The Special Committee of independent directors at Patheon and equity investor JLL Partners Inc. have entered into a settlement agreement in respect of the pending legal actions between the parties.

The settlement’s main points include:

1. until March 2011, the Board will consist of nine directors who will initially be four nominees of JLL, the chief executive officer of the company (Wesley P. Wheeler), Joaquin B. Viso and three independent directors. The three independent directors will include two members of the Special Committee, Derek J. Watchorn and Roy T. Graydon, and a new independent director, Brian G. Shaw;
2. JLL has agreed not to acquire any additional restricted voting shares of Patheon for a one-year period, including through any take over bid. Thereafter, and until April 27, 2012, JLL will not acquire any additional shares unless, among other things, the acquisition complies with the standstill provisions of the Investor Agreement between Patheon and JLL and, if the acquisition is to be effected by means of a takeover bid, the bid is subject to an irrevocable condition requiring the valid tender to the bid of at least a majority of the minority held Shares;
3. until April 27, 2012, certain transactions by Patheon, including certain rights offerings, issuer bids and related party transactions, would require independent director approval;
4. JLL will also end its current third party claim against the members of the Special Committee, and
5. Patheon will pay to JLL (U.S.) $1.5 million in connection with the settlement.

The settlement is subject to court approval, which Patheon and JLL will seek as soon as possible. The changes to Patheon’s board and the other provisions of the settlement will become effective immediately upon court approval.

According to a statement from the Special Committee, “Given the current circumstances, the settlement of the litigation on this basis is in the best interests of the company and all of its shareholders. The settlement provides additional meaningful ongoing protections for minority shareholders, and allows the company to focus on its business, without the distraction of litigation.”