with any business or organization that competes with the business that Avantor or any of its Subsidiaries or Affiliates is engaged in at the time of your Separation (the “Business”). Nothing herein shall prohibit you from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation that is publicly traded, so long as you have no active participation in the business of such corporation.
(b)Nonsolicitation. During the Employment Period and for a period of twenty-four months thereafter, you shall not directly or indirectly (i) induce or attempt to induce any employee of Avantor or any of its Subsidiaries or Affiliates to leave the employ of Avantor or any such Subsidiary or Affiliate, or in any way interfere with the relationship between Avantor or any of its Subsidiaries or Affiliates and any employee thereof, (ii) hire any person who was an employee of Avantor or any of its Subsidiaries or Affiliates within 180 days after a Separation, (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of Avantor or any of its Subsidiaries or Affiliates to cease doing business with Avantor or such Subsidiary or Affiliate or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and Avantor or any of its Subsidiaries or Affiliates or (iv) directly or indirectly acquire or attempt to acquire an interest in any business relating to the Business and with which Avantor or any of its Subsidiaries or Affiliates has entertained discussions relating to the acquisition of such business by Avantor or any of its Subsidiaries or Affiliates in the twelve month period immediately preceding a Separation.
(c)Nondisparagement. During the Employment Period and at any time thereafter, you shall not disparage Avantor or any of its affiliates, or any employee, director, shareholder or member of Avantor or its affiliates.
(d)Enforcement. If, at the time of enforcement of Section 1 or 2, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law. Because your services are unique and because you have access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Annex 1. Therefore, in the event a breach or threatened breach of this Annex 1, Avantor or any of its Subsidiaries or Affiliates or their successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security).

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(e)Additional Acknowledgments. You acknowledge that the provisions of Sections 1 and 2 are in consideration of: (i) employment with Avantor or its Subsidiaries or Affiliates and (ii) additional good and valuable consideration, including the payment of salary and bonus, as set forth in this Letter Agreement. In addition, you agree and acknowledge that the restrictions contained in Sections 1 and 2 do not preclude you from earning a livelihood, nor do they unreasonably impose limitations on your ability to earn a living. In addition, you acknowledge (A) that the business of Avantor and its Subsidiaries and Affiliates will be conducted throughout the world, (B) notwithstanding the state of incorporation or principal office of Avantor or any of its Subsidiaries or Affiliates, or any of their respective executives or employees (including you), it is expected that Avantor and its Subsidiaries and Affiliates will have business activities and have valuable business relationships within its industry throughout the world, and (C) as part of your responsibilities, you will be traveling throughout the world in furtherance of Avantor’s or any of its Subsidiaries’ or Affiliates’ business and relationships. You agree and acknowledge that the potential harm to Avantor and any of its Subsidiaries and Affiliates of the non‑enforcement of Sections 1 and 2 outweighs any potential harm to you of its enforcement by injunction or otherwise. You acknowledge that you have carefully read this Annex 1 and have given careful consideration to the restraints imposed upon you by this Annex 1, and are in full accord as to their necessity for the reasonable and proper protection of confidential and proprietary information of Avantor and any of its Subsidiaries and Affiliates now existing or to be developed in the future. You expressly acknowledge and agree that each and every restraint imposed by this Annex 1 is reasonable with respect to subject matter, time period and geographical area.
2.Definitions.
“Affiliate” means, with respect to any Person, any Person that controls, is controlled by or is under common control with such Person or an Affiliate of such Person.
“Board” means Avantor’s board of directors.
“Cause” means (i) the conviction of, or entry of a plea of nolo contendere with respect to, a felony or a crime involving moral turpitude, or the commission of fraud with respect to Avantor or any of its Subsidiaries or Affiliates or any of their customers or suppliers, (ii) substantial and repeated failure to perform duties as reasonably directed by the Board or a supervisor or report, after providing you with 15 days’ prior written notice and a reasonable opportunity to remedy such failure, (iii) gross negligence or willful misconduct with respect to Avantor or any of its Subsidiaries or Affiliates or (iv) a material violation of material Company rules or policies. Your cessation of employment shall not be deemed to be for Cause unless and until, if capable of being cured, the act or omission constituting Cause is not cured within 15 days following your receipt of written notice regarding such act or omission.
“Change in Control” shall have the meaning ascribed to it in the Vail Holdco Corp Equity Incentive Plan.
“Disability” shall have the meaning ascribed to it in Avantor’s long-term disability policy.
“Employment Period” means the period during which you are employed by Avantor or any of its Subsidiaries or Affiliates, regardless of whether such employment is pursuant to the terms of this Letter Agreement or another agreement.

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“Good Reason” means, within the two year period following a Change in Control, (i) a material diminution to your base salary, bonus opportunity, authority, duties or responsibilities, (ii) Avantor fails to make any compensatory payment to you when due, which is required to be paid to you pursuant to the Letter Agreement, (iii) a relocation of your principal place of employment to a location that is outside a 50 mile radius from your principal place of employment immediately prior to a Change in Control, or (iv) any other action or inaction by Avantor which constitutes a material breach by Avantor of the Letter Agreement; provided that, in order for your resignation for Good Reason to be effective, written notice of the occurrence any event that constitutes Good Reason must be delivered by you to Avantor within 90 days after you have actual knowledge of the occurrence of any such event and the occurrence of such event is not cured by Avantor within thirty (30) days after the date of such written notice by you to Avantor.
“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, investment fund, any other business entity and a governmental entity or any department, agency or political subdivision thereof.
“Separation” means you ceasing to be employed by Avantor or any of its Subsidiaries or Affiliates for any reason.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association, or business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association, or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association, or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association, or other business entity. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of Avantor.
3.Miscellaneous.
(a)Applicable Law. This Annex 1 shall be governed by, and construed in accordance with, the laws of the Commonwealth of Pennsylvania, without giving effect to any choice of law or conflict of law rules or provisions (whether of the Commonwealth of Pennsylvania or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Pennsylvania.
(b)Consent to Jurisdiction. You hereby irrevocably submit to the nonexclusive jurisdiction of the United States District Court for the Eastern District of Pennsylvania and the state courts of the Commonwealth of Pennsylvania for the purposes of any suit, action or other proceeding arising out of this Annex 1 or any transaction contemplated hereby. You further

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agree that service of any process, summons, notice or document by certified or registered mail to your address as listed above or such other address or to the attention of such other person as you have specified by prior written notice to Avantor shall be effective service of process in any action, suit or proceeding in the Commonwealth of Pennsylvania with respect to any matters to which you have submitted to jurisdiction as set forth above in the immediately preceding sentence. You irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Annex 1 or the transactions contemplated hereby in the United States District Court for the Eastern District of Pennsylvania or the state courts of the Commonwealth of Pennsylvania and hereby irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum.
(c)Additional Agreements. The provisions of this Annex 1 are in addition to, and do not supersede, the provisions of the Personal Services, Confidentiality and Inventions Agreement between you and Avantor.
(d)MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH PARTY TO THIS LETTER AGREEMENT (INCLUDING AVANTOR) HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS LETTER AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY AND/OR THE RELATIONSHIPS ESTABLISHED AMONG THE PARTIES HEREUNDER.

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Annex 2 - General Release
I, Ashish Kulkarni, in consideration of and subject to the performance by VWR International, LLC, a Delaware limited liability company (together with its affiliates, the “Company”), of its obligations under the Employment Letter Agreement, dated as of April 2, 2019 (the “Agreement”), do hereby release and forever discharge as of the date hereof the Company and all present and former directors, officers, agents, representatives, employees, successors and assigns of the Company and the Company’s direct or indirect owners (collectively, the “Released Parties”) to the extent provided below.
1.
I understand that any payments or benefits paid or granted to me under the “Severance/Restrictive Covenants” section of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled. I understand and agree that I will not receive the payments and benefits specified in the “Severance/Restrictive Covenants” section of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter or breach this General Release. I also acknowledge and represent that I have received all payments and benefits that I am entitled to receive (as of the date hereof) by virtue of any employment by the Company.
2.
Except as provided in paragraph 4 below and except for the provisions of the Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, may have, which arise out of or are connected with my employment with, or my separation or termination from, the Company (including, but not limited to, any allegation, claim or violation, arising under: Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state or local counterparts; or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”).
3.
I represent that I have made no assignment or transfer of any right, claim, demand, cause of action, or other matter covered by paragraph 2 above.

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4.
I agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute this General Release. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).
5.
In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement. I further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims. I further agree that I am not aware of any pending claim of the type described in paragraph 2 as of the execution of this General Release.
6.
I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.
7.
I agree that this General Release and the Agreement are confidential and agree not to disclose any information regarding the terms of this General Release or this Agreement, except to my immediate family and any tax, legal or other counsel I have consulted regarding the meaning or effect hereof or as required by law, and I will instruct each of the foregoing not to disclose the same to anyone. Notwithstanding anything herein to the contrary, each of the parties (and each affiliate and person acting on behalf of any such party) agree that each party (and each employee, representative, and other agent of such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of this transaction contemplated in the Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to such party or such person relating to such tax treatment and tax structure, except to the extent necessary to comply with any applicable federal or state securities laws. This authorization is not intended to permit disclosure of any other information including (without limitation) (i) any portion of any materials to the extent not related to the tax treatment or tax structure of this transaction, (ii) the identities of participants or potential participants in the Agreement, (iii) any financial information (except to the extent such information is related to the tax treatment or tax structure of this transaction), or (iv) any other term or detail not relevant to the tax treatment or the tax structure of this transaction.
8.
Any non-disclosure provision in this General Release does not prohibit or restrict me (or my attorney) from responding to any inquiry about this General Release or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the National Association of Securities Dealers, Inc. (NASD), any other self-regulatory organization or governmental entity. Furthermore, nothing in this Agreement shall prohibit or impede you from communicating, cooperating or filing a complaint with any U.S. federal, state or local

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governmental or law enforcement branch, agency or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state or local law or regulation, or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation, provided that in each case such communications and disclosures are consistent with applicable law. You understand and acknowledge that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, State, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. You understand and acknowledge further that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuant to court order. Except as provided in this paragraph or under applicable law, under no circumstance are you authorized to disclose any information covered by the Company’s attorney-client privilege or attorney work product, or trade secrets, without prior written consent of the Company.
9.
Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof.
10.
Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:
(i)
I HAVE READ IT CAREFULLY;
(ii)
I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;
(iii)
I VOLUNTARILY CONSENT TO EVERYTHING IN IT;
(iv)
I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

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(v)
I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON _______________ __, _____ TO CONSIDER IT AND THE CHANGES MADE SINCE THE _______________ __, _____ VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE REQUIRED 21-DAY PERIOD;
(vi)
THE CHANGES TO THE AGREEMENT SINCE _______________ ___, _____ EITHER ARE NOT MATERIAL OR WERE MADE AT MY REQUEST.
(vii)
I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;
(viii)
I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND
(ix)
I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF AVANTOR AND BY ME.
DATE:
April 4, 2019
 
/s/ Ashish Kulkarni
 
 
 
Ashish Kulkarni

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Exhibit 10.5
Avantor Performance Materials India Limited
17th Floor, Building No.5, Tower C
DLF Cyber City Phase-III
Gurgaon - 122002, Haryana, India
November 10, 2017
Devashish Ohri
RE: Employment Letter Agreement
Dear Devashish:
The following are the terms of your employment with Avantor Performance Materials India Limited (the "Company") effective as of the Merger Closing (as defined in that Agreement and Plan of Merger, dated as of May 4, 2017, by and among Avantor, Inc., Vail Acquisition Corp and VWR Corporation (the "Merger Agreement"), under which you will provide services to the Company and its various affiliates, as applicable. This Letter Agreement will supersede and replace any prior employment agreements you may have with the Company or any of its Affiliates, which, for the avoidance of doubt, shall not include any agreements governing previously granted special bonuses or equity awards in the Company or its affiliates. For the avoidance of doubt, in the event the Merger Agreement is terminated and the Merger Closing is not consummated, this Letter Agreement shall be void ab initio.
Position:
 
Managing Director, EVP, APAC and MEA.
 
 
 
Base Salary:
 
INR 25,831,455 per year, payable in installments on the
Company's regular payroll dates.
 
 
 
Duties:
 
Your duties shall include such duties as are commensurate with your position.
 
 
 
Reporting:
 
You will report solely and directly to the Chief Executive Officer of the Vail Holdco Corp ("Holdco").
 
 
 
Office Location:
 
Your office will be located in Gurgaon, India. However, the Company may at its sole discretion, transfer/ depute you from one place to another anywhere in India or abroad and/or to any of its affiliates, associates, subsidiaries, group companies of the Company whether existing or which may be set up in future.
 
 
 
Annual Bonus:
 
You will be eligible to participate in the Company's Management Incentive Program (MIP) with a target bonus of 75% of base salary.
 
 
 




Long-Term Incentive:
 
Subject to the approval of the board of directors of Holdco following the Merger Closing, as soon as practicable after the Merger Closing, you will be granted options in respect of shares of common stock of Holdco, which options shall be in an amount and have an exercise price as determined by such board pursuant to the terms and conditions of the applicable equity incentive plan of Holdco and the form of option grant agreement awarded thereunder. Notwithstanding anything contained in this Letter Agreement, all equity grants shall be controlled exclusively by the applicable equity plan and award agreement pursuant to which such grants are made.
 
 
 
Benefits:
 
You will be entitled to participate in all vacation, health, welfare and other similar benefits available to similarly situated employees of the company. You will be entitled to six weeks of vacation annually.
 
 
 
Retirement:
 
You shall retire upon attaining the age of 58 (fifty-eight) years. In and upon such retirement, you shall cease to be an employee of the Company. The Company may, however, at its sole discretion, choose to extend the term of your employment for such period as it deems fit.
 
 
 
Medical Fitness:
 
In case you are incapacitated by reason of illness, accident or any other cause and cannot perform your duties, the Company may at its option grant leave for a reasonable time on full pay or reduced pay or without pay or terminate your employment with the Company.
 
 
 
Employee Covenants:
 
The employee covenants shall be as listed on Annex 1.
Severance/Restrictive Covenants:
 
If your employment with the Company is terminated by the Company without Cause, other than within a two year period following a Change in Control (each as defined on Annex 1), you will be entitled to receive (A) an amount equal to your annual base salary then in effect, payable in equal installments on the Company's regular payroll dates during a period of twelve months after such termination, (B) your target bonus, prorated for the year of such termination, payable in equal installments on the Company's regular payroll dates during a period of twelve months after such termination and (C) continued health benefits for a period ending on the earlier of (i) your becoming eligible to receive health benefits from a new employer and (ii) six months after such termination. The payments (and benefits) described in the immediately preceding sentence that are due to be paid (or provided) more than sixty (60) days after your termination are subject to your execution and non-revocation of a general release in the form attached to this Letter Agreement as Annex 2 no later than fifty (50) days after your termination.
 
 
 




 
 
If your employment with the Company or its successor, as applicable, is terminated by you for Good Reason (as defined on Annex 1) or by the Company without Cause within a two year period following a Change in Control, you will be entitled to receive (A) an aggregate amount equal to 1.5 times the sum of (i) your base salary then in effect, plus (ii) you target bonus for the year of such termination, payable in equal installments on the Company's regular payroll dates during a period of twelve months after such termination and (B) continued health benefits for a period ending on the earlier of (i) your becoming eligible to receive health benefits from a new employer and (ii) twelve months after such termination. The payments (and benefits) described in the immediately preceding sentence that are due to be paid (or provided) more than sixty (60) days after your termination are subject to your execution and non-revocation of a general release in the form attached to this Letter Agreement as Annex 2 no later than fifty (50) days after your termination.
 
 
 
 
 
If your employment is terminated by the Company by reason of your Disability (as defined on Annex 1), you will be entitled to any compensation and benefits accrued prior to the termination date, including the Company's standard applicable disability insurance benefits,
 
 
 
 
 
If your employment with the Company is terminated by reason of your death, your beneficiary or estate, as applicable, will be entitled to any compensation and benefits accrued prior to the termination date, including the Company's standard applicable life insurance benefits.
 
 
 
 
 
If your employment is terminated by you without Good Reason, you will only be entitled to any compensation and benefits accrued prior to the termination date. Any such resignation shall require that written notice be delivered by you to the Company at least 90 days prior to your termination and any failure by you to provide such written notice shall be considered a material breach of this Letter Agreement by you.
 
 
 
 
 
If your employment is terminated by the Company for Cause, you will only be entitled to any compensation and benefits accrued prior to the termination date.
 
 
 
 
 
In the event of a termination of your employment for any reason, you agree to be subject to those restrictions set forth on Annex 1  attached hereto, which are a part of this Letter Agreement (the "Employee Covenants").
 
 
 
 
 
You shall be under no obligation to seek other employment for any reason or to mitigate any severance payments following a termination of your employment with the Company for any reason. In addition, there shall be no offset against amounts due to you upon termination of your employment with the Company on account of any compensation attributable to any employment subsequent to your employment with the Company. Subject to the notice requirement as set forth above, either you or the Company may terminate your employment with the Company at any time.
 
 
 




 
 
Except as provided above in this Severance/Restrictive Covenants section, you shall not be entitled to any other salary, compensation or benefits from the Company after termination of your employment with the Company, except as otherwise specifically provided for in the Company's employee benefit plans or as otherwise expressly required by applicable law.
 
 
 
 
 
Notwithstanding anything herein to the contrary, if any payments due hereunder shall be subject to all applicable taxes and the Company may withhold from any amounts payable under this Letter Agreement such taxes as shall be required to be withheld pursuant to any applicable law applicable to you.
 
 
 
Personal Services Agreement:
 
As a condition to entering into this Letter Agreement with the Company, you shall execute the Personal Services, Confidentiality and Inventions Agreement, in the form attached hereto as Exhibit A.
 
 
 
Entire Agreement:
 
This Letter Agreement, (including any Annexes attached hereto) and the Personal Services, Confidentiality and Inventions Agreement referenced above set forth the entire understanding between you and the Company with respect to the subject matter hereof and thereof, and supersede and preempt all prior oral or written understandings and agreements with respect to the subject matter hereof and thereof between you and the Company and its affiliates (including without limitation, Holdco, Avantor, Inc. and VWR Corporation and their respective affiliates), which shall terminate and be of no further effect upon the execution of this Letter Agreement.
This Letter Agreement, and all of your rights and duties hereunder, shall not be assignable or delegable by you. Any purported assignment or delegation by you in violation of the foregoing shall be null and void ab initio and of no force and effect. This Letter Agreement may be assigned by Holdco to a person or entity which is a successor in interest to substantially all of the business operations of Holdco, or to a subsidiary or affiliate of Holdco. Upon such assignment, the rights and obligations of Holdco hereunder shall become the rights and obligations of such subsidiary, affiliate or successor person or entity.
 
 
 
Survival:
 
All clauses of this Letter Agreement which by their nature survive termination including, Clause 6 of the Personal Services, Confidentiality and Inventions Agreement (Intellectual Property), Clause 9 of the Personal Services, Confidentiality and Inventions Agreement (Return of Property) and Clauses 5 of the Personal Services, Confidentiality and Inventions Agreement (Non-disclosure) shall survive and continue in full force and effect after the termination of this Letter Agreement.
[Signature page follows]




 
 
AVANTOR PERFORMANCE MATERIALS INDIA LIMITED
 
By:
/s/ Ashok Jain
Name:
Ashok Jain
Title:
Director, VP Finance and Controller
Accepted and Agreed
 
 
/s/ Devashish Ohri
Devashish Ohri
Date: 11/13/2017




Exhibit A - Personal Services, Confidentiality and Inventions Agreement
See Attached.




AVANTOR PERFORMANCE MATERIALS INDIA LIMITED
PERSONAL SERVICES, CONFIDENTIALITY AND INVENTIONS AGREEMENT
THIS AGREEMENT (this "Agreement") is between Avantor Performance Materials India Limited having its registered office at 17th Floor, Building No. 5, Tower C, DLF Cyber City Phase - III, Gurgaon - 122002, Haryana, India (with its various affiliates, the "Company") and Devashish Ohri ("Executive" or "I") who is employed by the Company.
The Company's sound business policy requires that its trade secrets, technical and non-technical know-how, business knowledge, plans, systems, business methods, business records and customer relations to be protected and not utilized by any person or firm who competes or wants to compete with the Company. The parties wish to evidence the terms of the employment relationship between them and particularly to set forth certain restrictions which shall apply to Executive.
In consideration of and as part of the terms of employment by the Company, it is agreed as follows:
1.
Compensation and Benefits. Executive shall be entitled to a salary, annual bonus and other monetary compensation, which shall be established by the Company at the inception of employment, and may be periodically thereafter adjusted. Executive shall also be entitled to participate in various Company employee benefit plans (for example, health insurance, retirement, and the like), in accordance with the participation requirements of said plans, and nothing contained herein shall confer benefit eligibility which is in any manner inconsistent with the terms of the benefit plans. Executive shall be entitled to reimbursement to expenses incurred in the course of carrying out his employment as per the Company policy. Compensation, including base salary, shall undergo such modifications and revisions, as may be mutually agreed to between the Executive and the Company from time to time. All forms of compensation or benefits paid to the Executive shall be subject to all applicable taxes and the Company may withhold from any amounts payable under this Agreement such taxes as shall be required to be withheld pursuant to any applicable law applicable to the Executive.
2.
Executive's General Obligations; Conflicts of Interest. During my employment with the Company, I agree to devote substantially all my working time during normal business hours to the Company. During my employment with the Company, I agree to use my best efforts to perform the duties associated with my position and title with the Company as the Company may direct, not to engage in any other business or activity the nature of which shall be determined by the Company to be competitive with the Company, its suppliers or its customers and to comply with any Conflict of Interest Policy of the Company. I acknowledge and agree that I will not serve on the board of directors of any other companies during my employment with the Company without first obtaining prior written approval from Holdco's Chief Executive Officer. 1 further agree to conform to all Company policies, practices, and procedures and shall keep myself aware and updated with the policies of the Company, as well as lawful directions of the Company and/or its affiliates as to performance of services for the Company, to the extent that the same are consistent with my position and title with the Company.
3.
No Existing Restrictive Agreements. I represent that I am not a party to any contract limiting my present or future right to work for the Company or to perform such activities as shall be required from time to time by the Company.





4.
Prior Employer Information. I agree that I will not use improperly or disclose any confidential or proprietary information or trade secrets of my former or current employers, principals, partners, co-venturers, customers, or suppliers, or the vendors or customers of such persons or entities, and I will not violate any nondisclosure or proprietary rights agreement I might have signed in connection with any such employer, person or entity.
5.
Non-Disclosure of Information. I recognize that, in the performance of my duties with the Company, Confidential Information belonging to the Company will come into my possession, including, without limitation, information regarding business methods, plan, systems, customer lists and customer relations, vendor lists and vendor relations, cost and pricing information, distribution and logistical information, and other information relating to the business of the Company that is not known to the general public. I recognize that the business of the Company is materially dependent upon the relationship between the Company and its customers who are serviced by its associates and that the Company has and will entrust me with Confidential Information, that must remain the property of the Company. As used in this Agreement, "Confidential Information" shall mean the trade secrets, technical and non-technical know-how, technical and business knowledge and information, plans and systems, business methods, customer lists and customer relations of the Company, including but not limited to research, development, manufacturing, purchasing, accounting, data processing, engineering, marketing, merchandising, selling and invoicing, which information is acquired from or through the Company during the course of my employment by the Company. "Confidential Information" shall not include any information that is or becomes publicly known or that enters the public domain other than as a result of my breach of my obligations under this Agreement or any other agreement between me and the Company or its affiliates. I agree that I will not at any time hereafter disclose Confidential Information to third parties or use Confidential Information for any purpose other than to further the Company's business, except as is required by law, any court of competent jurisdiction or any governmental agency or authority or recognized subpoena power.
I acknowledge and agree that it would be difficult to measure the damages that might result from any actual breach of these Clauses and that such actual breach may result in immediate, irreparable and continuing injury to the Company and that a remedy at law for any such actual breach may be inadequate. Accordingly, I agree that the Company, in its sole discretion and in addition to any other remedies it may have at law or in equity, shall be entitled to seek temporary, preliminary and permanent injunctive relief or other equitable relief, issued by a court of competent jurisdiction, in case of any such actual breach (without the necessity of actual injury being proved).
6.
Intellectual Property. I acknowledge and agree that all the Company Works shall vest in and be owned by the Company immediately upon their creation. To the extent such rights do not vest immediately in the Company, I hereby agree to and irrevocably and unconditionally assign to the Company all of my right, title and interest in the Company Works together with all of my right, title and interest in any and all intellectual property rights which subsist from time to time in the Company Works on a worldwide basis and in perpetuity for adequate consideration, receipt whereof is hereby acknowledged.
To the extent such rights do not vest immediately in the Company, I hereby assign to the Company all future copyright in the Company Works on a worldwide basis and in




perpetuity and agree that all such future copyright shall vest in the Company by operation of law pursuant to the Indian Copyright Act, 1957.
I hereby irrevocably and unconditionally waive, in favour of the Company, its licensees and successors-in-title any and all moral rights conferred on me by Chapter XII of the Indian Copyright Act, 1957 in relation to the Company Works (existing or future) and any and all other moral rights under any legislation now existing or in future enacted in any part of the world including, without limitation, the right conferred by Section 57 of the said Act to be identified as the author of any of the Company Works and the right not to have any such work subjected to derogatory treatment. I shall at the Company's request and expense, take all steps that may be necessary or desirable for the Company to enforce against any third party Company's moral rights in any of the Company Works.
I shall not, either during my employment or thereafter, exploit or assist others to exploit any of the Company Works or any invention or improvement which I may from time to time make or discover in the course of my duties or (unless the same shall have become public knowledge) make public or disclose any such Company Works or invention or improvement or give ally information in respect of it except to the Company or as the Company may direct.
I hereby irrevocably authorize the Company for the purposes of this Clause to make use of my name and to sign and to execute any documents or do anything on my behalf (or where permissible to obtain the patent or other protection in the Company's own name o in that of its nominees in relation to any of the Company Works) where there is undue delay or non-cooperation by me to execute the documents as necessary for the purposes hereof, and in all cases ensuring no liability or other action is suffered by me, provided there is no misrepresentation or breach on my part.
I shall forthwith and from time to time both during my employment under this Agreement and thereafter, at the request and expense of the Company, do all things and execute all documents necessary or desirable to give effect to the provisions of this Clause including, without limitation, all things necessary or conducive to obtain letters patent or other protection for any invention or improvement relating to any of the Company Works in any part of the world and to vest such letters patent or other protection in the Company or its nominees.
"Company Works" shall mean all works authored, originated, conceived, written or made by the Executive alone or with others including documents, records, databases, designs, innovations, inventions, improvements, processes, trademarks and trade names (except only those works which are legally authored, originated, conceived, written or made by the Executive wholly outside the course of his employment).
7.
Third Party Information. I recognize that the Company has received and will receive confidential or proprietary information from third parties subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. This information shall be deemed not to include any information that is or becomes publicly known or that enters the public domain other than as a result of my breach of my obligations under this Agreement or any other agreement between me and the Company or its affiliates. During the term of my




employment and thereafter I will not disclose nor use such information for the benefit of anyone other than the Company or such third party, or in any manner inconsistent with any agreement between the Company and such third party of which I am made aware, except as is required by law, any court of competent jurisdiction or any governmental agency or authority or recognized subpoena power.
8.
Termination. I acknowledge that this Agreement shall not constitute a contract for employment for any specific period of time, and that either the Company or I am free to terminate this Agreement, and employment relationship, "at will," at any time, with or without cause.
9.
Return of Property. I shall ensure that the property of the Company is protected and is taken due care of and that it is not used for personal purposes except in special and preauthorized circumstances. I shall promptly, whenever requested by the Company and in any event upon the termination of my employment, deliver to the Company all property of the Company and I shall not be entitled to and shall not retain any copies thereof. Title and copyright in the property shall at all times vest in the Company. I shall irretrievably delete any information relating to the business stored on any magnetic or optical disc or memory and all matter derived therefrom which is in his possession, custody, care or control outside the premises of the Company and shall produce such evidence thereof as the Company may require.
10.
Non-Waiver. The failure by the Company to enforce any of the provisions hereof upon any default by me at a particular time or under certain circumstances shall not be treated as a permanent waiver of such provisions and shall not prevent subsequent enforcement of such provisions upon default by either party.
11.
Irreparable Harm. 1 acknowledge and agree that it would be difficult to measure the damages that might result from any actual breach of this Agreement and that such actual breach by me may result in immediate, irreparable and continuing injury to the Company and that a remedy at law for any such actual breach may be inadequate. Accordingly, I agree that the Company, in its sole discretion and in addition to any other remedies it may have at law or in equity, shall be entitled to seek temporary, preliminary and permanent injunctive relief or other equitable relief, issued by a court of competent jurisdiction, in case of any such actual breach (without the necessity of actual injury being proved).
12.
Assignability of This Agreement. The services contracted for between the Company and me in this Agreement are personal, and therefore I may not assign this Agreement to any other person or entity. This Agreement may, however, be assigned by the Company to a successor to the business of the Company or to an affiliate of the Company.
13.
Severability. It is the intention of the parties that this Agreement shall be enforceable to the fullest extent permitted by local, state, and/or federal law in the jurisdiction in which performance of this Agreement occurs, or in which performance of this Agreement is sought to be enforced. In the event that a court of competent jurisdiction determines that one or more provisions of this Agreement are not enforceable under the provisions of the jurisdiction in which performance occurs or enforcement is sought, such a determination shall not affect the enforceability of the remainder of this Agreement.
14.
Other Agreements. This Agreement, together with the letter agreement, dated November 10, 2017, between me and the Company (the "Letter Agreement"), sets forth the sole and entire agreement between the parties hereto, and supersedes and replaces any and all prior agreements, whether oral, written, or implied, entered into by me and the Company, pertaining to my employment, the terms,




conditions, and responsibilities thereof, and/o any other subject matter contained in this Agreement or the Letter Agreement. This Agreement and the Letter Agreement shall be considered together as one agreement. There will be no modification of this Agreement, either verbal, implied, written, or otherwise, except through a written agreement signed by me, and an officer of the Company, which refers to the specific paragraph of this Agreement intended to be modified, and sets forth, in writing, the specific modification of said paragraph. This Agreement and the Letter Agreement will supersede and pre-empt all prior oral or written understandings and agreements including the prior employment agreement dated as of September 1, 2014 with respect to the subject matter hereof and thereof between me and the Company andits affiliates (including without limitation, Holdco, Avantor, Inc. and VWR Corporation and their respective affiliates).
[Signature page follows]




WITNESS WHEREFORE, the parties have executed this Agreement as of the 10th day of November, 2017.
/s/ Devashish Ohri
 
AVANTOR PERFORMANCE MATERIAL INDIA LIMITED
Executive - Signature
 
 
Devashish Ohri
By:
/s/ Ashok Jain
Executive - Print Name
Its:
Director, VP Finance and Controller




Annex 1 - Employee Covenants
1.Non-competition Non-solicitation and Non-disparagement. You acknowledge that in the course of your employment with the Company or Holdco or any of its Subsidiaries or Affiliates you will become familiar with the Company's/Holdco's and its Subsidiaries' and Affiliates' trade secrets and with other confidential information concerning the Company, Holdco and such Subsidiaries and Affiliates and that your services will be of special, unique and extraordinary value to the Company, Holdco and such Subsidiaries and Affiliates. Therefore, you agree that:
(a)Noncompetition. During the Employment Period and for a period of twelve months thereafter, you shall not directly or indirectly, anywhere in the world, own, manage, control, participate in, consult with, render services for or enter into employment with any business or organization that competes with the business that the Company or Holdco or any of its Subsidiaries or Affiliates is engaged in at the time of your Separation (the "Business"). Nothing herein shall prohibit you from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation that is publicly traded, so long as you have no active participation in the business of such corporation.
(b)Non-solicitation. During the Employment Period and for a period of twenty-four months thereafter, you shall not directly or indirectly (I) induce or attempt to induce any employee of the Company or Holdco or any of its Subsidiaries or Affiliates to leave the employment of the Company or Holdco or any such Subsidiary or Affiliate, or in any way interfere with the relationship between the Company or Holdco or any of its Subsidiaries or Affiliates and any employee thereof, (ii) hire any person who was an employee of the Company or Holdco or any of its Subsidiaries or Affiliates within 180 days after a Separation, (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or Holdco or any of its Subsidiaries or Affiliates to cease doing business with the Company or Holdco or such Subsidiary or Affiliate or in any way interfere with the relationship between any such customer; supplier, licensee or business relation and the Company or Holdco or any of its Subsidiaries or Affiliates or (iv) directly or indirectly acquire or attempt to acquire an interest in any business relating to the Business and with which the Company or Holdco or any of its Subsidiaries or Affiliates has entertained discussions relating to the acquisition of such business by the Company or Holdco or any of its Subsidiaries or Affiliates in the twelve month period immediately preceding a Separation.
(c)Non-disparagement. During the Employment Period and at any time thereafter, you shall not disparage the Company or any of its affiliates, or any employee, director, shareholder or member of the Company or its affiliates.
(d)Enforcement. If, at the time of enforcement of Section1 or 2, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law, Because your services are unique and because you have access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Annex 1. Therefore, in the event a breach or threatened breach of this Annex 1, the Company or Holdco or any of its Subsidiaries or Affiliates or their successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief




in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security).
(e)Additional Acknowledgments. You acknowledge that the provisions of Sections 1 and 2 are in consideration of: (i) employment with the Company or Holdco or its Subsidiaries or Affiliates and (ii) additional good and valuable consideration, including the payment of salary and bonus, as set forth in this Letter Agreement. In addition, you agree and acknowledge that the restrictions contained in Sections 1 and 2 are reasonable restrictions for the protection of Business and do not preclude you from earning a livelihood, nor do they unreasonably impose limitations on your ability to earn a living. In addition, you acknowledge (A) that the business of the Company, Holdco or and its Subsidiaries and Affiliates will be conducted throughout the world, (B) notwithstanding the state of incorporation or principal office of the Company, Holdco or any of its Subsidiaries or Affiliates, or any of their respective executives or employees (including you), it is expected that the Company, Holdco or and its Subsidiaries and Affiliates will have business activities and have valuable business relationships within its industry throughout the world, and (C) as part of your responsibilities, you will be traveling throughout the world in furtherance of the Company's or Holdco or any of its Subsidiaries' or Affiliates' business and relationships. You agree and acknowledge that the potential harm to the Company, Holdco or and any of its Subsidiaries and Affiliates of the non-enforcement of Sections 1 and 2 outweighs any potential harm to you of its enforcement by injunction or otherwise. You acknowledge that you have carefully read this Annex 1 and have given careful consideration to the restraints imposed upon you by this Annex 1, and are in full accord as to their necessity for the reasonable and proper protection of confidential and proprietary information of the Company, Holdco or and any of its Subsidiaries and Affiliates now existing or to be developed in the future. You expressly acknowledge and agree that each and every restraint imposed by this Annex 1 is reasonable with respect to subject matter, time period and geographical area.
2.
Definitions.
"Affiliate" means, with respect to any Person, any Person that controls, is controlled by or is under common control with such Person or an Affiliate of such Person.
"Board" means the Company's board of directors.
"Cause" means (i) the conviction of, or entry of a plea of nolo contendere with respect to, a felony or a crime involving moral turpitude, or the commission of fraud with respect to the Company or Holdco or any of its Subsidiaries or Affiliates or Holdco or any of their customers or suppliers, (ii) substantial and repeated failure to perform duties as reasonably directed by the Board or a supervisor or report, after providing you with 15 days' prior written notice and a reasonable opportunity to remedy such failure, (iii) gloss negligence or willful misconduct with respect to the Company or Holdco or any of its Subsidiaries or Affiliates or Holdco (iv) a material violation of material Company rules or policies. Your cessation of employment shall not be deemed to be for Cause unless and until, if capable of being cured, the act or omission constituting Cause is not cured within 15 days following your receipt of written notice regarding such act or omission.
"Change in Control" shall have the meaning ascribed to it in Holdco's Equity Incentive Plan.




"Disability" shall have the meaning ascribed to it in the Company's long-term disability policy.
"Employment Period" means the period during which you are employed by the Company or Holdco or any of its Subsidiaries or Affiliates, regardless of whether such employment is pursuant to the terms of this Letter Agreement or another agreement.
"Good Reason" means, within the two year period following a Change in Control, (i) a material diminution to your base salary, bonus opportunity, authority, duties or responsibilities, (ii) the Company fails to make any compensatory payment to you when due, which is required to be paid to you pursuant to the Letter Agreement, (iii) a relocation of your principal place of employment to a location that is outside a 50 mile radius from your principal place of employment immediately prior to a Change in Control, or (iv) any other action or inaction by the Company which constitutes a material breach by the Company of the Letter Agreement; provided that, in order for your resignation for Good Reason to be effective, written notice of the occurrence any event that constitutes Good Reason must be delivered by you to the Company within 90 days after you have actual knowledge of the occurrence of any such event and the occurrence of such event is not cured by the Company within thirty (30) days after the date of such written notice by you to the Company.
"Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, investment fund, any other business entity and a governmental entity or any department, agency or political subdivision thereof.
"Separation" means you ceasing to be employed by the Company or Holdco or any of its Subsidiaries or Affiliates for any reason.
"Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, association, or business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association, or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association, or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association, or other business entity, For purposes hereof, references to a "Subsidiary" of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated, the term "Subsidiary" refers to a Subsidiary of the Company.
3.    Miscellaneous.
(a)Applicable Law. This Annex 1 shall be governed by, and construed in accordance with, the laws of India, without giving effect to any choice of law or conflict of law




rules or provisions that would cause the application of the laws of any jurisdiction other than India.
(b)Consent to Jurisdiction. You hereby irrevocably submit to the nonexclusive jurisdiction of the courts of New Delhi for the purposes of any suit, action or other proceeding arising out of this Annex 1 or any transaction contemplated hereby. You further agree that service of any process, summons, notice or document by certified or registered mail to your address as listed above or such other address or to the attention of such other person as you have specified by prior written notice to the Company shall be effective service of process in any action, suit or proceeding in the State of Pennsylvania with respect to any matters to which you have submitted to jurisdiction as set forth above in the immediately preceding sentence. You irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Annex 1 or the transactions contemplated hereby in the courts of New Delhi.
(c)Additional Agreements. The provisions of this Annex 1 are in addition to, and do not supersede, the provisions of the Personal Services, Confidentiality and Inventions Agreement between you and the Company.




Annex 2 - General Release
I, Devashish Ohri, in consideration of and subject to the performance by Avantor Performance Materials India Limited (together with its affiliates, the "Company"), of its obligations under the Employment Letter Agreement, dated as of November 10, 2017 (the "Agreement"), do hereby release and forever discharge as of the date hereof the Company and all present and former directors, officers, agents, representatives, employees, successors and assigns of the Company and the Company's direct or indirect owners (collectively, the "Released Parties") to the extent provided below.
1.
I understand that any payments or benefits paid or granted to me under the "Severance/Restrictive Covenants" section of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled. 1 understand and agree that I will not receive the payments and benefits specified in the "Severance/Restrictive Covenants" section of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter or breach this General Release. I also acknowledge and represent that I have received all payments and benefits that I am entitled to receive (as of the date hereof) by virtue of any employment by the Company.
2.
Except as provided in paragraph 4 below and except for the provisions of the Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys' fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, may have, which arise out of or are connected with my employment with, or my separation or termination from, the Company under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys' fees incurred in these matters) (all of the foregoing collectively referred to herein as the "Claims").
3.
I represent that I have made no assignment or transfer of any right, claim, demand, cause of action, or other matter covered by paragraph 2 above.
4.
In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement. I further agree that in the




event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims. I further agree that I am not aware of any pending claim of the type described in paragraph 2 as of the execution of this General Release.
5.
I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.
6.
I agree that this General Release and the Agreement are confidential and agree not to disclose any information regarding the terms of this General Release or this Agreement, except to my immediate family and any tax, legal or other counsel I have consulted regarding the meaning or effect hereof or as required by law, and I will instruct each of the foregoing not to disclose the same to anyone. Notwithstanding anything herein to the contrary, each of the parties (and each affiliate and person acting on behalf of any such party) agree that each party (and each employee, representative, and other agent of such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of this transaction contemplated in the Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to such party or such person relating to such tax treatment and tax structure, except to the extent necessary to comply with any applicable federal or state securities laws. This authorization is not intended to permit disclosure of any other information including (without limitation) (i) any portion of any materials to the extent not related to the tax treatment or tax structure of this transaction, (ii) the identities of participants or potential participants in the Agreement, (iii) any financial information (except to the extent such information is related to the tax treatment or tax structure of this transaction), or (iv) any other term or detail not relevant to the tax treatment or the tax structure of this transaction.
7.
Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof.
8.
Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein,
BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:
(i)
I HAVE READ IT CAREFULLY;
(ii)
I UNDERSTAND ALL OF ITS TERMS ;
(iii)
I VOLUNTARILY CONSENT TO EVERYTHING IN IT;




(iv)
I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND
(v)
I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.
Date:
11/13/2017
/s/ Devashish Ohri
 
Devashish Ohri




Exhibit 31.1
CERTIFICATION
I, Michael Stubblefield, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Avantor, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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)
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
c)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and




5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 29, 2020
By:
/s/ Michael Stubblefield
 
 
Name:
Michael Stubblefield
 
 
Title:
President and Chief Executive Officer




Exhibit 31.2
CERTIFICATION
I, Thomas A. Szlosek, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Avantor, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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)
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
c)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and




5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 29, 2020
By:
/s/ Thomas A. Szlosek
 
 
Name:
Thomas A. Szlosek
 
 
Title:
Executive Vice President and Chief Financial Officer
(Principal 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 Quarterly Report on Form 10-Q of Avantor, Inc. (the “Company”) for the Three months ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Stubblefield, President and 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: April 29, 2020
By:
/s/ Michael Stubblefield
 
 
Name:
Michael Stubblefield
 
 
Title:
President and 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 Quarterly Report on Form 10-Q of Avantor, Inc. (the “Company”) for the Three months ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas A. Szlosek, Executive Vice President, 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: April 29, 2020
By:
/s/ Thomas A. Szlosek
 
 
Name:
Thomas A. Szlosek
 
 
Title:
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)