Document:

Amendment to Employment Agreement dated August 16, 2006

			
	[PATHEON]	  	Exhibit 10.38

  

			
		 	 Patheon Inc.
 Corporate
Office
 7070 Mississauga Road, Suite 350

Mississauga, Ontario L5N 7J8
 Canada

Tel: 905-821-4001 Fax: 905-812-6705

 August 16, 2006 
 Mr. Andrew Kelley 

Vice President Patheon Europe, Swindon Operations 

39, London Road 
 Marlborough 

Wiltshire 
 SN8 2AA 

Dear Andrew: 
 Re: Amendment to
Employment Agreement 
 In November of 2005 you and Patheon UK Limited (“Patheon”) entered into an employment agreement which
provides the terms and conditions of your employment with Patheon (the “Employment Agreement”). The purpose of this letter is to outline a proposed amendment to your Employment Agreement, the details of which appear on Schedule A to this
letter. 
 Should you agree with the terms and conditions contained on Schedule A, please execute this letter and provide the original to Roy
Wieschkowski. Execution of this letter will serve to formally amend your Employment Agreement, effective as of the date of execution. Except as provided in Schedule A, the terms and conditions of your Employment Agreement remain unchanged.

 Should you have any questions or concerns regarding such amendment, please feel free to contact Roy Wieschkowski. 

Sincerely. 
 Patheon UK Limited

 /s/ Nick A. DiPietro 
 Nick A.
DiPietro 
 Director 
 I, Andrew
Kelley, have read, understood and agree to the terms in this letter and the attached Schedule A, and understand that upon execution of this letter, my Employment Agreement shall be formally amended to include the language in the attached Schedule A.

  

					
	   /s/ A.J. Kelley
	 	Date	 	  20-09-06
	   Andrew Kelley
	 		 	

 Schedule A 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties, each of Patheon UK
Limited (the “Company”) and Andrew Kelley hereby agree that the Employment Agreement dated November 1, 2005 between Andrew Kelley and Patheon UK Limited (“the Employment Agreement”) is amended as follows: 

 

	1.	The following language shall be added to your Employment Agreement: 

 “Subject to the termination provisions contained in the section entitled “Notice” of the Employment Agreement and notwithstanding anything to the contrary contained herein, the following
provisions shall apply in the event of a Change of Control (as defined below). 
  

	(a)	in the event of a Change of Control which within 18 months from the date of such Change of Control results in the termination of your employment, by dismissal or
constructive dismissal, you shall be entitled to receive: 

  

	 	i.	a lump sum payment equal to 6 months base cash salary, pension contribution, automobile allowance, vacation pay and benefits payable to you by Patheon, such payment to
be made within 21 days of termination (“the Lump Sum Payment”); and 

  

	 	ii.	a payment in lieu of any unexpired period of notice to which you are entitled under the “Notice” section of the Employment Agreement (“the Notice
Payment”) together the “Change in Control Payment”; 

  

	(b)	payment of the Change in Control Payment shall not be subject to any duty or obligation on you to seek alternate employment or other sources of income or benefits, or
to mitigate your damages, or to any similar duty or obligation; and 

  

	(c)	the Change in Control Payment will be made to you net of any income tax and employee national insurance contributions that are due in respect of the sum, and except in
respect of these actual deductions which have been made from the Change in Control payment made under this agreement, you agree that you will be responsible for the payment of any other taxation or deductions of any nature which may arise by reason
of the payment which you receive under the terms of this agreement. 

 For the purposes of this Agreement: 

The term “Change in Control” means the occurrence of any of the following: 

 

	(a)	 any Person or group acquires beneficial ownership of securities of the Company’s holding company (as defined by S736 of the Companies Act 1985)
(“the Holding Company”) carrying 30% or more of the voting rights attached to all securities of the Holding Company then outstanding entitled to vote in the election of directors of the Holding Company (collectively, “Voting
Shares”) including securities 

  
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	 	convertible into, or exchangeable for, or providing for the issuance of, Voting Shares; provided, however, that, for the purposes of this paragraph (a), the following
acquisitions shall not constitute a Change in Control: 

  

	 	(i)	any acquisition of beneficial ownership of Voting Shares by the Holding Company or any of its subsidiaries; 

 

	 	(ii)	any acquisition of beneficial ownership of Voting Shares by any employee benefit plan (or related trust) of the Holding Company or its Subsidiaries;

  

	 	(iii)	any acquisition of beneficial ownership of Voting Shares by any Person pursuant to a transaction which complies with clauses (i), (ii) and (iii) of paragraph
(c); or 

  

	 	(iv)	any acquisition of beneficial ownership of Voting Shares by any Person whose ordinary business includes the management of investment funds for others and such Voting
Shares are beneficially owned by such Person in the ordinary course of such business; 

  

	(b)	individuals who, as the date hereof, constitute the Board of Directors of the -Holding Company (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Holding Company’s shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, excluding, for this purpose, any individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board of Directors of the Holding Company; or

  

	(c)	consummation of a merger, amalgamation, arrangement, business combination, reorganization or consolidation or sale or other disposition of all or substantially all of
the assets of the Holding Company (a “Business Combination”), in each case, unless following such Business Combination: 

  

	 	(i)	Persons who were the beneficial owners, respectively, of the outstanding common shares immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then outstanding Voting Shares of the Person resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Holding Company or all or
substantially all of the Holding Company’s assets either directly or through one or more subsidiaries); 

  
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	 	(ii)	no Person (excluding any Person resulting from the Business Combination or any employee benefit plan (or related trust) of the Holding Company or such Person resulting
from the Business Combination) or group beneficially owns, directly or indirectly, 30% or more of the then outstanding Voting Shares of the Person resulting from such Business Combination except to the extent that such ownership existed prior to the
Business Combination; and 

  

	 	(iii)	at least a majority of the members of the board of directors of the Person resulting from such Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement providing for, or the action of the Board of Directors of the Holding Company approving, such Business Combination. 

 The term “Person” means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, an
incorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted.” 

  
 3Addendum to Employment Agreement dated January 31, 2009

 Exhibit 10.39 
 [PATHEON] 
 January 31, 2009 
 PRIVATE AND CONFIDENTIAL 
 Andrew Kelley 
 39 London Road, 
 Marlborough, Wilts 
 SN8 2AA 
 Dear Andy: 
 Patheon UK Limited (“Patheon”) is pleased to offer you a temporary assignment in your newly promoted position as Senior Vice President, Commercial Operations, Europe & Asia Pacific and
will be based in the European Commercial Headquarters of Patheon International AG in Zug (Switzerland). This offer letter (“Offer”) describes the terms and conditions of your assignment and once signed by you shall serve as an
addendum to the employment agreement between you and Patheon. Your assignment is scheduled to begin on February 1, 2009. This assignment will be for a fixed term of two years, and may be renewed thereafter at the sole discretion of Patheon for
an additional year. The initial term will have an end date on January 31, 2011. 
 This offer is conditional upon you successfully
obtaining and maintaining a valid and subsisting Residence and Work Permit (and Visa, if necessary), and any renewal thereof. As a point of clarification, it is understood and agreed that the issuance of an initial Work Permit and any renewals
thereof cannot be guaranteed and Patheon makes no representations, warranties or inducements to you in this regard. 
 You acknowledge that as
part of the position as Senior Vice President, Commercial Operations, Europe & Asia Pacific, you will be required to temporarily relocate to the Zug area and you agree to consent to such relocation as Patheon deems such relocation
necessary, in its sole discretion. Further, in the event that you are permanently required to relocate to Switzerland, it is understood and agreed that the issuance of the appropriate Swiss immigration documents, including work authorization, and
any renewals thereof, necessary to enable you to work in this position cannot be guaranteed and Patheon makes no representations, warranties or inducements to you in this regard. 

  
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	1.	RESPONSIBILITIES AND DUTIES  

 As
Senior Vice President, Commercial Operations, Europe & Asia Pacific, your responsibilities will encompass all PDS and commercial manufacturing sales, marketing and business development activities in the European and Asia Pacific regions.
You will report directly to Aldo Braca, President, Europe. 
  

	2.	COMPENSATION AND BENEFITS  

  

	2.1	Base Cash Salary 

 Your base salary level
will be determined by the “home” country. Base salary will continue to be aligned with the salary policy of home country to reinforce the temporary aspect of the assignment and to facilitate smoother repatriation. You will receive a
promotion base salary adjustment to £175,000, as a Swiss Franc Equivalent per year, less applicable deductions based on the amount of tax and mandatory government benefit contribution equivalent to what you would have had deducted had you
remained in the UK based on company generated income only, in accordance with Section 2.14 Tax Equalization, noted below and Patheon CH payroll practices (“Base Salary”). Increases to Base Salary, if any, are at the sole discretion of
Patheon and are based on performance. Patheon CH shall deduct from your Base Salary any applicable taxes and source deductions that Patheon CH is required or authorized to withhold or make. The company will review the foreign exchange rate
periodically and determine if any adjustments are warranted due to significant fluctuations. 
  

	2.2	Performance Incentive Plan 

 You will
continue to be eligible to participate in Patheon’s performance incentive plan (the “Performance Incentive Plan”) established for your position and your target will remain the same at 40%. 

 

	2.3	Cost of Living Allowance 

 The Cost of
Living Allowance takes into consideration the cost differential (not the full cost) for goods and services. This amount is provided to you to maintain your purchasing power in the host location. The Cost of Living Allowance represents the
differential of £9,800 for goods and services in Zug. Details of the International Assignment Allowance are covered in the Patheon International Assignment Policy (Annex A). This allowance will be provided to you as a Swiss Franc Equivalent.
This allowance is calculated by an external third party provider who specializes in cost of living data. The company will review your allowance periodically and determine if any adjustments are warranted due to significant exchange rate
fluctuations. Please keep in mind that in an effort to avoid any taxable event to you, Patheon will also enter into any leasing arrangement for housing on your behalf. 

  
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	2.4	Pension Contribution 

 In order to
preserve your entitlement under the UK employer sponsored retirement scheme, and to the extent possible, you will continue to be covered under the UK retirement plan. Any required contribution will continue to be withheld at source, and any employer
contributions will be maintained. In this instance, you will not be provided with any additional pension arrangements by Patheon CH during your tenure in Switzerland. However, Patheon UK and Patheon CH have agreed that, in the event: (i) you
return to employment with Patheon UK after your tenure in Switzerland; or (ii) you voluntarily leave or are made redundant from Patheon during your tenure in Switzerland then the pension contributions payable between the time you left the
employment of Patheon UK to your return (or leaving Patheon) shall be paid up by Patheon CH to Patheon UK to provide you with the same pension benefit you would have accrued had you remained in the employment of Patheon UK. The employee will be
responsible for providing the employee contribution element of such accrual which can either: (i) be deducted at source during your tenure; or (ii) be paid for by you at the relevant time. However, in the event that your employment with
Patheon is terminated due to your misconduct or gross misconduct then Patheon CH shall not be liable to make such pension payments and you hereby agree to forfeit all and any rights in relation to such augmentation. Furthermore, any such payments
and related accruals shall be limited by the earnings cap and any other restrictions that may be in force, or come into force, in relation to the Patheon UK Pension Fund. You will receive payments to your UK pension plan retrospectively at the end
of your assignment in accordance with the plan provisions. 
  

	2.5	Employee Benefits Plan 

 Patheon will
provide you with a comprehensive international benefits package based on the available global markets that offer such coverage. Benefits are based on regulatory requirements which may change from time to time and that which private employers
typically offer. Specifically, your benefits package includes Life insurance for yourself and your dependent spouse and children, Accidental Death and Dismemberment, Long Term Disability, Health Care including coverage for hospital, drugs,
paramedical practitioners, vision care and travel insurance for you and your dependents, Dental Care including major and orthodontic services for you and your dependents. A summary of your international benefits is attached as Annex B. In addition
to the benefits outlined in Annex B, Patheon is prepared to top up your life insurance benefit to represent 4x your annual salary in consideration of your current UK benefits arrangements. 
 Patheon reserves the right to change, alter, modify the applicable benefit, pension, allowance, relocation and general insurances in its sole discretion subject to reasonable notice to the employee of
such changes. 

  
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	2.6	Social Security 

 In order to preserve
your ongoing entitlements under the UK Social Security or government sponsored benefit programs, and to the extent possible, all efforts will be made to keep you in the programs of the UK. Under agreements between various countries this is often
feasible and as such, you will be exempt from contributions to the programs in Switzerland. If, however, it is not possible to maintain coverage in the UK, you will be placed into the mandatory government programs in Switzerland. Patheon will adjust
your compensation accordingly to reflect any difference in Social Security and or mandatory benefit costs. 
  

	2.7	Payroll  

 As the majority of your day to
day expenses will be incurred in Switzerland, you will be placed onto the Swiss payroll. 
  

	2.8	Stock Options 

 If you have received stock
options prior to your assignment to Switzerland, or receive options during your tenure in Switzerland, you must notify Patheon Corporate Human Resources prior to any decision to exercise options and/or sell any shares of Patheon stock. 

 

	2.9	Car Lease & Transportation Expenses 

 Patheon will continue your car lease arrangement in the UK and are pleased to inform you that your car and petrol allowance will be increased to £15,000 per annum gross paid as a Swiss Franc
equivalent which will be subject to tax and any other appropriate payroll deductions. While in Zug, Patheon will pay for any Transportation expenses you incur while travelling on Company business. 

 

	2.10	Expenses and Representation Allowance 

The Company shall cover all reasonable expenses above CHF 50 (including travelling and hotel expenses, expenses for invitations etc.) which arise in
connection with the Employee’s activities for the Company. 
 In addition, the Company shall pay the Employee a non-taxable representation
allowance in the amount of CHF 6,000 per year, payable in 12 monthly instalments at the end of each month which is intended to cover all reasonable expenses below CHF 50. Notwithstanding anything to the contrary herein, this Section 2.10,
paragraph shall be subject to approval by the competent tax authorities. 

  
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	2.11	International Relocation Incentive 

 In
addition to the compensation elements noted above, an additional allowance equal to 20% of your gross base salary subject to the required statutory deductions, will be provided during your assignment to Switzerland. This will be paid in lump sum
instalments with 25% paid upon signing and the balance to be paid at the completion of the first 12 months. Further, an additional lump sum payment equal to 20% of your gross base salary will be paid to you following 24 months of your assignment to
Switzerland. These payments will be made to you conditional upon your ongoing active employment at that time and would be made in addition to any other payments, including bonus payments, to which you may be entitled. These International Relocation
Incentives will cease after your completion of your two year assignment to Switzerland. 
  

	2.12	Language Familiarization 

 Patheon
recognizes that you will better integrate into the new Swiss culture by becoming familiar with the local Swiss language. Therefore, where language training is deemed necessary by Patheon, the Company will pay for a pre-determined amount of training.
This benefit is not transferable to others. 
  

	2.13	Equity Compensation and Stock Options 

You will be eligible to participate in the Corporation’s Stock Option Plan, and awarded options from time to time in accordance with the terms of
such plan. As a promotion grant subject to approval of the Compensation and Human Resources Committee (the “Committee”) of the Board of Directors at a meeting following the Effective Date of this agreement, you would receive a stock option
grant of 50,000 options under the terms of the Patheon Stock Option Plan. As per securities regulatory requirements, options may not be issued when the Company is in possession of material undisclosed information. The options shall vest as to
one-third per year over the first three years. The subscription price for the shares under option will be the market price (as defined in the Patheon Stock Option Plan) on the day the grant is approved by the Committee. As you know, we are under an
extended blackout relating to the potential JLL Bid and Special Committee process and accordingly options cannot be granted until such blackout is lifted. At the conclusion of this process, should the ability to provide options not be available, the
Company will provide an alternative long term incentive (“LTI”) to replace the option benefit so described above. 
  

	2.14	Tax Equalization 

 Tax laws vary widely
from country to country. Therefore, Patheon has established guidelines and procedures (Tax equalization) to ensure that the international assignee’s tax liability is similar to what you would have incurred in the UK, subject to certain
limitations. Under Patheon’s tax equalization approach, you will be responsible for contributing to the cost of taxation to an amount similar to or equivalent to what you would have paid in the UK. This may or may not reflect your actual tax
burden. As such, it is often referred to as a “hypothetical tax” amount, and this will be withheld from pay on a regular basis. The hypothetical tax includes income tax, Social Security

  
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contributions, mandatory government withholdings and other amounts that would have been required in the UK. Any difference between the hypothetical amount withheld and the actual tax owning will
be the responsibility of Patheon. 
 Before your departure you will be asked to participate in a tax assessment and tax planning session.

 Professional tax advice will be made available to you at Patheon’s expense, as well as assistance with the preparation and filing of
both UK and Swiss tax returns for the tax years while you are on assignment. As this is a highly specialized area of tax, you are required to utilize the tax advisory firm selected by Patheon for this purpose. 

 

	3.	TERMINATION OF ASSIGNMENT  

 At the
end of your temporary assignment you will either return to your current position at our offices in Swindon or be assigned permanently to our regional office in Zug upon mutual consent. 

 

	4.	REPATRIATION ARRANGEMENTS 

 If
repatriated at the end of the assignment all of the assignment related payments and allowances would cease being paid. The cost of the trip to your origin location as well as the shipment of your household goods will be paid on your behalf or
reimbursed to you provided you are still an employee of Patheon at the time of repatriation. 
  

	5.	PERMANENT EMPLOYMENT  

 Should you
be offered permanent employment in the Zug area, you will enter into a new agreement as a full-time Swiss employee and be subject to the terms and conditions as other permanent employees at your level. At that time, you will review with Patheon, the
Permanent International Relocation Policy benefits that may apply to you. 
 Patheon reserves the right to cancel, replace or amend this
expatriate agreement where appropriated relating to the needs of the business with 30 days notice. 
  

	6.	TERM AND TERMINATION 

 Your
employment under this agreement may be terminated in compliance with the UK employment regulations. The termination provisions of your UK employment agreement will remain in force until such time that you become permanently employed in Switzerland
at which time you will be subject to Swiss regulatory provisions as it relates to termination of employment. 

  
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	7.	MANDATORY SWISS EMPLOYMENT LAW PROVISIONS  

 This secondment is subject to the provisions of the Federal Act Federal on the minimal working and salary conditions for employees seconded to Switzerland and the respective Ordinance (Bundesgesetz
fiber die in die Schweiz entsandten Arbeitnehmerinnnen and Arbeitnehmer, SR 823.20 and 823.201). 
 It is understood and agreed that in
consideration of the above, you will be required to execute the UK Non-Competition Undertaking attached as Annex C. All other terms and conditions of your employment will remain the same. 
 Andy, congratulations on your promotion and the opportunity to take on this exciting assignment. I look forward to working with you in this new capacity. 

If the contents of this letter including annexes are acceptable to you, please confirm your acceptance by signing below and returning this letter to
Patheon. 
 Yours truly, 
  

					
	 /s/ Roy Wieschkowski
	 		  	Date: January 31, 2009

 Roy Wieschkowski

 Senior VP, Human Resources 

For and on behalf of Patheon UK Limited 

I, Andrew Kelley, have read, understood and agree to the terms in this Offer, and accept this Offer according to the terms described in this letter.

  

							
	 /s/ A.J. Kelley
	 		  	Date   2nd February 2009            
	Andrew Kelley	 		  		  	

  
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 PATHEON UK LIMITED 
 ADDENDUM TO STATEMENT OF MAIN TERMS OF EMPLOYMENT 
 AGREEMENT ON OBLIGATIONS DURING AND
AFTER EMPLOYMENT 
  

	(1)	For the purpose of this Agreement, the Company shall mean Patheon UK Limited and any of its affiliates. 

The following obligations shall form part of the Contract of Employment between you and the Company and shall be rigorously observed. Each
of these clauses and sub-clauses shall be construed as an entirely separate obligation and the enforceability of any one or more of the clauses or sub-clauses shall not in any way be affected by the unenforceability of any other clause or
sub-clause. 
 Should any provision of this Agreement or any part of any provision be rendered void or unenforceable, then that
provision or that part of that provision shall be deleted (or, in the case of the period of application, be modified as necessary to make it valid) and, as far as the context allows, all other provisions shall be unaffected. 

 

	(2)	During the course of your employment with the Company you will have dealings with customers of the Company. In order to safeguard the Company’s goodwill and
commercial interests, you agree that you will not, at any time during the 12 months immediately following the termination of your employment, whether on your own account or on behalf of any other person, firm or company, directly or indirectly, in
connection with any business similar to or in competition with the Company, solicit or endeavour to entire away any person, firm or company who was a customer of the Company at the time that your employment with the Company terminated and with whom
you have personally conducted business, through the subsequent provision of any products or services similar to those provided by you on behalf of the Company during the last 12 months of your employment. 

 

	(3)	You agree that you shall not at any time, whether during the continuance of this Agreement nor a period of 12 months after its termination, employ, solicit, hire,
induce, entice or endeavour to entice away from the Company, whether on your own account or on behalf of any other person, firm or company, any person who was still an employee of the Company immediately prior to the termination of your employment
with the Company. 

  

	(4)	You agree that you shall not for a period of 12 months after the termination of your employment (without the previous consent in writing of the Company) directly or
indirectly be engaged, concerned or interested (whether as employee, agent, consultant or otherwise) in any business or company which invents, manufacturers, or sells products or services which are in competition with the business carried on by the
Company at the end of your employment. As compensation for Employee’s agreement not to compete and not to hire employees of the Company and/or its affiliates in accordance with this agreement on obligations during and after employment and in
addition to any other payment required to be made by the Company under this Employment Agreement, the Company hereby agrees to pay the Employee a monthly payment in an amount equal to his/her last monthly salary prior to termination for the twelve
month period after termination of the Employment Agreement. For the avoidance of doubt, an employee of the Company shall include any person who has discontinued his/her relationship with the Company in the 12 month period preceding the start of the
new employement. 

 In case of violation of this non-competition clause, the Employee shall pay to the Company
liquidated damages in the full amount of the Employees’ last yearly gross salary amount for each instance of violation. The payment of liquidated damages shall not discharge the Employee from observing this non-competition and no hire
undertaking. In addition to the payment of liquidated damages and further damages incurred by the Company, the Company shall have the right to request the termination of any of the Employee’s activities which violate this non-competition and no
hire agreement. 
 In signing below, you confirm that you understand, accept and agree to be bound by this Agreement, and that it supersedes any
previous such Agreement. 
  

							
	Signed by the employee	  	 /s/ A.J. Kelley
	  		  	Date 2nd February 2009

							
				
	Signed on behalf of the Company	  	 /s/ Roy Wieschkowski
	  		  	Date January 31, 2009
		  	                Roy Wieschkowski

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