Exhibit 10.19


 





 


 


EMPLOYMENT AGREEMENT


 


This
Employment Agreement (the “Agreement”) is made as of May 9, 2011 (the “Effective Date”), between Patheon Pharmaceuticals
Services Inc. (the “Company”) and Michael Lytton (the “Executive”).


 


A.           The
Company is a subsidiary of Patheon Inc. (“Patheon”). Patheon is in the business of providing its customers with pharmaceutical
development services, clinical trial manufacturing and packaging, and commercial manufacturing and packaging. The Company serves
as the corporate shared services entity for Patheon and other members of the Patheon Group. As used herein, “Patheon Group”
means Patheon and any entity controlled by Patheon.


 


B.          
The Company and the Executive wish to enter into this Agreement to set forth the rights and obligations of each of them with respect
to the employment of the Executive.


 


C.           The
Company wishes to employ the Executive pursuant to the terms and subject to the conditions set forth in this Agreement.


 


D.          
The Executive wishes to be employed by the Company pursuant to the terms and subject to the conditions set forth in this Agreement.


 


E.           The
Company and the Executive agree that the terms, provisions and mutual covenants of this Agreement suffice as adequate consideration
for their mutual promises made in this Agreement.


 


NOW, THEREFORE, the parties
agree as follows:


 


ARTICLE 1





INTERPRETATION


 


		1.1	Governing Law. This Agreement shall be construed and interpreted in accordance
with the substantive laws of the State of North Carolina, without giving effect to any choice or conflict of law provision or rule
(whether of the State of North Carolina or any other jurisdiction) that would cause the application of laws of any jurisdiction
other than those of the State of North Carolina. The state and federal courts located in North Carolina shall be the exclusive
forum for the adjudication of all disputes between the parties arising out of or relating to this Agreement. Each of the parties
hereby irrevocably consents to the personal jurisdiction of the federal and state courts in the State of North Carolina with respect
to any matters arising out of this Agreement and waives any and all objections and defenses to such personal jurisdiction regardless
of whether such objection or defense is based upon the venue, North Carolina’s long-arm statute, residence and/or contacts
with North Carolina, the convenience of the witnesses and/or parties, the inconvenience of the forum, or otherwise.



 


		1.2	Definitions. In this Agreement, including Schedule A and B hereto, unless the context
otherwise requires, the following terms shall have the following meanings, respectively:



 


		(a)	“Board of Directors” means the Board of Directors of Patheon.



  


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		(b)	“Cause” means the determination,
                                         in good faith, by the Company, after notice to the Executive that one or more of the
                                         following events has occurred:(i) the Executive has failed to perform his material
                                         duties and, if curable, such failure has not been cured after a period of thirty (30)
                                         days’ notice from the Company; (ii) any reckless or grossly negligent act by the
                                         Executive having the effect of injuring the interests, business, or reputation of any
                                         member of the Patheon Group in any material respect; (iii) the Executive’s commission
                                         of any felony (including entry of a nolo contendere plea); (iv) any misappropriation
                                         or embezzlement of the property of any member of the Patheon Group; or (v) a breach of
                                         any material provision of this Agreement by the Executive, which breach, if curable,
                                         remains uncured for a period of thirty (30) days after receipt by Executive of notice
                                         from the Company of such breach.



 


		(c)	“Change in Control” means any of the following events:



 


		(i)	Any “Person” (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than JLL Partners
or its affiliates, becomes a Beneficial Owner (within the meaning of Exchange Act Rule 13d-3) of more than fifty percent (50%)
of the voting power of the then outstanding voting securities of Patheon entitled to vote generally in the election of directors;



 


		(ii)	There is consummated a merger or consolidation of Patheon or any direct or indirect subsidiary
of Patheon with any other company, other than a merger or consolidation that would result in the voting securities of Patheon outstanding
immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least fifty percent (50%) of the combined voting power
of the securities of Patheon or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation;
or



 


		(iii)	The shareholders of Patheon approve a plan of complete liquidation or dissolution of the company
or there is consummated an agreement for the sale or disposition by Patheon of all or substantially all of its assets.



 


However, in no event shall a “Change
in Control” be deemed to have occurred for purposes of this Agreement solely because Patheon (or any member of the Patheon
Group) engages in an internal reorganization, which may include a transfer of assets to, or a merger or consolidation with, one
or more affiliates.


 


		(d)	“Code” means the Internal Revenue Code of 1986, as amended.



 


		(e)	“Good Reason” means the occurrence of any of the following events without
                                                               the consent of the Executive: (i) a material reduction of the Executive’s duties or responsibilities or the assignment
                                                               to the Executive of duties or responsibilities materially inconsistent with the Executive’s position; (ii) a material
                                                               breach by the Company of this Agreement, which breach remains uncured for a period of thirty (30) days after receipt by the
                                                               Company of written notice from Executive (iii) a requirement by the Company that the Executive work more than fifty (50)
                                                               miles from Executive’s principle office. A termination of the Executive’s employment by Executive shall not be
                                                               deemed to be for Good Reason unless (i) the Executive gives notice to the Company of the existence of the event or condition
                                                               constituting Good Reason within thirty (30) days after such event or condition initially occurs or exists, (ii) the Company
                                                               fails to cure such event or condition within thirty (30) days after receiving such notice, and (iii) the Executive’s
                                                               “separation from service” within the meaning of Section 409A of the Code occurs not later than ninety (90) days
                                                               after such event or condition initially occurs or exists.



 


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ARTICLE 2 


EFFECTIVE DATE; TERMS OF EMPLOYMENT


 


		2.1	Term



 


The Company hereby agrees to
employ the Executive, and the Executive hereby agrees to be employed by the Company pursuant to the terms and subject to the conditions
of this Agreement (including, without limitation, Article 6 and Schedules A and B), commencing on the Effective Date. The Executive’s
employment with the Company will be “at will,” meaning that either the Executive or the Company will be entitled to
terminate the Executive’s employment at any time and for any reason, with or without cause. Any contrary representations
which may have been made to the Executive are superseded by this Agreement. This is the full and complete agreement between the
Executive and the Company on this term. Although the Executive’s job duties, title, compensation and benefits, as well as
the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of the Executive’s
employment may only be changed in an express written agreement signed by the Executive and a duly authorized officer of the Company.


 


		2.2	Position and Duties



 


The Executive shall be employed
by the Company and shall serve as Executive Vice President, Corporate Development and Strategy and General Counsel of Patheon,
with such authority, duties and responsibilities as are commensurate with such position, reporting to the Chief Executive Officer.
In addition, the Executive will be a member of the Patheon Group’s Executive Committee and will become an officer of Patheon
and of any members of the Patheon Group, as may be requested.


 


The Executive shall also be responsible
for the functions and responsibilities set out in the Position Description attached hereto as Schedule A.


 


The location of the Executive’s
employment will be the Company’s Raleigh/Durham offices, located at 4721 Emperor Boulevard, Suite 200, Durham, North Carolina
27703, USA, or such other location where the principal executive offices may be relocated from time to time by the Company. The
Executive will be permitted to commute to the Company’s Raleigh/Durham offices from his primary residence in Boston, Massachusetts.
The Executive will be expected to be at the Company’s Raleigh/Durham offices or any other offices of the Company or otherwise
engaged in the performance of his duties at least five days per week, subject to required business travel, vacation and holidays.
In lieu of Patheon’s standard relocation benefits, Executive will be entitled to a lump sum payment of $75,000 (subject to
tax withholdings required by federal, state, and local laws). This amount will be treated as taxable income and will be paid within
thirty (30) days after the Effective Date (assuming the Executive continues to be employed by Patheon at such time). If the Executive’s
employment is terminated other than (i) for Good Reason (as defined below) or (ii) without Cause (as defined below) by the Company,
before the first (1st) anniversary of the Effective Date, he will repay to the Company within thirty (30) days of the
Date of Termination, a pro rata portion of the lump sum payment, based on the number of months remaining to the first (1st)
anniversary of the Effective Date from the Date of Termination (by way of example, if the Date of Termination would occur with
six (6) months remaining until the first (1st) anniversary of the Effective Date, then the Executive would repay fifty
percent (50%) of the lump sum payment to the Company). The indicated repayment amount is not subject to offset or any other reduction
for any prior withholdings or deductions (i.e., tax withholdings).


  


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In addition, a second lump sum
payment of $75,000 (subject to tax withholdings required by federal, state, and local laws) will be paid within thirty (30) days
after the first (1st) anniversary of the Effective Date (assuming the Executive continues to be employed by Patheon
at such time). This amount will be treated as taxable income. If the Executive’s employment is terminated other than (i)
for Good Reason (as defined below) by the Executive or (ii) without Cause (as defined below) by the Company, before the second
(2nd) anniversary of the Effective Date, he will repay to the Company, within thirty (30) days of the Date of Termination,
a pro rata portion of the second lump sum payment, based on the number of months remaining to the second (2nd)
anniversary of the Effective Date from the Date of Termination (by way of example, if the Date of Termination would occur with
six (6) months remaining until the second (2”d) anniversary of the Effective Date, then the Executive would repay fifty percent
(50%) of the second lump sum payment to the Company). The indicated repayment amount is not subject to offset or any other reduction
for any prior withholdings or deductions (i.e., tax withholdings).


 


Notwithstanding the above, in
the event that the Executive’s employment is terminated without Cause (as defined below) or terminated by the Executive for
Good Reason (as defined below) at any time during the six (6) month period following a Change in Control (as defined below), the
lump sum payments will cease to be subject to the claw-back provisions, and the Executive will not be required to repay any portion
thereof to the Company or its successor.


 


Upon the Executive’s relocation
to the Raleigh-Durham area in accordance with this Agreement, the Executive will be entitled to a relocation package equal to no
less than the then standard relocation package in North America for executives at the same level as the Executive in the Company,
provided that any amount reimbursable thereunder will be modified in a mutually agreeable manner, giving consideration to the total
amount paid to the Executive pursuant to this Section 2.2.


 


		2.3	Standards of Performance and Time Commitments 



 


The Executive will, at all times,
faithfully, industriously, and to the best of his ability, experience and talents, perform all of the duties required of and from
him pursuant to the terms of this Agreement. During the Executive’s employment, the Executive shall devote substantially
all of his working time and attention to his duties with the Patheon Group and shall render no material business services to any
other person or company; provided, however, it shall not be a violation of this Agreement for the Executive, subject to the requirements
of Article 6, to (a) to spend reasonable amounts of time to manage his personal, financial and legal affairs; (b) to fulfill speaking
engagements; and (c) with the Company’s consent, which will not be unreasonably withheld, to serve on civic, charitable,
not-for-profit, industry or other for profit corporate boards, so long as such activities do not materially interfere with the
performance of the Executive’s duties or responsibilities under this Agreement.


  


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ARTICLE 3

COMPENSATION AND BENEFITS


		3.1	Base Salary



The Company shall pay the Executive
an annualized base salary (“Annual Base Salary”) at a rate of US$400,000, payable pursuant to the Company’s regular
payroll practices for its executives in effect at the time. For fiscal year 2011, the Executive’s Annual Base Salary will
be prorated from the Effective Date. The Annual Base Salary shall be reviewed by the Chief Executive Officer, for increase only,
at such time as the salaries of other senior executives of Patheon are reviewed generally.


		3.2	Executive Performance Bonus 



The Executive shall be eligible
to participate in an annual performance incentive plan under terms and conditions no less favorable than other senior executives
of the Company; provided that the Executive’s target bonus shall not be less than forty-five percent (45%) of his Annual
Base Salary. The Executive’s payment under the annual performance incentive plan shall be based on meeting predetermined
personal objectives and Patheon’s financial performance. The personal objectives will be set by the Chief Executive Officer,
and the financial performance measures will be set by the Chief Executive Officer. For fiscal year 2011, the annual performance
bonus will be prorated from the Effective Date. The annual performance bonus, if earned, will be paid to the Executive by the Company
in the same manner and payment period generally applicable under the annual performance incentive plan and state law, but in no
event later than two and a half months after the later of (i) the end of the applicable performance period, or (ii) the end of
the calendar year in which the performance period ends. Nothing contained in this Section 3.2 will guarantee the Executive any
specific amount of incentive compensation, or prevent the Chief Executive Officer from establishing performance goals and compensation
targets applicable only to the Executive.


		3.3	Stock Options



		(a)	The Executive shall be eligible to participate in Patheon’s 2011 Amended and Restated Incentive
Stock Option Plan (the “Stock Option Plan”) and shall be eligible to be awarded options to acquire Patheon’s
restricted voting shares from time to time in accordance with the terms of such Plan and related stock option award agreement (together,
with the Stock Option Plan, the “Stock Option Related Documents”).



		(b)	Subject to approval of the Board of Directors at a meeting following the Effective Date, the Executive
will be granted options to acquire four hundred thousand (400,000) of Patheon’s restricted voting shares, which options shall
be granted subject to the Stock Option Related Documents. Except as otherwise provided in the Stock Option Related Documents, the
options will vest in five (5) equal installments on each of the first five (5) anniversaries of the Effective Date, subject to
the Executive’s continued employment with the Patheon Group until the relevant vesting dates. The subscription price for
the shares under option will be the market price (as defined in the Stock Option Plan) on the date of grant. All options granted
to the Executive will expire ten (10) years from the date of grant.






	 	 	 
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		(c)	During the Executive’s employment, at the discretion of the Board or its delegate, the Executive
also will be eligible to receive additional options and other long-term incentives under the Stock Option Plan or any similar plan
adopted by Patheon from time to time in the course of its periodic review of executive compensation arrangements.



		(d)	Upon the occurrence of a Change in Control, any options to purchase restricted voting shares of
Patheon then held by the Executive shall, to the extent provided in the applicable Stock Option Related Documents, become immediately
vested and exercisable and remain exercisable for the remaining term of such option (which remaining term shall be determined without
regard to the Executive’s termination of employment).



		(e)	The Executive will be required to comply with the Stock Option Related Documents and the terms
of any share ownership guidelines of Patheon generally, as amended from time to time.



		3.4	Employee Benefits



The Executive will be entitled
to participate in all employee healthcare and welfare benefits programs of the Company, in accordance with the then applicable
terms, conditions and eligibility requirements of such programs that are offered from time to time to U.S. resident-based employees
at the Executive’s level, including medical, dental, life insurance, 401-K retirement plans and other health benefit programs.


In addition, the Executive will
be entitled to four (4) weeks of vacation time, subject to the Company’s vacation policy, as may be in effect from time to
time, which will be pro-rated based on the Effective Date. Further, the Executive will be entitled to three (3) floating holidays
annually and twenty-four (24) hours for emergency time off annually, each in accordance with the Company’s policies, as may
be in effect from time to time, and prorated for 2011 based on the Effective Date.


		3.5	Reimbursement of Business Expenses 



The Executive shall be reimbursed
for all reasonable travel and other out-of-pocket expenses actually and properly incurred by the Executive during the Executive’s
employment in connection with carrying out his duties hereunder in accordance with the Company’s policies, as may be in effect
from time to time. Notwithstanding the foregoing, the Executive shall not be entitled to any reimbursement under this Section
3.5 for any commute to the Company’s Raleigh/Durham offices from his primary residence occurring prior to the second (2nd)
anniversary of the Effective Date.


		3.6	Sarbanes-Oxley Act Loan Prohibition 



To the extent that any Company
or Patheon Group benefit, program, practice, arrangement or this Agreement would or might otherwise result in the Executive’s
receipt of an illegal loan (the “Loan”), the Company shall use commercially reasonable efforts to provide the Executive
with a substitute for the Loan that is lawful and of at least equal value to the Executive. If this cannot be done, or if doing
so would be significantly more expensive to the Company than making the Loan, the Company need not make the Loan to the Executive
or provide him a substitute for it.


	 	 	 
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ARTICLE 4

TERMINATION OF EMPLOYMENT


 


		4.1	Death or Incapacity



 


		(a)	The Executive’s employment shall be immediately terminated without notice by the Company
upon the death of the Executive.



 


		(b)	If the Company determines in good faith that the Incapacity (as defined below) of the Executive
has occurred during the Executive’s employment, it may give to the Executive written notice in accordance with Section 7.4
of this Agreement of its intention to terminate the Executive’s employment; provided that such notice is provided no later
than one hundred fifty (150) days following the Executive’s first day of Incapacity. In such event, the Executive’s
employment shall terminate effective on the thirtieth (30th) day after receipt of such notice by the Executive (the
“Incapacity Effective Date”), provided that, within such thirty (30) day period after such receipt, the Executive has
not returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Incapacity”
shall mean the failure of the Executive to perform his duties under this Agreement for at least ninety (90) consecutive business
days as a result of any medically determinable physical or mental impairment. The determination of Incapacity shall be made by
a physician selected by the Company or its insurers and reasonably acceptable to the Executive or the Executive’s legal representative.



 


		4.2	Cause



 


The Executive’s
employment with the Company may be terminated with or without Cause.


 


		4.3	Good Reason



 


The Executive’s
employment with the Company may be terminated by the Executive with or without Good Reason.


 


		4.4	Notice of Termination



 


Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party in accordance
with Section 7.4. For purposes of this Agreement, a “Notice of Termination” means a written notice which (a) indicates
the specific termination provision in this Agreement relied upon, (b) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision
so indicated and (c) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by the Company or
the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good
Reason shall not waive any right of the Company or the Executive, respectively, hereunder or preclude the Company or the Executive,
respectively, from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder.


		 	 
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		4.5	Date of Termination



 


“Date of Termination”
means (a) if the Executive’s employment is terminated by the Company for Cause, or by the Executive for Good Reason, the
date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (b) if the Executive’s
employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which
the Company notifies the Executive of such termination and (c) if the Executive’s employment is terminated by reason of death
or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case
may be. The Company and the Executive shall take all steps necessary (including with regard to any post-termination services by
the Executive) to ensure that any termination described in this Section 4.5 constitutes a “separation from service”
within the meaning of Section 409A of the Code, and the date on which such separation from service takes place shall be the “Date
of Termination.”


 


		4.6	Resignation from All Positions



 


Notwithstanding any other provision
of this Agreement, upon the termination of the Executive’s employment for any reason, unless otherwise requested by the Board
of Directors, the Executive shall immediately resign as of the Date of Termination from all positions that he holds or has ever
held with the Patheon Group (and with any other entities with respect to which the Patheon Group has requested the Executive to
perform services). The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request
by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of
when or whether he executes any such documentation.


 


ARTICLE 5 

OBLIGATIONS OF THE COMPANY UPON TERMINATION


 


		5.1	Good Reason: Other than for Cause



 


If the Company shall terminate
the Executive’s employment other than for Cause, or if the Executive shall terminate the Executive’s employment for
Good Reason:


 


		(a)	The Company shall pay, or cause to be paid, to the Executive in a lump sum in cash the sum of:
(i) that portion of the Executive’s Annual Base Salary earned but not previously paid through the Date of Termination; (ii)
reimbursement of expenses incurred on or before the Date of Termination in accordance with Section 3.5, above; and (iii) any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (i), (ii), and (iii)
shall be hereinafter referred to as the “Accrued Obligations”). The Accrued Obligations shall be paid on the regular
payday following the Date of Termination.



 


		(b)	Subject to Executive’s compliance with Section 5.3, Article 6 and Schedule B, the Company
shall pay, or cause to be paid, to the Executive an amount equal to the Executive’s Annual Base Salary, plus payment of any
performance bonus set forth in Section 3.2 above for performance periods completed prior to the Date of Termination. Such amount
shall generally be paid in cash in twelve (12) equal monthly installments beginning within sixty (60) days after the Date of Termination
or such later date set forth in Section 7.8. Notwithstanding the foregoing, if the severance benefit described in this Section
5.1(b) exceeds two (2) times the lesser of (i) the Executive’s annual compensation or (ii) the compensation limit in effect
under Section 401(a)(17) of the Code for the calendar year including the Date of Termination, any amounts not yet paid as of the
“short-term deferral date” shall be paid in a lump sum on the “short-term deferral date.” The “short-term
deferral date” is the date that is two and one-half months after the end of the later of (i) the calendar year containing
the Date of Termination or (ii) the Company’s fiscal year containing the Date of Termination.



		 	 
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		(c)	To the extent not theretofore paid or provided, Company (or Patheon, as the case may be) shall
pay or provide, or cause to be paid or provided, to the Executive any other amounts or benefits required to be paid or provided
or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Patheon
Group (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”), in accordance with
the terms and normal procedures of each such plan, program, policy or practice or contract or agreement, based on earned, accrued
or vested benefits through the Date of Termination.



 


If the Executive receives payments
and benefits pursuant to this Section 5.1, then the Executive shall not be entitled to any other severance pay or benefits under
any severance plan, program or policy of any member of the Patheon Group, unless otherwise specifically provided therein in a specific
reference to this Agreement; provided, however, in the event any payment is made, or required to be made, under any such severance
plan, program or policy, then the amounts payable under this Section 5.1 shall be reduced by such amount.


 


		5.2	Death or Incapacity; Cause: Other than for Good Reason



 


If the Executive’s employment
is terminated due to death or Incapacity or for Cause, or if the Executive voluntarily terminates his employment without Good Reason,
this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive his
Accrued Obligations through the Date of Termination and the Other Benefits earned, accrued, or vested through the Date of Termination,
in each case to the extent not theretofore paid or provided. All Accrued Obligations shall be paid to the Executive in accordance
with Section 5.1(a) and the Other Benefits shall be paid to the Executive in accordance with Section 5.1(c). The Company (and
the Group) will have no further obligation to pay any compensation of any kind (including, without limitation, any bonus or portion
of a bonus that otherwise may have become due and payable to the Executive with respect to the year in which such Date of Termination
occurs), or severance payment of any kind, nor will the Company (or the Patheon Group) have any obligation to make any payment
in lieu of notice.


 


		5.3	Release



 


Notwithstanding anything
contained herein to the contrary, the Company shall only be obligated to make the payments under Section 5.1(b) if, in
addition to the other contingencies under Section 5.1(b): (a) within the 50-day period after the Date of Termination, the
Executive executes a general release, in a form provided by the Company, of all current or future claims, known or unknown,
against the Patheon Group, its officers, directors, shareholders, employees and agents arising on or before the date of the
release, including but not limited to all claims arising out of the Executive’s employment with the Patheon Group or
the termination of such employment, and (b) the Executive does not revoke the release during the seven-day revocation period
prescribed by the Age Discrimination in Employment Act of 1967, as amended, or any similar revocation period, if applicable.
The Company shall be obligated to provide such release to the Executive promptly following the Date of Termination.


		 	 
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ARTICLE 6

RESTRICTIVE COVENANTS


 


		6.1	In General



 


		(a)	The Executive acknowledges and agrees that the Patheon Group is a business engaged in the sale
of commercial pharmaceutical manufacturing capabilities and/or pharmaceutical development services, and during the Executive’s
employment, the Patheon Group’s business may expand or change (“the Patheon Group’s Business”). Any such
expansions and changes shall expand or change the Executive’s obligations under this Agreement accordingly. The Patheon Group’s
Business is international in scope and without geographical limitation and the Patheon Group has valuable business relationships
within its industry throughout the world.



 


		(b)	By virtue of the Executive’s employment by and position with the Company: (i) the Executive
has or will have access to confidential and proprietary information of the Patheon Group, including valuable information about
its business operations and methods and the persons with whom it does business in various locations throughout the world that is
not generally known to, or readily ascertainable by, the Patheon Group’s competitors, and the Executive understands that
the continued success of the Patheon Group depends upon the use and protection of a large body of confidential and proprietary
information, and (ii) the Executive has specialized knowledge of, and has received or will receive specialized training in, the
Patheon Group’s Business.



 


		(c)	The Executive authorizes the Company to disclose this Agreement to Executive’s future or
prospective employers along with notification of the Company’s intent to exercise all rights it has to seek enforcement of
its terms.



 


		6.2	Confidentiality Undertaking



 


The Executive confirms that he
is bound by the provisions of the Confidentiality Undertaking covenant set out in Schedule B hereto.


 


		6.3	Non-Compete, Non-Solicitation



 


		(a)	During the Executive’s employment with the Company and for one (1) year thereafter (the “Non-compete
Period”), the Executive shall not engage in any of the following activities (except in connection with his/her duties for
the Company):



 


		(i)	engage in any business activity that competes with the Patheon Group’s Business within the
geographical areas set forth in Section 6.3(b);



 


		(ii)	within the geographical areas set forth in Section 6,3(b), solicit or do business which is
                                                              the same, similar to or otherwise in competition with the business engaged in by the Patheon Group, from or with persons or
                                                              entities: (a) who are customers of the Patheon Group; (b) whom Executive or someone for whom Executive was responsible
                                                              solicited, negotiated, contracted, serviced or had contact with on the Patheon Group’s behalf; (c) who were customers
                                                              of the Patheon Group at any time during the last year of the Executive’s employment with the Patheon Group; or (d) to
                                                              whom the Patheon Group had made proposals to do business at any time during the last year of the Executive’s employment
                                                              with the Company; or



 


 


		 	 
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		(iii)	offer employment to or otherwise solicit for employment any employee or other person who had been
employed by the Patheon Group during the last year of the Executive’s employment with the Company;



 


		(iv)	within the geographical areas set forth in Section 6.3(b), be employed (or otherwise engaged) in
(i) a management capacity, (ii) other capacity providing the same or similar services which the Executive provided to the Patheon
Group, or (iii) any capacity connected with competitive business activities, by any person or entity that engages in the same,
similar or otherwise competitive business as the Patheon Group;



 


		(v)	directly or indirectly take any action which is materially detrimental or otherwise intended to
be adverse to the Patheon Group’s goodwill, name, business relations, prospects and operations.



 


		(b)	The restrictions set forth in this Section 6.3 apply to the following geographical areas: (i) the
Research Triangle Park, North Carolina metropolitan area; (ii) the Cincinnati, Ohio metropolitan area; (iii) any city, metropolitan
area, county (or similar political subdivisions in foreign countries) in which the Patheon Group is located or does or, during
the Executive’s employment with the Company, did business; (iv) any city, metropolitan area, county (or similar political
subdivisions in foreign countries) in which the Executive’s services were provided, or for which the Executive had responsibility,
or in which the Executive worked on Patheon Group projects, while employed by the Company.



 


		(c)	If, at the time of enforcement of this Section 6.3, a court holds that the restrictions stated
herein are unreasonable under circumstances then existing, the Executive agrees that they be “blue-penciled” or rewritten
by the court to the extent necessary to render them enforceable. In addition, the one (1) year time period specified in this Section
6.3 shall be tolled and shall not run during any time the Executive is in violation of Section 6.3 or period(s) of time required
for legal action to enforce the provisions of this Section 6.3.



 


		6.4	Remedies



 


Because the Executive has access
to Confidential Information (as defined in Schedule B), the Executive understands and agrees the Patheon Group would suffer irreparable
harm from a breach of this Agreement and that money damages would not be an adequate remedy for any such breach of this Agreement.
Therefore, in the event of a breach or threatened breach of this Agreement (including Schedules A and B), the Patheon Group and
its successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance
and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations
of, the provisions hereof (without posting a bond or other security) as well as court costs and reasonable attorney’s fees.






		 	 
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		6.5	Acknowledgements



 


The Executive agrees and acknowledges
that the promises and obligations made by the Company in this Agreement (specifically including, but not limited to, the payments
and benefits provided for under Section 5.1(b) and (d) hereof) constitute sufficient consideration for the covenants contained
in this Article 6 and Schedule B. The Executive further acknowledges that it is not the Patheon Group’s intention to interfere
in any way with his employment opportunities, except in such situations where the same conflict with the legitimate business interests
of the Patheon Group. The Executive agrees that he will notify the Company in writing if he has, or reasonably should have, any
questions regarding the applicability of this Article 6 and Schedule B.


 


		6.6	Survival



 


Subject to any limits on applicability
contained therein, this Article 6 and Schedule B shall survive and continue in full force in accordance with their respective terms,
notwithstanding any expiration or termination of this Agreement.


 


ARTICLE 7

GENERAL PROVISIONS


 


		7.1	Entire Agreement



 


This Agreement, together with
Schedules A and B attached hereto and incorporated herein by reference, when executed by both parties shall constitute the entire
agreement pertaining to the Executive’s employment and supersedes all prior agreements, understandings, negotiations and
discussions, whether written or oral, pertaining to the Executive’s employment, and there are no representations, undertakings
or agreements of any kind between the parties respecting the subject matter hereof except those contained herein. The recitals
set forth above are incorporated herein by this reference with the same force and effect as if set forth herein as agreements of
the parties. This Agreement supersedes the offer letter between the parties, dated April 18, 2011.


 


		7.2	Severability



 


If any provision of this Agreement
is declared void or unenforceable, such provision shall be deemed severed from this Agreement to the extent of the particular circumstances
giving rise to such declaration and such provision as it applies to other persons and circumstances and the remaining terms and
conditions of this Agreement shall remain in full force and effect.


 


		7.3	Representations



 


The Executive represents and
warrants that (a) he is not a party to any contract, understanding, agreement or policy, whether or not written, with his current
employer (or any previous employer) or otherwise, that would be breached by the Executive’s entering into, or performing
services under, this Agreement and (b) will not knowingly use any trade secret, confidential information, or other intellectual
property right of any other party in the performance of his duties hereunder. The Executive will indemnify, defend, and hold each
member of the Patheon Group harmless, from any and all suits and claims arising out of any breach of such restrictive contracts,
understandings, agreements or policies.


	 	 	 
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		7.4	Notices



 


All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:


 


If to the Executive:


 


Mr. Michael Lytton

48 Conant Road

Lincoln, MA 01773


 


If to the Company:


 


Patheon Pharmaceutical Services Inc.

4721 Emperor Blvd., Suite 200

Durham, NC 27703

Attention: Senior Human Resources Executive


 


with a copy to:


 


Patheon Pharmaceutical Services Inc.

4721 Emperor Blvd., Suite 200

Durham, NC 27703

Attention: Legal Department


 


or to such other address as either
party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually
received by the addressee.


 


		7.5	Withholding



 


The Company may withhold from
any compensation and benefits payable under this Agreement all federal, state, city and other taxes or amounts as shall be determined
by the Company to be required to be withheld pursuant to applicable laws, or governmental regulations or rulings. The Executive
shall be solely responsible for the satisfaction of any taxes (including employment taxes) imposed on employees and penalty taxes
on nonqualified deferred compensation.


 


		7.6	Waiver



 


The Executive’s or the
Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right
the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment
for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.


 


		7.7	Successors



 


		(a)	This Agreement is personal to the Executive is not assignable by the Executive. This
                                                               Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives. This Agreement
                                                               shall inure to the benefit of and be binding upon the Company, the other members of the Patheon Group, and their respective
                                                               successors and assigns.






	 	 	 
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		(b)	The Company, at its discretion, may assign this Agreement, and will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets
of Patheon or the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession had taken place.



 


		7.8	Compliance with Section 409A of the Code



 


		(a)	Although the payments and benefits provided under this Agreement are intended to be exempt from
the application of, or otherwise comply with, the requirements of Section 409A of the Code (“Section 409A”), the tax
treatment of the payments and benefits provided under this Agreement is not warranted or guaranteed. Specifically, any taxable
benefits or payments provided under this Agreement are intended to be separate payments that qualify for the “short-term
deferral” exception to Section 409A to the maximum extent possible, and to the extent they do not so qualify, are intended
to qualify for the involuntary separation pay exceptions to Section 409A to the maximum extent possible. This Agreement shall be
construed, administered, and governed in a manner that effects such intent, and the Company shall not take any action that would
be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under this Agreement may not
be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under
Section 409A upon the Executive.



 


		(b)	If neither the “short-term deferral” nor the involuntary separation pay exceptions
to Section 409A described above applies to a benefit, payment or reimbursement under this Agreement, then notwithstanding any provision
herein to the contrary, the remaining provisions of this Section 7.8(b) shall apply.



 


		(i)	If the Executive is a “specified employee,” as determined under the Company’s
policy for identifying specified employees on the Date of Termination, then to the extent required in order to comply with Section
409A, all payments and benefits provided under this Agreement that constitute a “deferral of compensation” within the
meaning of Section 409A, that are provided as a result of a “separation from service” within the meaning of Section
409A and that would otherwise be paid or provided during the first six months following such Date of Termination shall be accumulated
through and paid or provided (together with interest on the delayed amount at the applicable federal rate under Section 7872(f)(2)(A)
of the Code in effect on the Date of Termination) within thirty (30) days after the first business day following the sixth (6th)
month anniversary of such Date of Termination (or, if the Executive dies during such six-(6-)month period, then within thirty (30)
days after the Executive’s death).



 


		(ii)	To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this
Agreement that will not be excluded from Executive’s income when received is subject to the following requirements: (i) the
amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year can not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (ii) any reimbursement of an eligible
expense shall be made on or before the last day of the calendar year following the calendar year in which the expense was incurred;
and (iii) the right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange
for another benefit.






	 	 	 
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		(c)	Although the Company will endeavor to avoid the imposition of taxation, interest and penalties
under Section 409A of the Code, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed.
Neither the Patheon Group nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties
or other monetary amounts owed by the Executive or other taxpayer as a result of the Agreement. Any reference in this Agreement
to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated
with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.



 


NOW THEREFORE, the parties below
have entered into this Agreement as of the date first written above.


 


PATHEON PHARMACEUTICALS SERVICES INC.



	 	 	 
	By:	 	 
	 	 	 
	Name:	James C. Mullen	 
	 	 	 
	Title:	Chief Executive Officer	 


 








	 	 	 	EXECUTIVE
	 	 	 	 
	SIGNED, SEALED AND DELIVERED

    in the presence of 


	 	)

                                    )

				    )

                                    )

                                    
	
	Name of Witness:	 	 	Michael Lytton


 


	 	 	 
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	SCHEDULE A
	TO
	EMPLOYMENT AGREEMENT WITH
	Michael Lytton


 


POSITION DESCRIPTION


 


The functions and responsibilities of the Executive Vice President,
Corporate Development and Strategy and General Counsel will include the following:


 





		A.	SCOPE AND GENERAL RESPONSIBILITIES: 



  


		•	Span of control involves executive leadership of Patheon’s international operations and global customers.



 


		•	Ensures compliance with securities laws, issues for debt, equities and mixed financial instruments.



 


		•	Develops and negotiates complex business arrangements including short-term and long-term business contracts with complex provisions.



 


		•	Leads and coordinates corporate development activities, such as mergers and acquisitions, licensing, divestments, joint ventures,
strategic alliances (outside of core Sales and Marketing activities) and similar business arrangements.



 


		•	Leads strategic planning activities.



 


		•	Leads and/or directs global litigation, including but not limited to, business contracts, performance issues and employment
charges or litigation.



 


		•	Ensures compliance with regulatory legal matters including the activities of international bodies such as the FDA, US DEA,
EMEA, EPA, etc.



 





		•	Supports manufacturing activities requiring filings and registration with these regulators covering environmental, safety,
employment conditions, etc.



 








		•	Provides direction
in matters involving intellectual property laws with respect to pharmaceutical products, formulations, manufacturing processes
and devices that affect many of the products and customers.



 












		B.	MANAGEMENT: 



  


		•	Provides material support for execution of global Legal and Corporate Development responsibilities
to protect and support sustained growth of the business and improve profitability.






		 	 
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		•	Provides executive leadership to the global Legal and Corporate Development functions, including management of a diverse Legal
team located in several countries where Patheon conducts its Commercial and Development business.



 





		C.	ETHICS, CULTURE, POLICY & PUBLIC REPRESENTATION: 



  


Ensures global employees comply
with company established Ethics, Confidentiality and other practices including but not limited to Patheon’s Code of Business
Conduct or other country specific policies.


 


This position description is not intended as a complete list
of all responsibilities and responsibilities may change.


		 	 
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	SCHEDULE B
	TO
	EMPLOYMENT AGREEMENT WITH
	Michael Lytton
	 


 


CONFIDENTIALITY, INVENTIONS ASSIGNMENT
AND RETURN OF PROPERTY UNDERTAKING


 


In consideration of Michael Lytton
(the “Executive”) accepting an employment agreement between the Executive and Patheon Pharmaceuticals Services Inc.
(the “Company”) dated May 9, 2011, (the “Agreement”) to which this Confidentiality, Inventions Assignment
and Return of Property Undertaking(“Confidentiality Undertaking”) is attached as Schedule B, the Executive
undertakes and covenants with the Patheon Group (as defined in the Agreement) as follows:


 


		1.	CONFIDENTIAL INFORMATION



 


Executive acknowledges
that all Confidential Information (defined below) is the sole and exclusive property of the Patheon Group (or a third party providing
such information to the Patheon Group). At all times during Executive’s employment and thereafter, Executive will hold in
strictest confidence and will not use, disclose, copy or remove from the Patheon Group premises any Confidential Information,
nor aid third parties in obtaining or using any Confidential Information, nor access or attempt to access any Patheon Group computer
systems, networks or any resources or data that resides thereon, except as such use, disclosure, copying, removal or access may
be required in connection with Executive’s employment and only then in accordance with applicable Patheon Group policies
and procedures and solely for the Patheon Group’s benefit. Executive further acknowledges that the applicable Patheon
Group policies and procedures referenced in the preceding sentence include but are not limited to the following and apply regardless
of whether or not the information is Confidential Information: (i) no forwarding of electronic files, data, emails or other information
to home, personal or external email accounts even for the purpose of working remotely; (ii) no use of thumb drives, flash drives
or other portable devices or copying methods without the express written consent of the Company; (iii) no copying of hard copy
documents for removal from the worksite even for the purpose of working remotely; (iv) emails, voicemails or other communications,
whether written, verbal, electronic or otherwise, sent to Executive are for his/her eyes/ears only and are not to be shared with
any other employee or person, except with the express consent of the sender; and (v) violation of policies and procedures regarding
Patheon Group information is grounds for immediate termination for Cause. Additionally, Executive will notify the Patheon
Group of any known or suspected unauthorized use, disclosure, copying or removal of Confidential Information by others. 


		 	 
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As used in this Agreement,
“Confidential Information” means any and all facts, data or information of the Patheon Group (or of third parties providing
such information to the Patheon Group) that is not known by, or generally available to the public at large, that concerns the business
of the Patheon Group (or third parties providing such information to the Patheon Group) whether now existing or to be developed
in the future, and whether embodied in tangible or intangible form or merely remembered, including but not limited to trade secrets
or other intellectual property; products, product plans, designs, ideas, concepts, costs, methods or policies; prices or price
formulas; processes; procedures; raw materials; research, development or know-how; customer lists and information, information
relating to customers, prospective partners, partners, parents, subsidiaries, affiliates and other entities; financial information;
computer software (including design, programming techniques, flow charts, source code, object code, and related information and
documentation); products and services; inventory lists; market and/or product research and development data; business strategies
and methodologies, strategic or business plans, training manuals and methodologies; employee phone and address lists, personnel
data, incentive packages, compensation data and employee performance data; and all other information of any kind or character relating
to the development, improvement, manufacture, sale, or delivery of products or services by the Patheon Group.


 


If Executive is required
to disclose Confidential Information pursuant to a court order or such disclosure is necessary to comply with applicable law or
defend against claims, Executive shall: (i) notify the Patheon promptly before any such disclosure is made; (ii) at Patheon’s
request and expense take all reasonably necessary steps to defend against such disclosure, including defending against the enforcement
of the court order, other government process or claims; and (iii) permit the Patheon Group to participate with counsel of its choice
in any related proceeding.


 


		2.	INVENTIONS



 


		a.	Inventions. Subject to paragraph 2 b., Executive agrees that all right, title, and interest
in and to (i) all discoveries, designs, ideas, works of authorship, and inventions created, conceived, reduced to practice, or
otherwise developed, in whole or in part, by Executive, whether jointly or individually, during Executive’s employment or
within three years following termination of employment for any reason whatsoever; (ii) all improvements, modifications, and derivative
works to and of any of the foregoing in (i); and (iii) all patent, copyright, trademark, trade secret and other intellectual property
rights in any of the foregoing in (i) and (ii) (all the foregoing in (i)-(iii), collectively, the “Inventions”) will
be owned solely and exclusively by the Company. Without limiting the foregoing, all copyrightable subject matter included in the
Inventions shall constitute “work made for hire” under applicable copyright law. Executive will:



 


		(i)	promptly and fully disclose and describe, in detail satisfactory to the Company, all such Inventions
in writing to the Company;



 


		(ii)	irrevocably and unconditionally assign, and Executive does hereby irrevocably and unconditionally
assign, to the Company, without further compensation or other consideration, any and all of Executive’s rights, title and
interest in and to the Inventions, including without limitation (1) all rights to collect royalties for any use, and pursue remedies
for any infringement, misappropriation, or other violation, thereof and (2) all applications for letters of patent, copyright registrations,
trademark, service mark, and trade dress registrations, and industrial design or other forms of protection granted for the Inventions
throughout the world;



 


		(iii)	deliver promptly to the Company, upon request and in the form and manner prescribed by the Company
(without charge to the Company but at the Company’s expense), including without limitation Executive’s notarized signature
in execution of, the written instruments described in paragraph b. and perform all other acts deemed necessary by the Company to
obtain and maintain the instruments and to transfer all rights and title thereto to the Company in accordance with this Agreement;
and



		 	 
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		(iv)	promptly render all assistance that may be required by the Company to enable it to protect or exploit
the Inventions in any country of the world.



 


In addition, Executive does hereby
waive and agree never to assert any rights in the Inventions, and any part or parts thereof, that are not susceptible of assignment
by Executive under applicable law, including, but not limited to, any moral rights or the right to the integrity or attribution
of the Inventions, or any other right to be associated with the Inventions as its author, inventor, or user by name or under a
pseudonym or the right to remain anonymous.


 


		b.	Excluded Inventions. The provisions of paragraph 2 a. will not apply to Inventions
                                                              which fulfill all of the following criteria:



 


		(i)	Inventions for which no equipment, supplies, facility or Confidential Information belonging to
the Company were used; and



 


		(ii)	Inventions that do not relate to the business of the Company or to the Company’s actual or
demonstrably anticipated processes, research or development; and



 


		(ii)	Inventions that do not result from any work performed by Executive for the Company.



 


		3.	RETURN OF COMPANY PROPERTY



 


Upon the Company’s
request and, in any event, upon the cessation of Executive’s employment with the Company, Executive will return to the Company
all Confidential Information in Executive’s possession or control, along with all Company property, including but not limited
to keys, pass cards, identification cards, computer hardware and software, manuals, passwords, customer lists, sales records,
business plans, any data concerning customers of the Company, brochures of the Company and of any competitor, all corporate records,
policy handbooks, receipts, documents, records, files and other documents in whatever form they exist, whether electronic, hard
copy or otherwise, and all copies, notes or summaries thereof. Any and all such documents contained on Executive’s personal
computer or devices shall be printed, delivered to the Company and thereafter deleted from the personal computer/device. These
documents and items must be returned whether in Executive’s possession, work area, home, vehicle or in the wrongful possession
of any third party with Executive’s knowledge or acquiescence, and whether prepared by the Company or any other person or
entity. 








		 	 
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I HAVE READ THIS AGREEMENT CAREFULLY
AND UNDERSTAND ITS TERMS.








	 	 	 	 
	 	(SEAL)	5/9/11
	Executive’s Signature	 	 	Date:
	 	 	 	 
	Michael Lytton	 	 	 
	Print Executive Name	 	 	 
	 	 	 	 
	The signature above was witnessed by:	 	 
	 	 	 	 
	 	 	 	5-9-11
	Witness Signature	 	 	Date:
	 	 	 	 
	Meshar Lytton	 	 	 
	Witness’ Name	 	 	 


		 	 
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