EMPLOYMENT AGREEMENT

This employment agreement represents your contractual arrangements with Patheon Pharmaceuticals Services Inc. and supersedes any arrangements, understandings and verbal commitments to you during our discussions. Please sign and return the employment agreement. Upon receiving the signed employment agreement from you, we will execute it and return a copy of the fully executed document to you for your files.

Sincerely,

Patheon Inc.

James C. Mullen

Chief Executive Officer

This Employment Agreement (the “Agreement”) is made as of August 15, 2011 (the “Effective Date”), between Patheon Pharmaceuticals Services Inc. (the “Company”) and Rebecca Holland New (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:

otherwise requires, the following terms shall have the following meanings, respectively:

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.

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.

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.

The Executive shall be employed by the Company and shall serve as Senior Vice President, Human Resources, 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, if so requested by the Company or Patheon, become an officer of Patheon and of any members of the Patheon Group.

 

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 expected to be at the Company's Raleigh/Durham offices or any other offices of the Company or otherwise engaged in the performance of her duties at least five days per week, subject to required business travel, vacation and holidays. The Executive will be eligible for relocation assistance in accordance with the North American Tier 1 program. The move must be completed within twelve (12) months of Executive's employment. Notwithstanding anything to the contrary in the North American Tier 1 program, Executive shall be entitled to a one time lump sum payment on potential loss of sale of Executive's residence in New Jersey, in the amount of gross $117,669 (net $75,000). This amount will be treated as taxable income and will be paid on July 31, 2011. A second relocation incentive payment will

be made within thirty (30) days of completion of Executive's relocation. This payment will be in the gross amount of $50,000. If the loss of sale is less than expected, the second relocation incentive payment will be reduced to offset any overpayment on the loss of sale (net $75,000) referenced above. 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 third (3rd) anniversary of the Effective Date, she will repay to the Company within thirty (30) days of the date of termination, a pro rata portion of the lump sum payments, based on the number of months remaining to the third (3rd) anniversary of the Effective Date from the date of termination (by way of example, if the date of termination would occur eighteen (18) months remaining until the third (3rd) 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).

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 she will not be required to repay any portion thereof to the Company or its successor.

The Company will pay Executive, within thirty (30) business days of relocation, a sign-on bonus of US $80,000, based on an anticipated bonus payment from Executive's prior employer. This amount will be treated as taxable income. 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 third (3rd) anniversary of the Effective Date, she 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 third (3rd) anniversary of the Effective Date from the Date of Termination (by way of example, if the Date of Termination would occur with eighteen (18) months remaining until the third (3rd) 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).

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 she will not be required to repay any portion thereof to the Company or its successor.

The Executive will, at all times, faithfully, industriously, and to the best of her ability, experience and talents, perform all of the duties required of and from her pursuant to the terms of this Agreement. During the Executive's employment, the Executive shall devote substantially all of her working time and attention to her 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 her 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.

The Company shall pay the Executive an annualized base salary ("Annual Base Salary") at a rate of $350,000, 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 at such time as the salaries of other senior executives of Patheon are reviewed generally.

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 her 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. For fiscal year 2011, the Company agrees to a guaranteed payment in lieu of bonus of (gross) $35,000, payable in the same time frame as other similarly situated executives receiving fiscal-year 2011 bonus payments.

Generally, the annual performance bonus, if earned, will be paid to the Executive by the Company in the same manner and payment period 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. Except as expressly provided herein, 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.

(250,000) 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.

   

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 pro-rated for 2011 based on the Effective Date.

Executive will be entitled to an allowance of $ 1,200 USD per month for car-related expenses, subject to the normal statutory and withholding deductions.

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 her duties hereunder in accordance with

the Company's policies, as may be in effect from time to time.

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 her a substitute for it.

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.

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 she 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 she shall be treated for all purposes as having so resigned upon termination of her employment, regardless of when or whether she executes any such documentation.

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:

Obligations shall be paid on the regular payday following 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 her employment without Good Reason, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive her 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 Patheon 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 sixty- (60-) 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- (7-) 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.

6.1    In General

    

6.2    Confidentiality Undertaking

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

6.3    Non-Compete, Non-Solicitation

 

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.

  

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 her employment opportunities, except in such situations where the same conflict with the legitimate business interests of the Patheon Group. The Executive agrees that she will notify the Company in writing if she 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.

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, datedJuly 14, 2011.

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) she is not a party to any contract, understanding, agreement or policy, whether or not written, with her 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 her 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.

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:

If to the Company:

Patheon Pharmaceuticals Services Inc.

4721 Emperor Blvd., Suite 200

Durham, NC 27703

Attention: General Counsel

    

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

7.8    Compliance with Section 409A of the Code

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.

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

SIGNED, SEALED AND DELIVERED    )

in the presence of            )

)

Name of Witness:                      Rebecca Holland New

The functions and responsibilities of the Senior Vice President, Human Resources will include the following:

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.

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

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.

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.