Exhibit 10.6

 

LOGO [g65000ex10_6.jpg]    

Catalent Pharma Solutions

14 Schoolhouse Road

Somerset, NJ 08873

 

T (732) 537-6200

F (732) 537-6480

www.catalent.com

July 24, 2009

Dr. Richard J. Yarwood

[Home Address]

Subject: Separation Agreement and Release

Dear Richard,

The purpose of this letter agreement (the “Agreement”) is to confirm the
agreement between Catalent Pharma Solutions, Inc. (“Catalent”) and all of its
parents, subsidiaries and affiliated companies (together with Catalent,
collectively referred to as the “Catalent Group”) and Richard J. Yarwood
(referred to as “You”) concerning your termination of employment with the
Catalent Group.

Termination Date You agree that your last day of employment with the Catalent
Group will be July 31, 2009 (the “Termination Date”) and following such date you
will cease to be an officer or employee of the Catalent Group.

Severance Pay Following the Termination Date, subject to receipt of this
fully-executed Agreement, the receipt and non-revocation of the release of
claims attached hereto as Appendix A (the “Release”), and your adherence to both
the restrictive covenants contained herein and in the Management Equity
Subscription Agreement, dated May 7, 2007 by and between PTS Holdings Corp.
(“Holdings”) and you (the “MESA”, together with the restrictive covenants
contained herein, collectively, the “Restrictive Covenants”), you will be paid
an aggregate amount of £587,714 in severance (“Severance Benefits”), payable in
equal monthly installments for a twenty-four (24) month period commencing
following the Termination Date. Severance Benefits consists of an aggregate
amount which represents two (2) times your average base salary as computed by
Catalent for the prior twenty-four (24) consecutive month period (£525,000), two
(2) times you annual car allowance (£26,000) and two (2) times your annual
pension allowance (£36,714).

Continuation of Welfare Benefits/Perquisites Following the Termination Date, in
addition to the severance pay described above, and irrespective of
(x) furnishing the Release and (y) adherence to the Restrictive Covenants, for a
period of twenty-four (24) consecutive months following the Termination Date,
you are entitled to continue to participate in such group life, disability,
accident, hospital and medical insurance plans, in accordance with the terms
thereof, as from time to time may be in effect.

--------------------------------------------------------------------------------

UK Pension Plan

You may be entitled to receive benefits under the Cardinal Health Retirement and
Death Benefit Plan in accordance with the terms and conditions of the plan.

PTS Equity Compensation Plan

With respect to the 1,231.920 shares of common stock of Holdings (“PTS Shares”)
that you previously purchased, you will continue to hold all such shares subject
to the terms and conditions of the MESA and the Securityholders Agreement, dated
as of May 7, 2007, among Holdings and the other parties thereto (the
“Securityholders Agreement”).

With respect to the options to purchase PTS Shares (the “Options”) subject to
your nonqualified stock option agreement, dated as of May 7, 2007 (the “Option
Agreement”), you will have 90 days from the Termination Date to exercise 60% of
the shares (i.e., 1099 shares) subject to your Time Option (as defined in the
Option Agreement). The remaining 40% of the shares subject to your Time Option,
as well as 100% of the shares subject to your Performance Option and Exit Option
(each, as defined in your Option Agreement) will be forfeited as of the
Termination Date and you will not be able to exercise your option with respect
to these shares. If you decide to exercise the portion of your Time Option that
is exercisable, any shares that you receive upon such exercise will be subject
to the terms and conditions of the MESA and the Securityholders Agreement,
including the call rights set forth in Section 4.2 of the MESA.

Transition Procedure

You agree to (i) continue to conduct your activities in a professional manner
and to cooperate with Catalent in all reasonable ways to achieve a smooth
transition and resolution to any open items on which you were working, (ii) not
intentionally injure any member of the Catalent Group in any way relating to
company property or personnel, (iii) refrain from any conduct, activity, or
conversation which is intended to or does interfere with or disparage the
relationships between the Catalent Group and its employees, customers, suppliers
or others, and (iv) turn over any company property including proprietary
information in your possession including, but not limited to, all credit cards,
prescription cards, office or warehouse keys, supplies or equipment, all company
documents and all copies thereof.

Restrictive Covenants

You agree and acknowledge that you will continue to be subject to the covenants
not to compete, not to solicit and not to disclose confidential information
contained in the MESA as well as the following provisions:

Confidentiality

For purposes of this Agreement, “proprietary information” shall mean any
information relating to the business of Catalent or any of its subsidiaries that
has not previously been publicly released by duly authorized representatives of
Catalent and shall include (but shall not be limited to) company information
encompassed in all research, product development, designs, plans, formulations
and formulating techniques, proposals, marketing and sales plans, financial
information, costs, pricing information, strategic business plans, customer
information, and all methods, concepts, or ideas in or reasonably related to the
business of Catalent and its subsidiaries.

You agree to regard and preserve as confidential all proprietary information
pertaining to Catalent’s business that has been or may be obtained by you in the
course of your employment with the Catalent Group, whether you have such
information in your memory or in writing or other physical form. You will not,
without prior written authority from Catalent to do so, use for your benefit or
purposes, or disclose to any other person, firm, partnership, corporation or
other entity, either during the term of your employment or thereafter, any
proprietary information connected with the business or developments of Catalent
and its subsidiaries, except as required in connection with the performance by
you of your duties and responsibilities as an employee of the Catalent Group.
This provision shall not apply after the proprietary information has been
voluntarily disclosed to the public, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means.

Removal and Return of Documents or Objects

You agree not to remove from the premises of Catalent and its subsidiaries any
document (regardless of the medium on which it is recorded), object, computer
program, computer source code, object code or data (the “Documents”) containing
or reflecting any proprietary information of Catalent. You recognize that all
such Documents, whether developed by you or by someone else, are the exclusive
property of Catalent.

 

2

--------------------------------------------------------------------------------

You shall promptly return all property in the your possession belonging to the
Company and their subsidiaries and affiliates, including, but not limited to,
keys, credit cards, computer equipment, software and peripherals and originals
or copies of books, records, or other information pertaining to the Company or
its subsidiaries’ or affiliates’ businesses. In addition, you shall promptly
return all electronic documents or records relating to the Company or any of its
subsidiaries or affiliates that you may have saved to any such laptop computer
or other electronic or storage device, whether business or personal, including
any PowerPoint or other presentation stored in hard copy or electronically.
Further, if you stored any information relating to the Company on a personal
computer or other storage device, you shall permanently delete all such
information; provided, however, that, prior to deleting that information, you
shall print out one copy and provide it to the Company.

Non-Competition

You agree that for a period of two years from the date hereof, you will not in
any way, directly or indirectly, manage, operate, control, solicit officers or
employees of Catalent and its subsidiaries, accept employment a directorship or
a consulting position with or otherwise advise or assist or be connected with or
own or have any other interest in or right with respect to (other than through
ownership of not more than one percent (1%) of the outstanding shares of a
corporation’s stock which is listed on a national securities exchange) any
enterprise which competes or shall compete with Catalent and its subsidiaries,
by engaging in or otherwise carrying on the research, development, manufacture
or sale of any product of any type developed, manufactured or sold by Catalent
or any subsidiary thereof, whether now or hereafter (to the extent that any such
product is under consideration by the Board of Directors of Catalent (the
“Board”) at the time your employment terminates or is terminated).

Corporate Opportunities

You agree you will not take any action which might divert from Catalent or any
subsidiary of Catalent any opportunity which would be within the scope of any of
the present or future businesses of Catalent or any of its subsidiaries (which
future businesses are then under consideration by the Board), the loss of which
has or would have had, in the reasonable judgment of the Board, an adverse
effect upon Catalent, unless the Board has given prior written approval.

Relief

It is understood and agreed by and between the parties hereto that the services
rendered by you, and the rights and privileges granted to Catalent by you
hereunder, are of a special, unique, extraordinary and intellectual character,
which gives them a peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in any action at law, and that a breach by you
of any of the provisions contained in this Agreement will cause Catalent great
irreparable injury and damage.

You hereby expressly agree that Catalent shall be entitled to the remedies of
injunction, specific performance and other equitable relief to prevent a breach
of this Agreement by you. You further expressly agree that in the event you
breach the non-competition provisions or the confidentiality provisions of this
Agreement, the balance of any payments due under this Agreement shall be
forfeited by you.

These provisions shall not, however, be construed as a waiver of any of the
rights Catalent may have for damages or otherwise.

Notwithstanding anything herein to the contrary, in the event of any conflict
between the aforementioned terms and the terms of Sections 6.1 and 6.2 of the
MESA, the terms contained herein shall govern.

 

3

--------------------------------------------------------------------------------

Intellectual Property

You agree to take all requested actions and execute all requested documents
(including any licenses or assignments required by a government contract) at
Catalent’s expense (but without further remuneration) to assist Catalent in
validating, maintaining, protecting, enforcing, perfecting, recording, patenting
or registering any of Catalent’s rights in its inventions, patent applications
and other intellectual property. If Catalent is unable for any other reason to
secure your signature on any document for this purpose, then you hereby
irrevocably designate and appoint Catalent and its duly authorized officers and
agents as your agent and attorney in fact, to act for and on your behalf and
stead to execute any documents and to do all other lawfully permitted acts in
connection with the foregoing.

Officer and Directorships

You agree to resign from your position as a director and/or officer of the
entities listed in Appendix B.

No Additional Payments

The severance payments, rights and benefits described in this Agreement will be
the only such payments, rights and benefits you are to receive as a result of
your termination of employment and you agree you are not entitled to any
additional payments, rights or benefits not otherwise described in this
Agreement. You hereby acknowledge and agree that you are not eligible to be a
participant in any severance or retention plan of Catalent or any of its
subsidiaries. Any payments, rights or benefits received under this Agreement
will not be taken into account for purposes of determining benefits under any
employee benefit plan of Catalent or any of its subsidiaries, except to the
extent required by law, or as otherwise expressly provided by the terms of such
plan.

Litigation and Regulatory Cooperation

You agree to cooperate fully with Catalent in the defense or prosecution of any
claims or actions now in existence or which may be brought in the future against
or on behalf of Catalent that relate to events or occurrences that transpired
during your employment with Catalent. Your full cooperation in connection with
such claims or actions shall include, but not be limited to, being available to
meet with counsel to prepare for discovery or trial and to act as a witness on
behalf of Catalent at mutually convenient times. In scheduling your time to
prepare for discovery or trial, Catalent shall attempt to minimize interference
with any other employment obligations that you may have. You also will cooperate
with Catalent in connection with any investigation or review of any foreign,
federal, state or local regulatory authority as any such investigation or review
relates to events or occurrences that transpired while you were employed by
Catalent. Catalent will reimburse you for any reasonable out-of-pocket expenses
incurred in connection with any litigation and regulatory cooperation provided
after the Termination Date. This provision will survive the termination of this
Agreement.

Deduction; Withholding; Set-Off

Notwithstanding any other provision of this Agreement, any payments or benefits
hereunder will be subject to the withholding of such amounts, if any, relating
to tax and other payroll deductions as Catalent reasonably determines it should
withhold pursuant to any applicable law or regulation. The amounts due and
payable under this Agreement will at all times be subject to the right of
set-off, counterclaim or recoupment for any amounts or debts incurred and owed
by you to Catalent whether during your employment or after the Termination Date.

Compliance with IRC Section 409A

To the extent applicable, this Agreement is intended to comply with Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and will be
interpreted accordingly. References under this Agreement to your termination of
employment will be deemed to refer to the date upon which you experienced a
“separation from service” within the meaning of Section 409A of the Code.
Notwithstanding anything herein to the contrary, if any payment of money or
other benefits due to you hereunder could cause the application of an
accelerated or additional tax under Section 409A of the Code, such payment or
other benefits will be deferred if deferral will make such payment or other
benefits compliant under Section 409A of the Code, or otherwise such payment or
other benefits will be restructured, to the extent possible, in a manner,
determined by the Board, that does not cause such an accelerated or additional
tax. To the extent any reimbursements or in-kind benefits due to you under this
Agreement constitute “deferred compensation” under Section 409A of the Code, any
such reimbursements or in-kind benefits will be paid to you in a manner
consistent with Treasury Regulation Section 1.409A-3(i)(1)(iv). For purposes of
Section 409A of the Code, each payment made under this Agreement will be
designated as a “separate payment” within the meaning of Section 409A of the
Code. Catalent will consult with you in good faith regarding the implementation
of the provisions of this section; provided that neither Catalent nor any of its
employees or representatives will have any liability to you with respect to
thereto.

 

4

--------------------------------------------------------------------------------

Review of Agreement and Release

You agree and represent that you have been advised of and fully understand your
right to discuss all aspects of this Agreement and the Release with counsel of
your choice. Your execution of this Agreement and Release establishes that, if
you wish the advice of counsel, you have done so by the date you signed the
Agreement and the Release, and that you were given at least 21 days to consider
whether or not to sign. You may sign this Agreement and the Release before the
end of the 21-day period and you agree that if you decide to shorten this time
period for signing, your decision was knowing and voluntary. The parties agree
that a change, if immaterial, does not restart the running of the 21-day period.
You will have 7 days from the date that you sign this Agreement and the Release
to revoke the Release and to change your mind, in which case this Agreement and
the Release will be ineffective and of no legal force. If you so revoke the
Agreement and the Release, then there will be no obligation on the part of
Catalent to pay you any severance or provide you with any other benefits and you
agree to repay to Catalent any such severance or other benefits previously paid
or provided to you.

Modifications/Severability

This Agreement, the MESA and the Securityholders Agreement constitute the entire
understanding of the parties on the subjects covered, and supersede any and all
previous agreements on these subjects, including the Employment Agreement, dated
as of February 1, 1998, between you and RP. Sherer Corporation, as amended from
time to time, including January 18, 2000 and May 25, 2000 amendments (the
“Employment Agreement”) (other than Sections 5, 6 and 7 of the Employment
Agreement, which provisions are restated herein under the heading “Restrictive
Covenants”). The parties agree that this Agreement will not be terminated or
modified except in writing signed by you and Catalent. If any provision or
portion of this Agreement is held to be unenforceable for any reason, all other
provisions of this Agreement will remain in full force and effect and will be
enforced according to their terms.

Full Compliance

You acknowledge and agree that Catalent’s agreement to provide severance and
other benefits under this Agreement is expressly contingent upon your full
compliance with the provisions of this Agreement and the MESA and
Securityholders Agreement, to the extent applicable.

Successors

You and anyone who succeeds to your rights and responsibilities are bound by
this Agreement and the Release and this Agreement and the Release will accrue to
the benefit of and may be enforced by Catalent and its successors and assigns.

Governing Law

You agree that all questions concerning the intention, validity or meaning of
this Agreement and the Release will be construed and resolved according to the
laws of the State of Delaware. You also designate the Superior Court of Somerset
County, New Jersey as the court of competent jurisdiction and venue for any
actions or proceedings related to this Agreement and the Release, and hereby
irrevocably consents to such designation, jurisdiction and venue.

 

5

--------------------------------------------------------------------------------

Counterparts

This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original but all of which together will constitute one in the
same instrument.

I believe the foregoing accurately reflects the terms of your severance from
Catalent, and ask that you sign an extra copy of this letter to confirm your
agreement. You must return the signed Agreement and the Release to me by
August 14, 2009, otherwise, I will assume that you reject this offer and it will
no longer be available to you.

Sincerely,

John Chiminski

President & Chief Executive Officer

 

/s/ John Chiminski

   Date  

September 2, 2009

   Agreed to:        

/s/ Richard J. Yarwood

   Date  

August 10, 2009

   Richard J. Yarwood        

 

6

--------------------------------------------------------------------------------

APPENDIX A

RELEASE AND WAIVER OF CLAIMS

This Release and Waiver of Claims (“Release”) is entered into as of this
         day of                     , 2009, by and between Catalent Pharma
Solutions, Inc. (the “Company”) and Richard J. Yarwood (the “Executive”).

The Executive and the Company agree as follows:

1.        The employment relationship between the Executive and the Company and
its subsidiaries and affiliates, as applicable, will terminate on July 31, 2009
(the “Termination Date”).

2.        In consideration of the payments, rights and benefits provided for in
the Separation Agreement, dated July 24, 2009 (the “Separation Agreement”), the
sufficiency of which the Executive hereby acknowledges, the Executive, on behalf
of himself and his agents, representatives, attorneys, administrators, heirs,
executors and assigns, hereby releases and forever discharges the Company and
its members, parents, affiliates, subsidiaries, divisions, any and all current
and former directors, officers, employees, agents, and contractors and their
heirs and assigns, and any and all employee pension benefit or welfare benefit
plans of the Company, including current and former trustees and administrators
of such employee pension benefit and welfare benefit plans (the “Released
Parties”), from all claims, charges, causes of action, obligations, expenses,
damages of any kind (including attorneys’ fees and costs actually incurred) or
demands, in law or in equity, whether known or unknown, which may have existed
or which may now exist from the beginning of time to the date of this Release
arising from or relating to Executive’s employment or termination from
employment with the Company or otherwise, including a release of any rights or
claims the Executive may have under Title VII of the Civil Rights Act of 1964,
as amended, and the Civil Rights Act of 1991 (which prohibits discrimination in
employment based upon race, color, sex, religion, and national origin); the
Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act
of 1973 (which prohibits discrimination based upon disability); the Family and
Medical Leave Act of 1993 (which prohibits discrimination based on requesting or
taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866
(which prohibits discrimination based upon race); Section 1985(3) of the Civil
Rights Act of 1871 (which prohibits conspiracies to discriminate); the Employee
Retirement Income Security Act of 1974, as amended (which prohibits
discrimination with regard to benefits); the Fair Labor Standards Act, as
amended, 29 U.S.C. Section 201 et. seq.; the New Jersey Conscientious Employee
Protection Act; any other federal, state or local laws against discrimination;
or any other federal, state, or local statute, regulation or common law relating
to employment, wages, hours, or any other terms and conditions of employment.
This includes a release by the Executive of any and all claims or rights arising
under contract (whether written or oral, express or implied), covenant, public
policy, tort or otherwise.

3.        The Executive acknowledges that the Executive is waiving and releasing
any rights that the Executive may have under the Age Discrimination in
Employment Act of 1967, as amended (“ADEA”) and that this Release is knowing and
voluntary. The Executive and the Company agree that this Release does not apply
to any rights or claims that may arise under the ADEA after the effective date
of this Release. The Executive acknowledges that the consideration given for
this Release is in addition to anything of value to which the Executive is
already entitled. The Executive further acknowledges that the Executive has been
advised by this writing that: (i) the Executive should consult with an attorney
prior to executing this Release; (ii) the Executive has up to twenty-one
(21) days within which to consider this Release, although the Executive may, at
the Executive’s discretion, sign and return this Release at an earlier time, in
which case the Executive waives all rights to the balance of this twenty-one
(21) day review period; (iii) for a period of 7 days following the execution of
this Release in duplicate originals, the Executive may revoke this Release in a
writing delivered to Harry Weininger, SVP, Human Resources, by hand or mail
(signature of receipt required), and this Release shall not become effective or
enforceable, and neither the Company nor any other person is obligated to
provide any benefits to the Executive until the revocation period has expired;
and (iv) nothing in this Release prevents or precludes the Executive from
challenging or seeking a determination in good faith of the validity of this
Release under the ADEA, nor does it impose any condition precedent, penalties or
costs for doing so, unless specifically authorized by federal law. If the
Executive has not returned the signed Release by August 14, 2009, then the offer
of payments set forth in the Separation Agreement will expire by its own terms
at such time.

4.        This Release does not release the Released Parties from (i) any
obligations due to the Executive under the Separation Agreement or under this
Release, (ii) any vested rights the Executive has under the Company’s employee
pension benefit and welfare benefit plans or (iii) any rights of the Executive
under the Management Equity Subscription Agreement, dated as of May 7, 2007, by
and between PTS Holdings Corp. (“Holdings”) and the Executive and the
Securityholders Agreement, dated as of May 7, 2007, among Holdings and the other
parties thereto.

5.        This Release is not an admission by the Released Parties of any
wrongdoing, liability or violation of law.

6.        The Executive waives any right to reinstatement or future employment
with the Company following the Executive’s separation from the Company on the
Termination Date.

 

7

--------------------------------------------------------------------------------

7.        The Executive agrees not to engage in any act after execution of the
Release that is intended, or may reasonably be expected to harm the reputation,
business, prospects or operations of Released Parties.

8.        The Executive shall continue to be bound by the Restrictive Covenants
(as defined in the Separation Agreement).

9.        This Release shall be governed by and construed in accordance with the
laws of the State of Delaware, without reference to the principles of conflict
of laws.

10.        This Release represents the complete agreement between the Executive
and the Company concerning the subject matter in this Release and supersedes all
prior agreements or understandings, written or oral. This Release may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

11.        Each of the sections contained in this Release shall be enforceable
independently of every other section in this Release, and the invalidity or
unenforceability of any section shall not invalidate or render unenforceable any
other section contained in this Release.

[Rest of page intentionally left blank]

 

8

--------------------------------------------------------------------------------

12.        The Executive acknowledges that the Executive has carefully read and
understands this Release, that the Executive has the right to consult an
attorney with respect to its provisions and that this Release has been entered
into voluntarily. The Executive acknowledges that no representation, statement,
promise, inducement, threat or suggestion has been made by any of the Released
Parties to influence the Executive to sign this Release except such statements
as are expressly set forth herein or in the Separation Agreement. The parties to
this Release have executed this Release as of the day and year first written
above.

 

CATALENT PHARMA SOLUTIONS, INC.     RICHARD J. YARWOOD

 

   

 

By:       Title:      

 

9

--------------------------------------------------------------------------------

APPENDIX B

Richard Yarwood

Director and Officer Positions

as of 22 July 2009

 

Company

 

Position

Catalent Pharma Solutions, Inc.   Group President, Sterile Technologies Catalent
USA Paintball, Inc.   Group President, Sterile Technologies Catalent Pharma
Solutions, LLC   Group President, Sterile Technologies Catalent US Holding I,
LLC   Director Catalent USA Woodstock, Inc.   Group President, Sterile
Technologies Catalent USA Packaging, Inc.   Group President, Sterile
Technologies Catalent France Limoges Holding S.A.S.   President & Chairman
Catalent France Limoges S.A.S.   President & Chairman Catalent Japan K.K.  
Director Catalent Netherlands Holding B.V.   Managing Director Catalent
Cosmetics AG   Director & Chairman Catalent Belgium Holding S.A.   Director
Catalent Belgium S.A.   Director Ingel Technologies Limited   Director Catalent
Pharma Solutions Limited   Director & Company Secretary Catalent U.K. Swindon
Encaps Limited   Director Catalent U.K. Swindon Holding I Limited   Director
Catalent U.K. Swindon Zydis Limited   Director Catalent U.K. Stockport Limited  
Director Catalent U.K. Stockport Holding Limited   Director Catalent U.K.
Swindon Holding II Limited   Director

 

10