**Exhibit 4.5**

 

**EMPLOYMENTAGREEMENT OF****PROF.****JUERGEN ENGEL**

 

**ÆTERNA ZENTARIS INC.**

 

**DatedSeptember 1****st****, 2008**

 

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**EMPLOYMENTAGREEMENT**

 
| **BETWEEN:** | ** ** | **ÆTERNA  ZENTARIS INC.**, a Corporation duly incorporated under the laws of  Canada, having its head office at 1405 Parc-Technologique Blvd., Québec, QC GIP 4P5 |
|--------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |       |                                                                                                                                                                        |
|         |       | (hereinafter  the “**Corporation**”)                                                                                                                              |
|         |       |                                                                                                                                                                        |
| **AND:**     | ** ** | **PROF.  JUERGEN ENGEL**, at [civic address redacted for privacy reasons] Alzenau                                                                                           |
|         |       |                                                                                                                                                                        |
|         |       | (hereinafter  the “**Executive**”)                                                                                                                                |
|         |       |                                                                                                                                                                        |
| **AND:**     | ** ** | **ÆTERNA  ZENTARIS GmbH**, Weismüllerstraße 50, 60314 Frankfurt am Main                                                                                      |
|         |       |                                                                                                                                                                        |
|         |       | (hereinafter  the “**Intervening Party**”)                                                                                                                        |

 

**SECTION 1 — PURPOSE**

 

1.1           The Corporation wishes to employ the Executive as its President andChief Executive Officer, starting on September 1st,2008 (the “**Effective date**”).  The Executive is willing to be employed bythe Corporation, on the terms and conditions set forth herein in thisEmployment Agreement (the “**Agreement**”).  The Executive shall report to the Board ofDirectors of the Corporation (the “**Board**”).  In addition to the duties andresponsibilities inherent to his position, the Executive shall have any powersand carry out mandates that may be entrusted to him by the Board from time totime.

 

**SECTION 2— DUTIES**

 

2.1           The Executive agrees to devote his full business time to theCorporation, including its subsidiaries, Æterna Zentaris GmbH and Zentaris IVFGmbH, to make every effort necessary to perform adequately the duties that areassigned to him and to act in the best interests of the Corporation at alltimes. The Corporation hereby consents to the Executive’s secondary consultingactivities for Degussa AG (now Evonik Degussa), Neryx Biopharmaceuticals and asa member of the scientific advisory board of GIG, as long as it isnon-competitive with the Corporation’s business.  The Executive shall refrain from any activitythat could be prejudicial to the Corporation’s interests.  In performing his duties with theCorporation, the Executive shall act faithfully and honestly at all times.

 

2.2           The Executive shall carry out his duties from Frankfurt am Main, Germany.  However, the Executive acknowledges that hisposition will require traveling, and the Executive agrees to devote thenecessary and reasonable time to such traveling.

 

2.3           The Executive declares that he has no obligation toward any person,including his former employers, that would be incompatible with this Agreementor that could be an impediment to the performance of his duties with theCorporation. For the avoidance of doubt, the Executive has to fulfill allduties with respect to his position as Managing Director of the InterveningParty.

 

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2.4           The Executive agrees to comply with all the instructions, policiesand/or rules that are established verbally or in writing by theCorporation.

 

2.5           The Executive shall be entitled to sit on a board of directors ofanother corporation, solely with the prior written authorization of the Board.

 

**SECTION 3— COMPENSATION, VACATION AND STOCK OPTIONS**

 

3.1           Compensation and Vacation

 

                The compensation and vacation to whichthe Executive is entitled shall be those provided for in the Service Contractfor Managing Director entered into between the Executive and the InterveningParty on December 5, 2007 and modified on September 1st, 2008 (the “Contract”) and shallcontinue after the Contract has expired for the duration of the presentAgreement.

 

3.2           Stock Options

 

Subject to regulatory approval, theCorporation shall grant to the Executive, no later than the Effective Date or as soon as legallypossible, 200,000 options under the Corporation’s StockOption Plan (the “**Plan**”).  These stock options shall vest equally over aperiod of three (3) years from the date of the original grant.  The said options, the exercise price, theperiod during which they may be exercised and the other terms and conditionsattaching to their exercise shall be subject to the terms and conditions of thePlan.

 

**SECTION 4— GROUP INSURANCE**

 

4.1           Medical/Dental Insurance, Life and Disability Insurance

 

For the avoidance of doubt, the Executiveshall receive all social security benefits under German law as stated in theContract as well as any pension stated in the Contract.

 

**SECTION 5— DURATION AND TERMINATION**

 

5.1           Duration

 

This contract is for an indeterminate term.

 

5.2           Automatic termination

 

Upon the resignation or the death of the Executive, he or hisdependents, as the case may be, can claim to be paid his monthly gross basesalary for a duration of three months.

 

The Executive’s employment may also be terminated by the Corporationfor cause upon simple notice in writing transmitted to the Executive, withoutthe Corporation being bound to pay any compensation whatsoever, in thefollowing cases, hereinafter referred to as “**Cause**”:

 

a)     If the Executive is declared bankrupt or insolvent or makes anassignment of his property or is placed under protective supervision, whichsituations the Executive acknowledges to be incompatible with the continuationof his employment.

 

b)    If the Executive becomes physically or mentally disabled to such anextent as to make him unable to perform his duties normally and adequately andwithout his fault. In such a case, he shall be entitled to a continuation ofhis monthly gross base salary for a duration of up to one year or, if earlier, untilthe end of this Agreement, provided the relevant doctor’s certificates arefurnished.

 

c)     If the Executive breaches the terms of this Agreement.

 

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d)    If the Executive commits any fraud, theft, embezzlement or othercriminal act of a similar nature.

 

e)     If the Executive has committed serious misconduct or willful negligencein the performance of his duties.

 

f)     If the Executive refuses or fails to follow reasonable directives ofthe Corporation.

 

g)    If the Executive’s demonstrates willful or reckless conduct causingmaterial damage to the Corporation or the Corporation’s business.

 

h)    If the Executive misuses or abuses alcohol, drugs or controlledsubstances.

 

5.3           Termination without Cause

 

The Corporation may also terminate the Executive’s employment, withoutcause, by paying him the following:

 

a)     If the Executive’s employment is terminated by the Corporation on orbefore the date that is the eighteen (18)-month anniversary of the date of thisAgreement:

 

(i)        Anamount equivalent to twelve (12) months of the Executive’s annual Base Salary;and

 

(ii)       Anamount equivalent to the Annual Bonus received by the Executive for the lastcompleted fiscal year prior to the termination date.

 

(iii)      An amountequivalent to twelve (12) months of the cost of the benefits which were inforce at the time of termination of the Executive’s employment, calculated on ayearly basis, excluding the car allowance and operating costs.  However, Stock Options are expressly excludedfrom this provision and the Executive shall be treated, in this regard, inaccordance with the terms of the Plan.

 

b)    If the Executive’s employment is terminatedby the Corporation after the date that is the eighteen (18)-month anniversaryof the date of this Agreement:

 

(i)        anamount equivalent to twenty-four (24) months of the Executive’s annual BaseSalary; and

 

(ii)       Anamount equivalent to twice the Annual Bonus received by the Executive for thelast completed fiscal year prior to the termination date.

 

(iii)      An amountequivalent to twelve (12) months of the cost of the benefits which were inforce at the time of termination of the Executive’s employment, calculated on ayearly basis, excluding the car allowance and operating costs.  However, Stock Options are expressly excludedfrom this provision and the Executive shall be treated, in this regard, inaccordance with the terms of the Plan.

 

c)     The Executive acknowledges that the saidpayments are fair and sufficient and, in consideration of the Corporationgiving him such payments in the event of the termination of his employmentwithout cause, the Executive shall grant the Corporation and its directors,officers, employees, shareholders, representatives and agents, and thedirectors, officers, employees, shareholders, representatives and agents of anyaffiliate of the Corporation, a full and final release and discharge from anyand all claims, past, present or future, that he has or may have, arisingdirectly or indirectly from the termination of his employment, whether forprior notice of termination, severance pay, damages in lieu thereof or for anyother reason.

 

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5.4           Resignation

 

In the event that the Executive wishes to terminate his employment, heshall give the Corporation prior written notice of at least 6 weeks.

 

**SECTION 6— TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE OF CONTROL**

 

6.1           If the employment of the Executive is terminated by the Corporationwithin twelve (12) months following a Change of Control, without Cause by theCorporation or by the Executive for Good Reason, the whole as defined inAppendix 1, the Executive shall receive the following:

 

a)     An amount equivalent to twenty-four (24)months of his annual Base Salary; and

 

b)    An amount equivalent to twice the AnnualBonus, if any, which the Executive would have been entitled to receive in theyear during which the Change of Control occurred; and

 

c)     An amount equivalent to twenty-four (24)months of the cost of the benefits which were in force at the time oftermination of the Executive’s employment, calculated on a yearly basis,including the car allowance, but excluding operating costs.  However, Stock Options are expressly excludedfrom this provision and the Executive shall be treated, in this regard, inaccordance with the terms of the Plan.

 

**SECTION 7— CONFIDENTIALITY**

 

7.1           The Executive acknowledges that he has received and will receive orconceive, in carrying on or in the course of his work during his employmentwith the Corporation, confidential information pertaining to the activities,the technologies, the operations and the business, past, present and future, ofthe Corporation or its subsidiaries or related or associated companies whichinformation is not in the public domain. The Executive acknowledges that suchconfidential information belongs to the Corporation and that its disclosure orunauthorized use could be prejudicial to the Corporation and contrary to itsinterests.

 

                Accordingly, the Executive agrees torespect the confidentiality of such information and not to make use of ordisclose or discuss it to or with any person, other than in the course of hisduties with the Corporation, without the explicit prior written authorizationof the Corporation.

 

                This undertaking to respect theconfidentiality of such information and not to make use of or disclose ordiscuss it to or with any person shall continue to have full effectnotwithstanding the termination of the Executive’s employment with theCorporation, so long as such confidential information does not become public asa result of an act by the Corporation or a third party which act does notinvolve the fault of one its Executives.

 

7.2           The term “confidential information” includes among other things:

 

7.2.1        products,formulae, processes and composition of products, as well as raw materials andingredients, of whatever kind, that are used in their manufacture;

 

7.2.2        technicalknowledge and methods, quality control processes, inspection methods,laboratory and testing methods, information processing programs and systems;manufacturing processes, plans, drawings, tests, test reports and software;

 

7.2.3        equipment,machinery, devices, tools, instruments and accessories;

 

7.2.4        financialinformation, production cost data, marketing strategies, raw materialssupplies, suppliers, staff and client lists and related information, marketingplans, sales techniques and policies, including pricing policies, sales anddistribution data and present and future expansion plans; and

 

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7.2.5        research,experiments, inventions, discoveries, developments, improvements, ideas,industrial secrets and “know-how”.

 

7.3           The Executive undertakes to keep the terms of this Agreementconfidential.

 

**SECTION 8— OWNERSHIP OF INTELLECTUAL PROPERTY**

 

8.1           TheExecutive hereby assigns and agrees to assign to the Intervening Party, for thewhole duration of this Agreement, all his intellectual property rights as oftheir creation and to make full and prompt disclosure to the Intervening Partyof all information relating to anything made or designed by him or that may bemade or designed by him during the period of his employment, whether alone orjointly with other persons, or within a period of two (2) years followingthe termination of his employment and resulting from or arising out of any workperformed by the Executive on behalf of the Corporation or connected with anymatter relating or possibly relating to any business in which the Corporationor any of its subsidiaries or related or associated companies is involvedunless specifically released from such obligation in writing by the Board.

 

8.2           In addition, the Executive renounces allmoral rights in any document or work realized during the period of his employment.  The Executive acknowledges that theIntervening Party and the Corporation have the right to use, modify orreproduce any document or work realized by the Executive, at their entirediscretion, without the Executive’s authorization and without his name beingmentioned.

 

8.3           Atany time during the period of his employment or after the termination of hisemployment, the Executive shall sign, acknowledge and deliver, at theCorporation’s expense, but without compensation other than a reasonable sum forhis time devoted thereto if his employment has then terminated, any documentrequired by the Corporation to give effect to section 10.1, including patentapplications and documents evidencing the assignment of ownership. TheExecutive shall also provide such other assistance as the Corporation mayrequire with respect to any proceeding or litigation relating to the protectionor defense of intellectual property rights belonging to the Corporation.

 

8.4           Thissection shall be binding on the Executive’s heirs, assignees and legalrepresentatives.

 

8.5           Inthis Section, the expression “Intervening Party” shall refer to the InterveningParty, its successors or anyone of its designated subsidiaries, associated orrelated companies.

 

**SECTION 9— OWNERSHIP OF FILES AND OTHER PROPERTY**

 

9.1           Any file, sketch, drawing, letter, report, memo or other document, anyequipment, machinery, tool, instrument or other device, any diskette, recordingtape, compact disc or software or any other property which comes into the Executive’spossession during his employment with the Corporation, in the performance or inthe course of his duties, regardless of whether he has participated in itspreparation or design, how it may have come into his possession and whether ornot it is an original or a copy, shall at all times remain the property of theCorporation and, upon the termination of the Executive’s employment, shall bereturned to the Corporation or its designated representative before theExecutive leaves his place of work. The Executive may not keep a copy or giveone to a third party.

 

**SECTION 10— TERMINATION OF PRIOR CONTRACTS**

 

10.1         As of the effective date hereof, this Agreement supersedes and cancelsany prior agreement, verbal or written, with respect to the Executive’s employmentwith the Corporation.

 

**SECTION 11— AMENDMENT OF THE AGREEMENT**

 

11.1         To bevalid, any amendment to this Agreement must be confirmed in writing by the Corporationand by the Executive.

 

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**SECTION 12— NOTICES**

 

12.1         Any notice given hereunder shall be given in writing and sent byregistered or certified mail or hand delivered. If such notice is sent byregistered or certified mail, it shall be deemed to have been received five (5) businessdays following the date of its mailing if the postal services are workingnormally. If such is not the case, the notice must be hand delivered or servedby bailiff, at the discretion of the sender. In the case of hand delivery orservice, the notice shall be deemed to have been received the same day. It isagreed that if the delivery date is a non-business day, the notice shall bedeemed to have been received on the following business day.

 

**SECTION 13— ELECTION OF DOMICILE**

 

13.1         Forthe purposes of the exercise of any rights flowing from this Agreement and theinstitution of legal proceedings, the parties elect domicile in the judicialdistrict of Québec.

 

**SECTION 14— SUCCESSORS**

 

14.1         This Agreement shall be binding on the successors, heirs, assignees andlegal representatives of the parties.

 

**SECTION 15— FINAL PROVISION**

 

15.1         It isunderstood between the parties that the Contract and this Agreement shallcoexist for the duration of either one of them.

 

**SECTION 16— INTERPRETATION**

 

16.1         This Agreement shall be governed by and interpreted in accordance withthe laws of the province of Québec.

 

**SECTION 17— LANGUAGE**

 

17.1         The parties have expressly requested that this Agreement be drafted inthe English language.  Lesparties ont expressément requis que cette convention d’emploi soit rédigée enanglais.

 

**WITNESSWHEREOF**the parties hereto have duly signed this Agreement on this 1st day of September, 2008.

 
| ** **                         |             |   |
|------------------------------------|------------------|--------|
| **Prof. Juergen Engel**            |             |   |
| ** **                         |             |   |
| ** **                         |             |   |
| **Æ****TERNA  ZENTARIS INC.** |             |   |
|                               |             |   |
| By:                                |             |   |   |
|                               | Juergen  Ernst   |   |   |
|                               |             |   |
|                               |             |   |
| **ÆTERNA  ZENTARIS GmbH**     |             |   |
|                               |             |   |
| By:                                |             |   |   |
|                               | Matthias  Seeber |   |   |

 

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** **

**ANNEX 1**

** **

**CHANGE OF CONTROL PROGRAM (the “Program”)**

** **

**1.****             Applicabilityof the Program**

** **

The Executive shall be entitled to the benefit of the Program if bothconditions mentioned below occur:

 

(A)          there is a “**Change of Control**” of theCorporation, as defined below; and

 

(B)           The Executive’semployment is terminated, within twelve (12) months following a Change ofControl :

 

(i)        involuntarily, at the request of theCorporation or its successors, except “**for Cause**” or

 

(ii)       by him, for “**GoodReason**”.

 

**2.****             Definitions**

** **

(A)          For purposes of the Program and unlessotherwise defined, the capitalized terms used herein shall have the followingmeaning:

 

(i)**        “Person**”includes any individual, firm, partnership, association, trust, trustee,executor, administrator, legal personal representative, government,governmental body or authority, corporation, or other incorporated orunincorporated organization, syndicate or other entity;

 

(ii)       Subject to the exceptions set out in ScheduleA hereto, a Person shall be deemed the “**BeneficialOwner**” of or to “**Beneficially Own**”****(a) any securities of which suchPerson or any of such Person’s affiliates or associates, as such terms aredefined in *National Instrument 45-106 — Prospectus andRegistration Exemptions*, is owner at law or in equity; (b) anysecurities which the Person or any of such Person’s affiliates or associateshas the right to acquire within 60 days (whether such right is exercisableimmediately or after the passage of not more than 60 days thereafter or uponthe occurrence of a contingency or the making of a payment) pursuant to anysecurities convertible into Voting Shares, agreement, arrangement, pledge orunderstanding, whether or not in writing (other than customary agreements withand between underwriters and/or banking group and/or selling group members withrespect to a distribution of securities or pledges of securities in theordinary course of the pledgee’s business); and (c) any securities thatare Beneficially Owned within the meaning of clauses (i) or (ii) ofthis Subsection 2(A)(ii) by any other Person with which such Person isacting jointly or in concert;

 

(iii)      “**Voting Shares**”means the common shares and any other securities the holders of which areentitled to vote generally on the election of directors of the Corporation.

 

(B)           For purposes of the Program, involuntarytermination of employment “**for Cause**” includes the following:

 

(i)        if the Executive commits any fraud, theft,embezzlement or other criminal act of a similar nature; or

 

(ii)       if the Executive is guilty of serious misconductor willful negligence in the performance of his duties.

 

(C)           For purposes of the Program, “**Good Reason**”means the occurrence, without the Executive’s express written consent, of anyof the following acts:

 

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(i)        a material reduction of the Executive’s totalcompensation (including annual Base Salary plus Annual Bonus, benefits andnumber of stock options) as in effect on the date of this Agreement or as samemay be increased from time to time ;

 

(ii)       a material reduction or change in the Executive’sduties, authority, responsibilities, accountability or a change in the businessor corporate structure of the Corporation which materially affects hisauthority, compensation or ability to perform duties or responsibilities (suchas shifting from a policy making position to a policy implementation position);

 

(iii)      a forced relocation; or

 

(iv)      a material change in the terms and conditions ofthis Program.

 

(D)          For purposes of the Program, a “**Change of Control**” shall be deemed to haveoccurred in any of the following circumstances:

 

(i)            subject to the exceptions set out in ScheduleB hereto, upon the purchase or acquisition, in one or more transactions, bya Person or one or more Persons who are affiliates of one another or who areacting jointly or in concert (as such expressions are defined in the *Securities Act* (Ontario)) (the “**Acquiring Person**”) of a beneficial interest in securities ofthe Corporation representing in any circumstance fifty percent (50%) or more ofthe voting rights attaching to the then outstanding securities of theCorporation; or

 

(ii)           upon a sale or other disposition of all orsubstantially all of the Corporation’s assets; or

 

(iii)          upon a plan of liquidation or dissolution ofthe Corporation; or

 

(iv)          if, for any reason, including anamalgamation, merger or consolidation of the Corporation with or into anothercompany, the individuals who at the date hereof constitute the Board ofDirectors of the Corporation (and any new directors whose appointment by theBoard of Directors of the Corporation or whose nomination for election by theCorporation’s shareholders was approved by a vote of at least two-thirds (2/3)of the directors then still in office who either were directors at the datehereof or whose appointment or nomination for election was previously soapproved) cease to constitute a majority of the members of the Board ofDirectors of the Corporation.

 

**3.****             Payment**

** **

In the event that the two (2) conditions mentioned in Section 1above are met, the Executive shall receive, in a lump sum, at the latest withinten (10) days of the effective date of the termination of employment, thepayment of the amounts mentioned in section 6 of theAgreement.

 

Should the Executive die before he has received the full payments, hisestate shall receive, immediately following his death, a cash amount equal tothe unpaid balance, less required statutory deductions.

 

It is understood that the Executive will not be required to mitigatethe amount of any payment hereunder by seeking other employment or otherwise.

 

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** **

**4.****             Release**

** **

The Executive acknowledges that the full and complete execution of allobligations undertaken by the Corporation and its successors under the Program,to the extent the Program becomes applicable pursuant to Section 1 of theProgram, constitutes adequate notice of termination and in consideration andsubject to the full and complete execution of all such obligations, theExecutive agrees to grant the Corporation, its affiliated and related companiesand their respective directors, officers, shareholders, representatives,employees, successors and assigns, a full and final release and discharge forall claims, past, present or future, that he has or may have, arising directlyor indirectly from his employment and the termination thereof, whether forprior notice of termination, severance pay, damages in lieu thereof or for anyother reason.

 

**5.****             General**

** **

The Executive’s participation in the Program shall end immediately uponthe termination of his employment with the Corporation or one of its affiliatesfor any reason whatsoever. The Program is for an indefinite term commencing onthe date of this Agreement. Furthermore, the Corporation shall have the rightprior to the occurrence of a Change of Control, in its sole discretion, toterminate the Executive’s participation in the Program at the end of eachtwelve (12)-month period commencing on the date of this Agreement by sendinghim a written notice of termination at least thirty (30) days prior to thefirst anniversary date of this Agreement and of each anniversary datethereafter. For example, the Corporation would be entitled to exercise itsdiscretion to terminate the Executive’s participation in the Program if, as ofthe date of the notice of termination, there has been during said twelve(12)-month period a material reduction in the responsibilities of theExecutive.

 

**6.****             Successors**

** **

The terms and conditions hereof shall bind the Corporation, itssuccessors and assignees.

 

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**Schedule A**

** **

***Exceptions to the definition of “BeneficialOwner” and “Beneficially Own” (Section 2 (A)(ii) of the Program)***

* *

APerson shall not be deemed the “**Beneficial Owner”**of or to “**Beneficially Own**” anysecurity:

 

(A)          as a result of such security having been deposited or tendered pursuantto a take-over bid (as such term is defined in the *Securities Act*(Ontario)) made by such Person or any of such Person’s affiliates orassociates or any other Person acting jointly or in concert with such Personuntil such deposited or tendered security is taken up and paid for;

 

(B)          as a result of entering into an agreement, including a lock-upagreement, pursuant to which it has been agreed that such security will bedeposited or tendered until such deposited or tendered security is taken up andpaid for;

 

(C)          as a result of (a) such Person or any of the affiliates orassociates of such Person holding such security provided that the ordinarybusiness of any such Person (the “**Fund****Manager**”) includes the management of investment funds forothers and such security is held by the Fund Manager in the ordinary course ofsuch business in the performance of such Fund Manager’s duties for the accountof any other Person (a “**Client**”); (b) suchPerson (the “**Trust****Company**”)being licensed to carry on the business of a trust company under applicablelaws and, as such, acting as trustee or administrator or in a similar capacityin relation to the estates of deceased or incompetent Persons (each an “**Estate****Account**”) or inrelation to other accounts (each an “**Other****Account**”) and holding such security in the ordinary courseof such duties for such Estate Accounts or for such Other Accounts;  (c) such Person (the “**Plan****Administrator**”)being the administrator or the trustee of one or more pension funds or plans (a “**Plan**”) registered under the laws of Canada or any provincethereof or the laws of the United States of America or any state thereof andsuch security being held by the Plan Administrator or the Plan in the ordinarycourse of such Plan Administrator’s or Plan’s activities; (d) such Person(the “**Crown****Agent**”)being established by statute for purposes that include, and the ordinarybusiness or activity of such Person includes, the management of investmentfunds for employee benefit plans, pension plans or insurance plans of variouspublic bodies and such security is held by the Crown Agent in the ordinarycourse of the management of such investment funds; or (e) such Personbeing a Plan and such security being held by the Plan in the ordinary course ofsuch Plan’s activities; provided, however, that in any of the foregoing casesthe Fund Manager, the Trust Company, the Plan Administrator, the Crown Agent orthe Plan, as the case may be, is not then making or has not then announced acurrent intention to make a take-over bid (as such term is defined in the *Securities Act* (Ontario)), alone or by acting jointly or inconcert with any other Person, other than an offer to acquire the Voting Sharespursuant to a distribution by the Corporation or by means of markettransactions made in the ordinary course of business of such Person (includingpre-arranged trades entered into in the ordinary course of business of suchPerson) executed through the facilities of a stock exchange or organizedover-the-counter-market;

 

(D)          because such Person is a Client of the same Fund Manager as anotherPerson on whose account the Fund Manager holds such security, or because suchPerson is an Estate Account or an Other Account of the same Trust Company asanother Person on whose account the Trust Company holds such security, orbecause such Person is a Plan with the same Plan Administrator as another Planon whose account the Plan Administrator holds such security;

 

(E)           because such Person is a Client of a Fund Manager and such security isowned at law or in equity by the Fund Manager, or because such Person is anEstate Account or an Other Account of a Trust Company and such security isowned at law or in equity by the Trust Company, or because such Person is aPlan and such security is owned at law or in equity by the Plan Administrator;or

 

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(F)           because such Person is the registered holder of securities as a resultof carrying on the business of, or acting as, a nominee of a securitiesdepositary.

 

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** **

**Schedule B**

** **

***Exceptions to the definition of “AcquiringPerson” (Section 2 (D)(i) of the Program)***

*** ***

“**ACQUIRING PERSON**” SHALLMEAN ANY PERSON WHO IS AT ANY TIME AFTER THE DATE HEREOF THE BENEFICIAL OWNEROF FIFTY **PERCENT (50%)** OR MORE OF THEOUTSTANDING VOTING SHARES OF THE CORPORATION; PROVIDED, HOWEVER, THAT THE TERM“ACQUIRING PERSON” SHALL NOT INCLUDE:

 

(i)        the Corporation or any corporation controlled by the Corporation;

 

#### (ii)       any Person who becomes the beneficial owner of **fifty percent (50%)** or more of the outstanding Voting Sharesas a result of one or any combination of: (a) a Voting Share Reduction; (b) anExempt Acquisition; or (c) a Pro Rata Acquisition; provided, however, thatif a Person shall become the Beneficial Owner of **fiftypercent (50%)** or more of the outstanding Voting Shares by reason ofone or any combination of a Voting Share Reduction, an Exempt Acquisition or aPro Rata Acquisition, and thereafter becomes the Beneficial Owner of anadditional one percent of any Voting Shares then outstanding (otherwise thanpursuant to an additional Voting Share Reduction, Exempt Acquisition or ProRata Acquisition), then, as of the date that such Person becomes a BeneficialOwner of such additional Voting Shares, such Person shall become an “**Acquiring Person**”; or

####  

#### (iii)      an underwriter or member of a banking or sellinggroup acting in such capacity that becomes the Beneficial Owner of **fifty percent (50%)** or more of the Voting Shares inconnection with a distribution of securities pursuant to an underwritingagreement with the Corporation;

####  

Forpurposes of the Program, the capitalized terms used herein shall have thefollowing meaning:

 

(a)           “**Voting Share Reduction**” means anacquisition or redemption by the Corporation or any corporation controlled bythe Corporation of Voting Shares which, by reducing the number of Voting Sharesoutstanding, increases the percentage of Voting Shares Beneficially Owned byany Person to fifty percent (50%) or more of the Voting Shares thenoutstanding;

 

(b)           “**Exempt Acquisition**” means anacquisition whereby a Person became an Acquiring Person by inadvertence andwithout any intention to become, or knowledge that it would become, anAcquiring Person under this Program and, in the event that a waiver is grantedby the Board of Directors, such acquisition shall be deemed not to haveoccurred for the purposes hereof. Any such waiver may only be given on thecondition that such Person, within 10 days after the foregoing determination bythe Board of Directors or such later date as the Board of Directors maydetermine (the “Disposition Date”), has reduced its Beneficial Ownership ofVoting Shares such that the Person is no longer an Acquiring Person and suchwaiver shall only be effective if the reduction has occurred within such 10-dayperiod; **[NTD: To consider whether such an event can everoccur]**

 

(c)           “**Pro Rata Acquisition**”means an acquisition by a Person of Voting Shares pursuant to (i) anydividend reinvestment plan, such purchase plan or other plan of the Corporationmade available to all holders of Voting Shares (other than holders resident inany jurisdiction where participation in such plan is restricted or impracticalas a result of applicable law); (ii) a stock dividend, a stock split orother event pursuant to which such Person becomes the Beneficial Owner ofVoting Shares on the same pro rata basis as all other holders of Voting Sharesof the same class or series; (iii) the acquisition or exercise of rightsto purchase Voting Shares distributed to all holders of Voting Shares (otherthan holders resident in any jurisdiction where such distribution or exerciseis restricted or impractical as a result of applicable law) by the Corporationpursuant to a rights offering (but only if such rights are acquired directlyfrom the Corporation); or (iv) a distribution of Voting Shares orconvertible securities in respect thereof offered pursuant to a prospectus orby way of a private placement by the Corporation or a conversion or exchange ofany such convertible security, provided that such Person does not therebyacquire a greater percentage of Voting Shares or convertible securities sooffered than the Person’s percentage of Voting Shares Beneficially Ownedimmediately prior to such acquisition.

 

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