Document:

Patheon 2013 10K- Exhibit 10.31

 Exhibit 10.31

	
					
	

	
	
	Patheon Pharmaceutical Services Inc.

	4721 Emperor Blvd. Suite 200

	Durham, NC 27703

	Patheon.com

June 3, 2013

PRIVATE AND CONFIDENTIAL

Harry Gill
12321 Angel Falls Rd. 
Raleigh, NC 27614
Harry Gill

 
RE: Second Amendment to Employment Contract
Dear Harry:
This letter (the “Second Amendment Letter”), effective as of June 10, 2013 (the “Second Amendment Effective Date”), confirms the following changes to the terms and conditions of your employment and, once signed, will serve as an amendment to the Employment Agreement between you and Patheon (the “Company”), dated April 26, 2010, as amended by the Amendment Letter Dated September 11, 2012 (collectively the “Employment Agreement”). Any terms used in this Second Amendment Letter that are not defined herein have the definition ascribed to them in the Employment Agreement. The Company is a subsidiary of Patheon Inc. (“Patheon”). As used herein, the “Patheon Group” means Patheon and any entity controlled by Patheon.
		
	1.
	General Provisions

This Second Amendment Letter, when fully executed, together with the Employment Agreement, reflects the entire agreement regarding the terms and conditions of your employment. Unless expressly modified by this Second Amendment Letter, the terms and conditions of the Employment Agreement will remain the same.  Nothing in this Second Amendment Letter alters the Employment-At-Will nature of your employment relationship with Patheon.
		
	2.
	Compensation & Benefits

		
	(a)
	Increase to Base Salary: Your annual base salary will be increased to USD $350,000, subject to standard withholdings and deductions and payable in regular installments in accordance with the Company’s normal payroll practices.

		
	(b)
	Performance Incentive Plan: You will be eligible to participate in the Patheon Group’s annual performance incentive plan, at an increased target level of 45% of your annual base salary, based on achieving predetermined financial and other targets set by Patheon. For fiscal 2013, the change in target level will be pro-rated from the Effective Date.

		
	(c)
	Options: Subject to the approval of the Board of Directors of Patheon, you will be granted additional options to acquire 50,000 of Patheon’s restricted voting shares, subject to Patheon’s 2011 Amended and Restated Incentive Stock Option Plan (the “Stock Option Plan”) and related stock option award agreement. Except as otherwise provided in the Stock Option Plan and related stock option award agreement, the options will vest in five (5) equal installments on each of the first five (5) anniversaries of the Amendment Effective Date, subject to your 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 you will expire ten (10) years from the date of grant.

		
	(d)
	Other Benefits: All other compensation and benefits terms (including without limitation, severance terms) shall be as provided in your Employment Agreement. For purposes of clarity, any changes, modifications, or additions to your compensation and benefits terms require the review and approval of Patheon’s Compensation and Human Resources Committee (i.e., cannot be approved at the Company level).

		
	3.
	Confidentiality, Inventions, Non-Competition and Non-Solicitation Undertaking

3.1    CONFIDENTIAL INFORMATION 
3.1.1    Confidential Information
You acknowledge that all information and facts relating to the business and affairs of Patheon and its customers, including, without limitation, trade secrets, data, notes, marketing plans, sales patterns, and private corporate and financial information (the “Confidential Information”) is confidential and proprietary to Patheon and is a valuable trade secret of Patheon, disclosure of which could severely damage the economic interests of Patheon. Confidential Information includes, without limitation, any document, work, instrument or other medium assembled or composed by you which contains Confidential Information.
3.1.2    Non-Disclosure of Confidential Information 

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You will not, either during your employment or at any time thereafter, use or disclose, directly or indirectly, any Confidential Information to any person outside Patheon, except where the disclosure is necessary for the proper and bona fide execution of you r duties hereunder, without the prior written consent of Patheon. Your obligation not to use or disclose Confidential Information without prior written consent will continue to apply after you have ceased to be an employee of Patheon until the time the Confidential Information becomes public knowledge through no fault of the Employee. Patheon will have full right, title and authority to deal in and with the proprietary rights and the Confidential Information. You acknowledge and agrees that the restrictions contained in this Section 3.1 are reasonable in the circumstances in order to protect the business of Patheon.
3.1.3    Return of Confidential Information
Confidential Information and the documents, works, instruments or other medium containing Confidential Information will remain the property of Patheon and will be returned to Patheon upon request or immediately following your termination of employment for any reason. You agree that you will not retain any copies, duplications, reproductions or excerpts from any of the foregoing materials.
3.2.    INVENTIONS
3.2.1    Inventions
Subject to Section 3.2.2, you agree that all discoveries, improvements, designs, ideas or inventions made or conceived, in whole or in part, by you during your  employment or within three years following termination of employment for any reason whatsoever (the “Inventions”) will be the sole property of Patheon. You will:
		
	(a)
	promptly disclose and describe all such Inventions in writing to Patheon;

		
	(b)
	assign, and you do hereby assign, to Patheon, without further compensation, all of your rights, title and interest in and to the Inventions and to all applications for letters of patent, copyrights, industrial design or other forms of protection granted for the Inventions throughout the world;

		
	(c)
	deliver promptly to Patheon, upon request and in the form and manner prescribed by Patheon (without charge to Patheon but at Patheon’s expense) the written instruments described in paragraph (b) and perform acts deemed necessary by Patheon to obtain and maintain the instruments and to transfer all rights and title thereto to Patheon; and

		
	(d)
	give all assistance that may be required by Patheon to enable it to protect or exploit the Inventions in any country of the world.

You do hereby waive any rights that you may have in each of the Inventions and any part or parts thereof, including, but not limited to, the right to the integrity of the Inventions, the right to be associated with the Inventions as its author by name or under a pseudonym and the right to remain anonymous.

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3.2.2    Excluded Inventions
The provisions of Section 3.2.1 will not apply to Inventions which fulfill all of the following criteria:
		
	(a)
	Inventions for which no equipment, supplies, facility or Confidential Information belonging to Patheon were used; and

		
	(b)
	Inventions that do not relate to the business of Patheon or to Patheon’s actual or demonstrably anticipated processes, research or development which you had access to or knowledge of; and

		
	(c)
	Inventions that do not result from any work performed by you for Patheon.

3.3    NON-SOLICITATION/NO-HIRE
3.3.1    Non-Solicitation/No-Hire of Employees. 
You will not, during and for 12 months after the termination of employment with Patheon for any reason whatsoever, hire or solicit the employment of employees of Patheon other person who had been employed by the Patheon Group during the last year of your employment with the Company and whom you knew, worked with supervised or has confidential information about; in any manner whatsoever that would have the effect of causing them to leave the employment of Patheon.
3.3.2    Non-Solicitation of Customers. 
You will not, for 12 months after the termination of your employment with Patheon, directly or indirectly solicit, divert, or attempt to divert from Patheon any customer of Patheon with whom you had contact during employment with Patheon.
3.4.    NON-COMPETITION
You agree that for 12 months after the termination of employment with Patheon by you or by Patheon for any reason, you will not directly or indirectly, perform any duties or services similar to those performed for Patheon (whether advisory, consulting, employment or otherwise) for any person, firm, corporation, partnership, or other entity or venture which engages in a Competitive Business (as defined in this Undertaking) in the United States, in any territory of the United States, or in any foreign country in which Patheon conducts business. “Competitive Business” means a business engaged in the sale of commercial pharmaceutical manufacturing capabilities and/or pharmaceutical development services. This non-compete does not restrict you from future employment in the pharmaceutical industry.
3.5     DUTY OF LOYALTY
During your employment, your agree that you have and will comply with a duty of loyalty to the Company and the Patheon Group, and shall render no material services to other person or company in conflict with such duty, or to any Competitive Business as defined above. 

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3.6.    GOVERNING LAW 
This Section 3 Undertaking will be governed and construed in accordance with the laws of the State of Ohio. The resolution of any claims or disputes arising from this Undertaking will be subject to the exclusive jurisdiction of the State or Federal Courts located in Hamilton County, Ohio.
3.7.    SEVERABILITY 
The provisions of this Undertaking are severable. If any provision of this Undertaking is determined to be invalid or unenforceable by a court of competent jurisdiction, the other provisions of this Undertaking will continue in full force and effect and the voided provision will be amended, if permissible, to the extent necessary to render it valid and enforceable in the court’s jurisdiction.
By executing this Letter, you confirm your decision to accept the additional benefits and the amendments to the terms of your Employment Agreement and you agree that your employment will be governed by the Employment Agreement, as amended by this Letter.
	
		
	Very truly yours,
	 

	 
	 

	Patheon Pharmaceutical Services Inc.

	 
	 

	/s/ James C. Mullen

	 
	 

	James C. Mullen
	 

	Chief Executive Officer

	 
	 

	 
	 

	
			
	Read, understood, consented, and agreed as of this 3rd day of June, 2013:

	 
	 
	 

	SIGNED SEALED AND DELIVERED
	)
	 

	in the presence of
	)
	 

	 
	)
	 

	 
	)
	 

	 
	)
	 

	 
	)
	/s/ Harry Gill

	Name of Witness:
	 
	Harry Gill

	 
	 
	 

Page | 5Patheon 2013 10K- Exhibit 10.47

Exhibit 10.47

Execution Copy

AGREEMENT, dated as of August 6, 2012, between BANNER PHARMACAPS INC., a corporation organized under the laws of Delaware (the "Company"), and AQEEL FATMI (the "Employee"), with an address at 4125 Premier Drive, High Point, North Carolina.

WITNESSETH:

WHEREAS, the Company considers it in its best interest to retain  and encourage the continuing service and dedication of its designated management team, in part, by ensuring that the members of the management team receive fair treatment in the event of a change of control of the Company; and

WHEREAS, the Employee is a valued member of the Company's management team, and the Company wishes to set out the rights and entitlements of the Employee on a termination of his employment in the circumstances set out herein;

NOW,  THEREFORE, in consideration of the premises  and of the mutual obligations herein set forth, the parties agree as follows:

1. Definitions.

"Change of Control"  means a transaction or series of transactions whereby directly or indirectly:

		
	(a)
	any person or combination of persons (other than Vion or any affiliate thereof) acquires 50% or more of the outstanding voting securities of the Company;

		
	(b)
	property  or  assets  (i)  aggregating more  than  50% of  the  consolidated  assets (measured by either book value or fair market value) utilized by the Company as at the end of the Company's most recently completed financial year or (ii) which during the Company's most recently completed financial year generated, or during the then current financial year of the Company are expected to generate, more than  50%  of the consolidated  operating income  of the  Company, are  sold or otherwise transferred to any other person or persons (other than Vion or one or more of its affiliates); or

		
	(c)
	the  Company is merged or consolidated with another entity or undergoes any other corporate transaction, if more than 50% of the combined voting power of the continuing or surviving entity's securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders  of the Company (or affiliates of such stockholders) immediately prior to such merger, consolidation or other reorganization.

"Disability" means the Employee's inability to substantially fulfill his duties on behalf of the Company such that he has been approved for long-term disability benefits pursuant to the Company's long-term disability plan.

"Excluded   Termination"  means a termination of the Employee's employment with  the Company:

(a)by the Company for Just Cause;

(b)by the Employee other than for Good Reason; or

(c)as a result of the Disability, death or retirement of the Employee.

"Good    Reason" means a (i) material adverse change in the duties, authority, responsibilities, salary or level of benefits  (including, without limitation, a material  reduction in the bonus target  percentage) of the Employee, except  where  the reduction  in salary or benefits is not more  than 10% and is part of a general reduction affecting all or substantially all of the Company's  management team, (ii) a relocation  of the Employee more than fifty (50) miles  from the Employee's current  place of employment, or (iii) the Company's failure to pay any amounts due and owing under the terms  of any equity plan or 

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incentive compensation plan then in effect; provided, however, that  during the four  month  period  following a  Change of Control, (y) a material adverse change in duties, authority  or responsibilities of the Employee from those prior to  the  Change of Control, or (z) a temporary relocation of the  Employee more than fifty (50) miles  from the  Employee's current place of employment   (so  long  as the  Company maintains a travel and per diem  expense policy during this period at least as favorable as that in effect immediately  prior to such Change of Control) shall not constitute "Good  Reason", so long as the Employee's duties  are to facilitate  a transition  or integration  with  the successor  company or are otherwise commensurate with a senior  role; and provided, further,  that  none  of the  foregoing conditions or events  shall constitute Good Reason unless: (y) Employee has provided written notice  to the Company within ninety (90) days after the occurrence of such condition or event describing  the  condition or event  claimed to constitute Good  Reason and (z) the Company has failed to remedy the condition or event within thirty (30) days of its receipt of such written notice.

"Just  Cause"  means conduct by the  Employee that constitutes or results in any of the following: (i) Employee's conviction  for a felony  or conviction for a criminal offense  that would damage the reputation of the Company;  (ii) Employee's  gross negligence or willful misconduct that is detrimental to the Company; (iii) the breach by the Employee of  (A) any  duty or undertaking owing to the Company to keep confidential the confidential or  proprietary information and trade  secrets  of the  Company  or (B) any agreement between the Employee  and the  Company; or (iv)  a  material   breach  of  any  Company policy governing ethics or code of conduct. To the extent  that  an event  described  above  is susceptible  to cure, no termination  with Just  Cause will  occur  unless the Company  has  first  provided   written  notice of the event that constitutes Just Cause and the Employee  has failed to cure such event within  ten (10) business days of such notice.

"Vion" means Vion Holding  N.V.,  a Netherlands corporation.

2.  Term.   This Agreement  shall enter into effect on the date hereof  and shall terminate on December  31, 2013. The  obligations of the  Company  under  this  Agreement shall survive  such termination if there  is a Change  of Control  prior to  December  31, 2013, or an agreement has been entered  into prior to December 31, 2013, which, when the transaction   contemplated by such agreement is completed, would  constitute   a Change  of  Control.  This  Agreement  shall  not  be deemed to amend  or revise the terms  and conditions  of employment of  the Employee  other than as expressly set forth herein.

3.   Change  of Control  Benefits.  If within eighteen (18) months following  a Change  of Control, the Employee's  employment with  the  Company shall be terminated for any reason whatsoever  (including  by the Employee for Good Reason),  other than as a result of an Excluded Termination, the following   provisions, in lieu of, and not in addition to, any other contractual termination obligations, shall apply (subject  to Section  5):

		
	(a)
	The  Employee  shall  be  entitled  to  receive, and  the  Company shall pay to the Employee,  in addition  to all entitlements and amounts  due  and owing for services rendered through the date of termination,  a lump sum cash  amount, less applicable withholding deductions, equal to (i) the aggregate of twenty-four (24)  months' base salary  at the date  of termination (but  no less  than the salary  in effect at the time of the Change  of Control), plus (ii) the Employee's target payout of his short and long term bonus for the 24-month period after such  date  of termination (but no less  than  the target  in effect at the  time of the  Change  of Control), and paid within  sixty (60) days of the date of the Employee's termination from employment. In addition, Employee  shall be entitled  to receive,  and the Company shall pay to the Employee,  a pro-rata portion of the  Employee's  short  and long term bonuses for the year of termination, which amount shall be determined  in the sole discretion of  the  Company's  Board of  Directors exercising good faith in accordance with the terms  of the short and  long  term  bonus plan in effect at the time of termination and paid at the same time  as the Company  pays  its bonuses to management generally under such plans.

		
	(b)
	The  Employee shall continue to receive, and the Company shall  continue to provide  or cause  to be provided to the Employee, until  (i) the end of the twelve (12) month period immediately following the date of termination, or (ii) the date on which the Employee becomes eligible for group medical benefits with a new employer, whichever occurs first, group medical, dental and vision benefits, as in existence immediately prior to the termination, or as subsequently modified for continuing management employees.  The coverage provided under this paragraph (b) shall run concurrently with and be offset by any continuation coverage under the  Consolidated  Omnibus  Budget  Reconciliation  Act of 1985  ("COBRA"), provided  that  the  cost  to  the  Employee  shall  not  exceed  the  cost  in  place immediately prior  to  the termination. The  Employee shall not  be entitled to continued coverage under any other benefit plans of the Company.  However, in lieu of the Employee's continued participation in the Company's group disability, life and accident insurance plans, the Company shall make a lump sum payment to the Employee in an amount equal to the greater of two (2) times the annualized cost of such group disability, life and accident insurance that the Company  had paid for  such  coverages during the year  in  which the termination occurs  and $10,000, which  amount   shall  be paid  

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within  sixty  (60) days of the Employee's termination from employment. The foregoing  sentence  shall  also modify  the last sentence  of  Section  9(c)  of the  Employment   Agreement   between  the  Employee and the Company dated January 1, 2007, as amended, (the "Employment Agreement"),  as it relates to continuation of his group disability, life and accidence insurance.
		
	(c)
	The  Employee   shall  be  entitled   to  participate    in  an  outplacement   counseling program  of the Company's   choice  during  the twelve  (12)  month  period  following the  date  of  termination  at  a  cost  to  the  Company   not   to  exceed 10% of the Employee's base  salary  at the  date of termination. In lieu  of the  foregoing,  the Company shall have  the right to implement  an omnibus outplacement  counseling program  for  such  twelve (12) month period in which all members of the Company's management team may participate.

		
	(d)
	Notwithstanding anything to the contrary contained in the 2012 Retention Incentive Plan for Banner  Companies  (the "Retention Plan"), the Employee shall be  entitled to receive the Second Payment  (as  such term is defined in  the Retention Plan)  in the  event  of the  Employee's termination of employment   for Good  Reason  prior to payment of the Second Payment. Such payment shall be made at the same time as such payments are made to other Participants in the Retention Plan pursuant to its terms.

		
	(e)
	The  Employee shall not be required to mitigate the amount of any payment or benefit  provided for in this Agreement, or damages  resulting from a failure of the Company to make any such payment or  provide any such  benefit, by seeking other  employment, by taking early  retirement or otherwise, nor  shall the amount of any payment  provided  for in this Agreement be reduced  by any compensation earned  by the Employee as a result of taking  early retirement, employment by another company after   termination or otherwise, save as expressly provided herein.

		
	(f)
	In the event of the Employee's material breach of any of the restrictive covenants to which he is bound  (which are incorporated herein by reference),  including without  limitation,   the  obligations  described  in  Sections  7  and  8  of  the Employment Agreement, the Company's  obligation to make the payments and provide the benefits described in Section 3 under this Agreement (the "Severance Benefits") shall cease; and the Company will be entitled to recoup any payments and the cost of such benefits already provided to the Employee, in addition to any other remedies available to the Company.

4.   Return  of Materials.    Upon  the termination  of the  Employee's employment, the Employee will return all materials relating to the business and affairs of the Company and its subsidiaries to the Company.

5.   Release.  In order to receive  the  Severance  Benefits,  the Employee must (i) execute and deliver to the Company  a separation agreement and release of claims in a form  satisfactory to the Company within the time prescribed therein  but in no event later than fifty (50) days of the date of the Employee's  termination  of employment and (ii) not revoke  such separation agreement and release pursuant to any revocation rights afforded  by law. The Company shall provide to the Employee the  form of separation agreement and release of claims not later than three (3) days following the Employee's termination of employment. If the Employee does not timely execute and deliver  to the Company such a separation  agreement and release  of  claims, or if the Employee executes a separation agreement and release of claims but revokes it, no Severance Benefits shall be paid.

6.  Governing Law. The interpretation, construction and performance of this agreement shall be governed by and construed and enforced in accordance with the laws of the State of North Carolina.

7.  Section 409A; Section 280G Compliance.

		
	(a)
	It is intended that  any amounts payable under this Agreement  shall either be exempt from or comply with Section 409A of the Internal Revenue Code of 1986, as amended, (the "Code")  (including Treasury regulations  and other published guidance related thereto) so as not to subject the Employee to payment of any additional tax, penalty or interest imposed under Section 409A of the Code.The provisions  of this  Agreement  shall be construed  and interpreted  to  avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve  (to the nearest extent reasonably possible) the intended benefit payable to the Employee. Notwithstanding the foregoing, the Company makes no representation or warranty and shall have no liability to the Employee or to any other person if any of the provisions of this Agreement are determined to  constitute deferred compensation  subject to  Section 409A,  but that do not satisfy an exemption from, or the conditions of, that section. Notwithstanding any other provisions of this Agreement, any payment of the Severance Benefits that is "nonqualified deferred compensation" under Section 409A of the Code and that the Company reasonably determines is subject to Section 409A(a)(2)(B)(i) of the Code because the Employee is 

3

a "specified employee" shall not be paid until the later of (i) six (6) months after the date of the Employee's termination of employment (or, if earlier, the Employee's death) and (ii) the date on which it was otherwise due pursuant to Section 3.
		
	(b)
	No  payment  will  be  made  hereunder  to Employee  if such payment would constitute a "parachute payment" within the meaning of Sections 280G and 4999 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), unless the shareholders of the Company have  approved the payment in accordance with Sections 280G(b)(5)(A)(ii) and 280G(b)(5)(B) of the Code and the corresponding Treasury Regulations promulgated thereunder.

8.  Entire Agreement. This Agreement, together with the covenants incorporated herein by reference in Section 3(f), constitute the entire agreement between the parties with respect to their subject matter  and supersede any prior  agreement or understanding,  including, without limitation, any change of control agreements that may have expired.  For the avoidance of doubt, the Employment Agreement remains in full force and effect, except as modified by Section 3(b) herein, provided that  in no event shall the Employee receive a duplicate  benefit under that agreement; the provision in either this Agreement or the Employment Agreement that provides for a greater benefit to the Employee shall apply.

IN  WITNESS  WHEREOF, the  Company  has  executed this  Agreement  by  its  duly authorized representative, and the Employee has hereunto executed the  same, all as of the day and year first written above.

	
			
	THE COMPANY:
	 
	BANNER PHARMACAPS INC.

	 
	 
	 

	 
	 
	By: /s/ Peter Beckers

	 
	 
	Name: Peter Beckers

	 
	 
	Title: Chairman

	 
	 
	 

	 
	 
	 

	THE EMPLOYEE:
	 
	/s/ Aqeel Fatmi

	 
	 
	Name: Aqeel Fatmi

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