Document:

Exhibit
4.7

EMPLOYMENT AGREEMENT OF NICHOLAS J. PELLICCIONE

 

ÆTERNA ZENTARIS INC.

 

Dated May 7, 2007

 

 

EMPLOYMENT AGREEMENT

 

 

	
  BETWEEN:

  	
   

  	
  ÆTERNA ZENTARIS INC., a Corporation duly incorporated, having
  its head office at 1405 Parc-Technologique Blvd., Québec, QC GIP 4P5,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (hereinafter
  the “Corporation”)

  
	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  NICHOLAS J. PELLICCIONE, domiciled at [civic address redacted for
  privacy reasons], New York, USA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (hereinafter
  the “Executive”)

  

 

SECTION 1 – PURPOSE

 

1.1             The Corporation wishes to employ the
Executive as its Senior Vice President, Regulatory and Quality Assurance,
starting on May 7, 2007. The Executive is willing to be employed by the
Corporation, on the terms and conditions set forth herein in this Employment
Agreement (the “Agreement”). The
Executive shall report to the President and Chief Executive Officer of the
Corporation.

 

SECTION 2 – DUTIES

 

2.1             The Executive agrees to devote his full
business time to the Corporation, to make every effort necessary to perform
adequately the duties that are assigned to him and to act in the best interests
of the Corporation at all times. The Employee shall refrain from any activity
that could be prejudicial to the Corporation’s interests. In performing his
duties with the Corporation, the Executive shall act faithfully and honestly at
all times.

 

2.2             The Executive shall carry out his duties from
New Jersey, USA. However, the Executive acknowledges that his position will
require traveling, including to Canada and Europe, and the Executive agrees to
devote the necessary 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 Agreement or that could be an impediment to the
performance of his duties with the Corporation.

 

 

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

 

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

 

SECTION 3 – COMPENSATION

 

3.1             Salary

 

The Corporation shall pay the Executive, for the duration of this
Agreement, a base annual salary (the “Base
Salary”) of THREE HUNDRED AND TEN THOUSAND US DOLLARS
(US$310,000.00), payable in accordance with the Corporation’s standard payroll
practice. Such Base Salary shall be reviewed annually and may be increased in
accordance with the Corporation’s policy.

 

3.2             Bonus

 

During the term of this Agreement, the Executive shall be eligible to
receive an annual lump sum cash bonus (the “Annual
Bonus”) in respect of each full or partial fiscal year of the
Corporation, which is from January 1 to December 31. The Annual Bonus
for the 2007 fiscal year, which shall be prorated, shall be equal to an amount
representing thirty-five (35%) of the Base Salary. If an Annual Bonus is to be
paid hereunder in respect of a period that is a partial fiscal year, such
Annual Bonus shall be prorated for service through the Executive’s date of
termination. In all cases, the Executive’s eligibility for such Annual Bonus is
conditional upon the attainment of objectives, which shall be mutually agreed
upon within one month of the commencement of the Executive’s employment for
year 2007 and thereafter yearly. According the Corporation’s policy, the
granting of Annual Bonus is based upon an assessment of each individual’s
performance as well as the performance of the Corporation and requires Board
approval.

 

3.3             Stock Options

 

Subject to regulatory approval, the Corporation shall grant to the
Executive, no later than the date of signature of this Agreement, 25,000
options under the Corporation’s Stock Option Plan (the “Plan”). These stock options shall vest equally
over a period of three (3) years from the date of the original grant. The
said options, the exercise price, the period during which they may be exercised
and the other terms and conditions attaching to their exercise shall be subject
to the terms and conditions of the Plan.

 

3.4             Signing Bonus

 

The Executive shall receive a signing bonus, of an amount representing
the value of 2,500 Corporation’s Common Shares. This amount will be grossed up
to take into account the income taxes and will be payable only if the Executive
acquire the same number of Common Shares of the Corporation on the market,
within the first month

 

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following the signature of this Agreement,
subject to compliance with the Corporation’s insider trading and blackout
policies and all relevant securities regulations.

 

3.5             Car Allowance

 

The Corporation shall pay the Executive an annual taxable car allowance
of TWENTY THOUSAND US DOLLARS (US$20,000.00). In addition, the Corporation will
assume all related operating costs of the vehicle (including insurance,
registration, maintenance, repairs and fuel).

 

3.6             Business Expenses

 

The Corporation shall reimburse the Executive, upon presentation of
vouchers, for reasonable entertainment, traveling and other expenses incurred
by him on behalf of the Corporation, in accordance with the Corporation’s
policies and rules.

 

SECTION 4 – VACATION

 

The Executive shall be entitled to paid annual vacation of four (4) weeks,
in accordance with the Corporation’s policy, which vacation is to be taken at
times prearranged with the Corporation. Vacation must be taken during the year
and shall not be cumulative. The full vacation for 2007 is vested for the
Executive upon execution of this agreement.

 

SECTION 5 – GROUP INSURANCE

 

5..1          Medical/Dental Insurance, Life and Disability Insurance

 

The Corporation shall pay the monthly premium for family benefits plan
insurance according the Corporation’s existing plan Insurance

 

SECTION 6
– DURATION AND TERMINATION

 

6..1          Duration

 

This contract is for an indeterminate term.

 

6.2             Automatic termination

 

The Executive’s employment shall terminate automatically, without the
Corporation being bound to pay any compensation whatsoever, upon the death of
the Executive or the date upon which his resignation becomes effective.

 

The Executive’s employment may also be terminated by the Corporation
for cause upon simple notice in writing transmitted to the Executive, without
the Corporation being bound to pay any compensation whatsoever, in the
following cases, hereinafter referred to as “Cause”:

 

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(a)                                  If the Executive is declared bankrupt or
insolvent or makes an assignment of his property or is placed under protective
supervision, which situations the Executive acknowledges to be incompatible
with the continuation of his employment.

 

(b)                                 If the Executive becomes physically or
mentally disabled to such an extent as to make him unable to perform his duties
normally and adequately for an aggregate of six (6) months during a period
of twelve (12) consecutive months. In such a case, the Executive may continue
to benefit under short-term and long-term disability insurance plans, subject
to the terms of such plans, if any.

 

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

 

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

 

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

 

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

 

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

 

(h)                                 If the Executive misuses or abuses alcohol,
drugs or controlled substances.

 

6.3             Termination without Cause

 

The Corporation may also
terminate the Executive’s employment, without cause, by paying him the
following:

 

(a)                                  If the Executive’s employment is terminated
by the Corporation on or before the date that is the twelve (12)-month
anniversary of the date of this Agreement, an amount equivalent of months
worked of:

 

(i)                                     the Executive’s annual Base Salary;

 

(ii)                                  the annualized Annual Bonus received or to
receive by the Executive for 2007; and

 

(iii)                               the cost of the benefits which were in force
at the time of termination of the Executive’s employment, calculated on a
yearly basis, including the car allowance but excluding the related operating
costs. However, Stock Options are expressly excluded from this provision and
the Executive shall be treated, in this regard, in accordance with the terms of
the Plan.

 

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(b)                                 If the Executive’s employment is terminated
by the Corporation after the date that is the twelve (12)-month anniversary of
the date of this Agreement:

 

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

 

(ii)           An amount equivalent to the Annual Bonus
received by the Executive for the last completed fiscal year prior to the
termination date calculated on a yearly basis; and

 

(iii)          An amount equivalent to twelve (12) months of
the cost of the benefits which were in force at the time of termination of the
Executive’s employment, calculated on a yearly basis, including the car
allowance but excluding the related operating costs. However, Stock Options are
expressly excluded from this provision and the Executive shall be treated, in
this regard, in accordance with the terms of the Plan.

 

(c)                                  The Executive acknowledges that the said
payments are fair and sufficient and, in consideration of the Corporation
giving him such payments in the event of the termination of his employment
without cause, the Executive shall grant the Corporation and its directors,
officers, employees, shareholders, representatives and agents, and the
directors, officers, employees, shareholders, representatives and agents of any
affiliate of the Corporation, a full and final release and discharge from any
and all claims, past, present or future, that he has or may have, arising
directly or indirectly from the termination of his employment, whether for
prior notice of termination, severance pay, damages in lieu thereof or for any
other reason.

 

6.4             Resignation

 

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

 

SECTION 7 – TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE
OF CONTROL

 

7.1             If the employment of the Executive is
terminated by the Corporation within twelve (12) months following a Change of
Control, without Cause by the Corporation or by the Executive for Good Reason,
the whole as defined in Appendix 1, the Executive shall receive the following:

 

(a)                                  An amount equivalent to eighteen (18) months
of his annual Base Salary;

 

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(b)                                 An amount equivalent to 1.5 times the Annual
Bonus, if any, which the Executive would have been entitled to receive in the
year during which the Change of Control occurred; and

 

(c)                                  An amount equivalent to eighteen (18) months
of the cost of the benefits which were in force at the time of termination of
the Executive’s employment, calculated on a yearly basis, including the car
allowance, but excluding operating costs. However, Stock Options are expressly
excluded from this provision and the Executive shall be treated, in this
regard, in accordance with the terms of the Plan.

 

SECTION 8 – NO COMPETITION, NO SOLICITATION AND LOYALTY

 

8.1             The Executive shall not compete with the
Corporation, directly nor indirectly. He shall not participate in any capacity
whatsoever in a business that would directly or indirectly compete with the
Corporation, namely one involved in the development and commercialization of
the specific endocrine therapies and oncology treatments which the Corporation
is actively developing, including, without limitation, as an executive,
director, officer, employer, principal, agent, fiduciary, administrator of
another’s property, associate, independent contractor, franchisor, franchisee,
distributor or consultant unless such participation is fully disclosed to the
Corporation and approved in writing in advance by the Board. In addition, the
Executive shall not have any interest whatsoever in such an enterprise,
including, without limitation, as owner, shareholder, partner, limited partner,
lender or silent partner. This no competition covenant is limited as follows :

 

8.1.1                        As to the time period, to the duration of the Executive’s
employment and for a period of one (1) year as of the date of termination
of his employment;

 

8.1.2                        As to the geographical area, the territory in which a specific product
had been actively exploited by the Corporation during the two years preceding
the termination date. For purposes of this clause, the Corporation is deemed to
have actively exploited such territory for such product if, during the two (2) years
immediately preceding the termination date:

 

(i)                                     Distribution rights for this product were
granted to a distributor of the Corporation, pursuant to a distribution
agreement (exclusive or non-exclusive) except if such distribution agreement
ceased to have effect, prior to the termination date, with the Corporation’s
consent and provided that the Corporation did not actively search for other
distributors for the territory covered by this Agreement; or if

 

(ii)                                  The Corporation has completed phase II
clinical development work for this product in this territory, or searched for
commercial partners or applied to protect its intellectual property rights in
relation to the product

 

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and
its use, including patent applications in relation to the product or its use,
which applications referred to these territories.

 

8.1.3                        As to the nature of the
activities, to duties or
activities which are identical or substantially similar to those performed or
carried on by the Executive during the twenty-four (24) months preceding the
termination of his employment.

 

8.2             The foregoing stipulation shall nevertheless
not prevent the Executive from buying or holding shares or other securities of
a Corporation whose securities are publicly traded on a recognized stock
exchange where the securities so held by the Executive do not represent more
than five percent (5%) of the voting shares of such Corporation and do not
allow for its control.

 

8.3             The Executive also undertakes, for the same
period and in respect of the same territory referred to hereinabove in
sub-sections 8.1.1 and 8.1.2, not to solicit clients of the Corporation,
directly or indirectly, not to permit the use of his name in order to solicit
said clients or do anything whatsoever to induce or to lead any person to
decide to put an end, in whole or in part, to his business relations with the
Corporation.

 

8.4             The Executive also undertakes, for the same
period and in respect of the same territory referred to hereinabove in
sub-sections 8.1.1 and 8.1.2, not to induce, attempt to induce or otherwise
interfere in the relations which the Corporation has with its distributors,
suppliers, representatives, agents and other parties with whom the Corporation
deals.

 

8.5             The Executive also undertakes, for the same
period and in respect of the same territory referred to hereinabove in
sub-sections 8.1.1 and 8.1.2 not to induce, attempt to induce or otherwise
solicit the personnel of the Corporation to leave their employment with the
Corporation nor to hire the personnel of the Corporation for any enterprise in
which the Executive has an interest.

 

8.6             The Executive acknowledges that the
provisions of this section 8 are limited as to the time period, the geographic
area and the nature of the activities to what the parties deem necessary to
protect the legitimate interests of the Corporation, while allowing the
Executive to earn his living.

 

8.7             Nothing in this section shall operate to
reduce nor to extinguish the obligations of the Executive arising at law or
under this contract which survive at the termination of the contract in reason
of their nature and, in particular, without limiting the foregoing, the
Executive’s duty of loyalty and obligation to act faithfully and honestly.

 

SECTION 9 – CONFIDENTIALITY

 

9.1             The Executive acknowledges that he has
received and will receive or conceive, in carrying on or in the course of his
work during his employment with the Corporation, confidential information
pertaining to the activities, the technologies, the operations and

 

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the
business, past, present and future, of the Corporation or its subsidiaries or
related or associated companies which information is not in the public domain.
The Executive acknowledges that such confidential information belongs to the
Corporation and that its disclosure or unauthorized use could be prejudicial to
the Corporation and contrary to its interests.

 

Accordingly,
the Executive agrees to respect the confidentiality of such information and not
to make use of or disclose or discuss it to or with any person, other than in
the course of his duties with the Corporation, without the explicit prior
written authorization of the Corporation.

 

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

 

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

 

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

 

9.2.2                        technical knowledge 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;

 

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

 

9.2.4                        financial information, production cost data,
marketing strategies, raw materials supplies, suppliers, staff and client lists
and related information, marketing plans, sales techniques and policies, including
pricing policies, sales and distribution data and present and future expansion
plans; and

 

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

 

9..3          The Executive undertakes to keep the terms of this Agreement
confidential.

 

SECTION 10 – OWNERSHIP OF INTELLECTUAL PROPERTY

 

10.1       The Executive hereby assigns and agrees to assign to the Corporation
all his intellectual property rights as of their creation and to make full and
prompt disclosure to the Corporation of all information relating to anything
made or designed by him or that may be made or designed by him during the
period of his employment, whether alone or jointly with other persons, or
within a period of two (2) years following the termination

 

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of
his employment and resulting from or arising out of any work performed by the
Executive on behalf of the Corporation or connected with any matter relating or
possibly relating to any business in which the Corporation or any of its
subsidiaries or related or associated companies is involved unless specifically
released from such obligation in writing by the Board.

 

In
addition, the Executive renounces all moral rights in any document or work
realized during the period of his employment. The Executive acknowledges that
the Corporation has the right to use, modify or reproduce any document or work
realized by the Executive, at its entire discretion, without the Executive’s
authorization and without his name being mentioned.

 

10.2        At any time during the period of his employment or after the
termination of his employment, the Executive shall sign, acknowledge and
deliver, at the Corporation’s expense, but without compensation other than a
reasonable sum for his time devoted thereto if his employment has then
terminated, any document required by the Corporation to give effect to section
10.1, including patent applications and documents evidencing the assignment of
ownership. The Executive shall also provide such other assistance as the
Corporation may require with respect to any proceeding or litigation relating
to the protection or defense of intellectual property rights belonging to the
Corporation.

 

10.3        This section shall be binding on the
Executive’s heirs, assignees and legal representatives. 

 

SECTION 11 – OWNERSHIP OF FILES AND OTHER PROPERTY

 

11.1       Any file, sketch, drawing, letter, report, memo or other document, any
equipment, machinery, tool, instrument or other device, any diskette, recording
tape, compact disc or software or any other property which comes into the
Executive’s possession during his employment with the Corporation, in the
performance or in the course of his duties, regardless of whether he has
participated in its preparation or design, how it may have come into his
possession and whether or not it is an original or a copy, shall at all times
remain the property of the Corporation and, upon the termination of the
Executive’s employment, shall be returned to the Corporation or its designated
representative before the Executive leaves his place of work. The Executive may
not keep a copy or give one to a third party.

 

SECTION 12 – TERMINATION OF PRIOR CONTRACTS

 

12.1       As of the effective date hereof, this Agreement supersedes and cancels
any prior agreement, verbal or written, with respect to the Executive’s
employment with the Corporation.

 

SECTION 13 – AMENDMENT OF THE AGREEMENT

 

13.1       To be valid, any
amendment to this Agreement must be confirmed in writing by the Corporation and
by the Executive.

 

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SECTION 14 – NOTICES

 

14.1                         Any notice
given hereunder shall be given in writing and sent by registered or certified
mail or hand delivered. If such notice is sent by registered or certified mail,
it shall be deemed to have been received five (5) business days following
the date of its mailing if the postal services are working normally. If such is
not the case, the notice must be hand delivered or served by bailiff, at the
discretion of the sender. In the case of hand delivery or service, the notice
shall be deemed to have been received the same day. It is agreed that if the
delivery date is a non-business day, the notice shall be deemed to have been
received on the following business day.

 

SECTION 15 – ELECTION OF DOMICILE

 

15.1                         For the
purposes of the exercise of any rights flowing from this Agreement and the
institution of legal proceedings, the parties elect domicile in the judicial
district of Québec

 

SECTION 16 – SUCCESSORS

 

16.1                         This Agreement
shall be binding on the successors, heirs, assignees and legal representatives
of the parties.

 

SECTION 17 – INTERPRETATION

 

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

 

SECTION 18 – LANGUAGE

 

The  parties  have expressly requested
that this Agreement be drafted in the English language. Les
parties ont expressément requis que cette convention
d’emploi soit rédigée en
anglais.

 

IN WITNESS WHEREOF the parties hereto have duly
signed this Agreement on this · day of 25 May,
2007.

 

 

ÆTERNA ZENTARIS INC.

 

	
  By:

  	
  /s/
  David J. Mazzo

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  David
  J. Mazzo, Ph.D.

  	
   

  	
  /s/
  Nicholas J. Pelliccione

  
	
   

  	
   

  	
   

  
	
  President
  and Chief Executive Officer

  	
   

  	
  Nicholas
  J. Pelliccione, Ph.D.

  

 

10

 

ANNEX 1

 

CHANGE OF
CONTROL PROGRAM (the “Program”)

 

1.                                    Applicability of the Program

 

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

 

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

 

(B)                                The Executive’s
employment is terminated, within twelve (12) months following a Change of
Control :

 

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

 

(ii)                                  by him, for “Good Reason”.

 

2.                                    Definitions

 

(A)                              For purposes of
the Program and unless otherwise defined, the capitalized terms used herein
shall have the following meaning:

 

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

 

(ii)                                Subject to the
exceptions set out in Schedule A hereto, a Person shall be deemed the “Beneficial Owner”
of or to “Beneficially
Own” (a) any securities of which such Person or any of such
Person’s affiliates or associates, as such terms are defined in National Instrument 45-106 – Prospectus and
Registration Exemptions, is owner at law or in equity; (b) any
securities which the Person or any of such Person’s affiliates or associates
has the right to acquire within 60 days (whether such right is exercisable
immediately or after the passage of not more than 60 days thereafter or upon
the occurrence of a contingency or the making of a payment) pursuant to any
securities convertible into Voting Shares, agreement, arrangement, pledge or
understanding, whether or not in writing (other than customary agreements with
and between underwriters and/or banking group and/or selling group members with
respect to a distribution of securities or pledges of securities in the
ordinary course of the pledgee’s business); and (c) any securities that
are Beneficially Owned within the meaning of clauses (i) or (ii) of
this Subsection 2(A)(ii) by any other Person with which such Person is
acting jointly or in concert;

 

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

 

(B)                                For purposes of
the Program, involuntary termination 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 misconduct or 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 any of the following acts:

 

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

 

(ii)                                a material
reduction or change in the Executive’s duties, authority, responsibilities,
accountability or a change in the business or corporate structure of the
Corporation which materially affects his authority, compensation or ability to
perform duties or responsibilities (such as 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 of this Program.

 

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

 

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

 

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

 

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

 

(iv)                                 if, for any
reason, including an amalgamation, merger or consolidation of the Corporation
with or into another company, the individuals who at the date hereof constitute
the Board of Directors of the Corporation (and any new directors whose
appointment by the Board of Directors of the Corporation or whose nomination
for election by the Corporation’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 date hereof or whose appointment or nomination for election
was previously so approved) cease to constitute a majority of the members of
the Board of Directors of the Corporation.

 

3.                                    Payment

 

In
the event that the two (2) conditions mentioned in Section 1 above
are met, the Executive shall receive, in a lump sum, at the latest within ten (10) days
of the effective date of the termination of employment, the payment of the
amounts mentioned in section 7 of the Agreement.

 

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

 

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

 

4.                                    Release

 

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

 

5.                                    General

 

The
Executive’s participation in the Program shall end immediately upon the
termination of his employment with the Corporation or one of its affiliates for
any reason whatsoever. The Program is for an indefinite term commencing on the
date of this Agreement. Furthermore, the Corporation shall have the right prior
to the occurrence of a Change of Control, in its sole discretion, to terminate
the Executive’s participation in the Program at the end of each twelve
(12)-month period commencing on the date of this Agreement by sending him a
written notice of termination at least thirty (30) days prior to the first
anniversary date of this Agreement and of

 

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each
anniversary date thereafter. For example, the Corporation would be entitled to
exercise its discretion to terminate the Executive’s participation in the
Program if, as of the date of the notice of termination, there has been during
said twelve (12)-month period a material reduction in the responsibilities of
the Executive.

 

6.                                    Successors

 

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

 

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Schedule A

 

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

 

A
Person shall not be deemed the “Beneficial Owner” of or to “Beneficially Own”
any security:

 

(A)                            as a result of
such security having been deposited or tendered pursuant to 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 or associates
or any other Person acting jointly or in concert with such Person until such
deposited or tendered security is taken up and paid for;

 

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

 

(C)                              as a result of (a) such
Person or any of the affiliates or associates of such Person holding such
security provided that the ordinary business of any such Person (the “Fund Manager”)
includes the management of investment funds for others and such security is
held by the Fund Manager in the ordinary course of such business in the
performance of such Fund Manager’s duties for the account of any other Person
(a “Client”);
(b) such Person (the “Trust Company”) being licensed to
carry on the business of a trust company under applicable laws and, as such, acting
as trustee or administrator or in a similar capacity in relation to the estates
of deceased or incompetent Persons (each an “Estate Account”) or in relation to
other accounts (each an “Other Account”) and holding such
security in the ordinary course of 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 province thereof or the laws of the United States of America
or any state thereof and such security being held by the Plan Administrator or
the Plan in the ordinary course 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 ordinary business or activity of
such Person includes, the management of investment funds for employee benefit
plans, pension plans or insurance plans of various public bodies and such
security is held

 

15

 

by the Crown Agent in the ordinary course of the management of such
investment funds; or (e) such Person being a Plan and such security being held
by the Plan in the ordinary course of such Plan’s activities; provided,
however, that in any of the foregoing cases the Fund Manager, the Trust
Company, the Plan Administrator, the Crown Agent or the Plan, as the case may
be, is not then making or has not then announced a current intention to make a
take-over bid (as such term is defined in the Securities
Act (Ontario)), alone or by acting jointly or in concert with any
other Person, other than an offer to acquire the Voting Shares pursuant to a
distribution by the Corporation or by means of market transactions made in the
ordinary course of business of such Person (including pre-arranged trades
entered into in the ordinary course of business of such Person) executed
through the facilities of a stock exchange or organized
over-the-counter-market;

 

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

 

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

 

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

 

16

 

Schedule B

 

Exceptions to the definition of “Acquiring
Person” (Section 2 (D)(i) of the Program)

 

“ACQUIRING PERSON” SHALL MEAN ANY
PERSON WHO IS AT ANY TIME AFTER THE DATE HEREOF THE BENEFICIAL OWNER OF FIFTY PERCENT (50%) OR MORE OF THE
OUTSTANDING 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 Shares as a result of one or
any combination of: (a) a Voting Share Reduction; (b) an Exempt
Acquisition; or (c) a Pro Rata Acquisition; provided, however, that if a
Person shall become the Beneficial Owner of fifty
percent (50%) or more of the outstanding Voting Shares by reason of
one or any combination of a Voting Share Reduction, an Exempt Acquisition or a
Pro Rata Acquisition, and thereafter becomes the Beneficial Owner of an
additional one percent of any Voting Shares then outstanding (otherwise than
pursuant to an additional Voting Share Reduction, Exempt Acquisition or Pro
Rata Acquisition), then, as of the date that such Person becomes a Beneficial
Owner of such additional Voting Shares, such Person shall become an “Acquiring Person”;
or

 

(iii)                             an underwriter
or member of a banking or selling group acting in such capacity that becomes
the Beneficial Owner of fifty percent (50%)
or more of the Voting Shares in connection with a distribution of securities
pursuant to an underwriting agreement with the Corporation;

 

For
purposes of the Program, the capitalized terms used herein shall have the
following meaning:

 

(a)                                “Voting Share Reduction” means an acquisition or
redemption by the Corporation or any corporation controlled by the Corporation
of Voting Shares which, by reducing the number of Voting Shares outstanding,
increases the percentage of Voting Shares Beneficially Owned by any Person to
fifty percent (50%) or more of the Voting Shares then outstanding;

 

 

(b)                               “Exempt  Acquisition”  means  an  acquisition  whereby  a  Person  became  an  Acquiring  Person  by  inadvertence  and  without  any  intention  to  become,  or  knowledge  that  it  would  become,  an  Acquiring  Person  under  this  Program  and,  in  the  event  that  a  waiver  is  granted  by  the  Board  of  Directors,  such  acquisition  shall  be  deemed  not  to  have  occurred  for  the  purposes  hereof.  Any  such  waiver  may  only  be  given  on  the  condition  that  such  Person,  within  10  days  after  the  foregoing  determination  by  the  Board  of  Directors  or  such  later  date  as  the  Board  of  Directors  may  determine  (the  “Disposition  Date”),  has  reduced  its  Beneficial  Ownership  of  Voting  Shares  such  that  the  Person  is  no  longer  an  Acquiring  Person  and  such  waiver  shall  only  be  effective  if  the  reduction  has  occurred  within  such  10-day  period;  [NTD:  To
consider  whether  such
an  event  can
ever  occur]

 

(c)                                “Pro Rata Acquisition” means an acquisition by a
Person of Voting Shares pursuant to (i) any dividend reinvestment plan, such purchase plan or other plan
of the Corporation made available to all holders of Voting Shares (other than
holders resident in any jurisdiction where participation in such plan is
restricted or impractical as a result of applicable law); (ii) a stock
dividend, a stock split or other event pursuant to which such Person becomes
the Beneficial Owner of Voting Shares on the same pro rata basis as all other
holders of Voting Shares of the same class or series; (iii) the
acquisition or exercise of rights to purchase Voting Shares distributed to all
holders of Voting Shares (other than holders resident in any jurisdiction where
such distribution or exercise is restricted or impractical as a result of
applicable law) by the Corporation pursuant to a rights offering (but only if
such rights are acquired directly from the Corporation); or (iv) a
distribution of Voting Shares or convertible securities in respect thereof
offered pursuant to a prospectus or by way of a private placement by the
Corporation or a conversion or exchange of any such convertible security,
provided that such Person does not thereby acquire a greater percentage of
Voting Shares or convertible securities so offered than the Person’s percentage
of Voting Shares Beneficially Owned immediately prior to such acquisition.

 

2Exhibit 4.8

 

AMENDMENT TO AMENDED EMPLOYMENT AGREEMENT

 

DATED AS OF JUNE 29, 2007

 

	
  BETWEEN:

  	
   

  	
  ÆTERNA
  ZENTARIS INC.,  a Corporation duly
  incorporated under the laws of Canada, having its registered address at 1405,
  boul. du Parc-Technologique, Quebec City, Quebec Canada G1P 4P5;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (the
  “Corporation”)

  
	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  ÆTERNA ZENTARIS, INC., a Corporation duly
  incorporated under the laws of Delaware, having its registered address at 

  PO Box, 540, Bernardsville, New Jersey, 07924-0540; 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (the
  “Subsidiary”)

  
	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  DENNIS TURPIN, CA domiciled at [civic
  address redacted for

  
	
   

  	
   

  	
  privacy
  reasons], Quebec, Canada

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (the
  “Executive”)

  

 

WHEREAS the Corporation and the
Executive entered into an amended employment agreement dated May 2, 2007
(the “Amended Employment Agreement”);

 

WHEREAS on April 9, 2007, the
Corporation incorporated the Subsidiary and the Corporation owns all of the
issued and outstanding voting and equity shares of the Subsidiary;

 

WHEREAS the Corporation has
transferred certain of its executives who will be performing their employment
duties principally out of the United States of America to the Subsidiary;

 

WHEREAS it is the parties’ intention
that, except for the transfer of employer effected by the present amendment to
the Amended Employment Agreement, all other terms and conditions of the Amended
Employment Agreement shall remain in place and unchanged;

 

AND WHEREAS it is the parties’ intention
that, at the discretion of the Corporation’s Board of Directors, the Executive
shall also serve as a corporate officer of the Corporation and perform such
corporate duties and functions commensurate therewith;

 

NOW THEREFORE THE PARTIES HERETO AGREE AS FOLLOWS:

 

 

SECTION 1
– ACKNOWLEDGMENTS

 

	
  1.1

  	
   

  	
  The
  parties hereto acknowledge that the Amended Employment Agreement has been
  transferred to the Subsidiary and that, therefore, the Subsidiary shall
  henceforth be the Executive’s employer and the Executive shall be on the
  Subsidiary’s payroll.

  
	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  The
  Executive agrees and undertakes that, in the event the Executive shall be
  appointed a corporate officer of the Corporation by the Corporation’s Board
  of Directors, the Executive shall fulfill such corporate functions and duties
  commensurate therewith gratuitously.

  
	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  The
  Executive hereby stipulates that that the Corporation shall continue to
  benefit from all of its and its Subsidiary’s rights and all of the
  Executive’s obligations under the Amended Employment Agreement, as hereby
  amended, as a third-party beneficiary, and the Corporation hereby accepts
  such stipulation.

  
	
   

  	
   

  	
   

  
	
  1.4

  	
   

  	
  The
  Corporation and the Subsidiary hereby acknowledge that, notwithstanding the
  amendment effected by the present, the hiring date of the Executive is 1999,
  being the year in which the Executive commenced employment with the
  Corporation and entered into an initial employment agreement with the
  Corporation.

  
	
   

  	
   

  	
   

  
	
  1.5

  	
   

  	
  Except
  as otherwise provided herein, all terms and conditions of the Employment
  Agreement remain unchanged, unmodified and in full force and effect.

  

 

SECTION 2
– LANGUAGE

 

The
parties have expressly requested that this Amendment be drafted in the English
language. Les parties ont expressément
requis que cet amendement soit rédigé en anglais.

 

IN
WITNESS WHEREOF the parties hereto have duly signed this agreement
on this twenty- ninth (29) day of June, 2007.

 

[Signature Page Follows]

 

2

 

	
  ÆTERNA
  ZENTARIS INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ David J. Mazzo

  	
   

  	
  /s/
  Dennis Turpin 

  
	
  David
  J. Mazzo, Ph.D. 

  	
   

  	
  DENNIS
  TURPIN, CA

  
	
  President
  and Chief Executive Officer

  	
   

  	
  SVP and
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ÆTERNA
  ZENTARIS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ David J. Mazzo

  	 

	
  David
  J. Mazzo, Ph.D. 

  	
   

  	
   

  
	
  President
  and Chief Executive Officer

  	
   

  	
   

  

 

3

 

AMENDED EMPLOYMENT AGREEMENT OF DENNIS TURPIN

 

ÆTERNA
ZENTARIS INC.

 

Dated May 2nd, 2007

 

 

AMENDED EMPLOYMENT AGREEMENT

 

	
  BETWEEN:

  	
   

  	
  ÆTERNA ZENTARIS INC., a Corporation duly
  incorporated, having its head office at 1405 Parc-Technologique Blvd., Québec, QC GIP 4P5,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (hereinafter
  the “Corporation”)

  
	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  DENNIS TURPIN, CA domiciled at [civic
  address redacted for privacy reasons], Quebec, Canada

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (hereinafter
  the “Executive”)

  

 

SECTION 1 – PURPOSE

 

	
  1.1

  	
   

  	
  The
  Corporation wishes to amend the employment agreement with the Executive. The
  Executive is willing to amend the employment agreement entered with the
  Corporation in 1996, on the terms and conditions set forth herein in this
  Amended Employment Agreement (the “Agreement”).  The
  Executive shall act as Senior Vice President and Chief Financial Officer and
  shall report to the President and Chief Executive Officer of the Corporation.

  

 

SECTION 2 – DUTIES

 

	
  2.1

  	
   

  	
  The
  Executive agrees to devote his full business time to the Corporation, to make
  every effort necessary to perform adequately the duties that are assigned to
  him and to act in the best interests of the Corporation at all times. The
  Employee shall refrain from any activity that could be prejudicial to the
  Corporation’s interests. In performing his duties with the Corporation, the
  Executive shall act faithfully and honestly at all times.

  
	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  The
  Executive shall carry out his duties from New Jersey, USA. However, the
  Executive acknowledges that his position will require traveling, including to
  Canada and Europe, and the Executive agrees to devote the necessary and
  reasonable time to such traveling.

  
	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  The
  Executive agrees to comply with all the instructions, policies and/or rules
  that are established verbally or in writing by the Corporation.

  

 

 

	
  2.4

  	
   

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

  

 

SECTION 3 – COMPENSATION

 

3.1                                 Salary

 

The
Corporation shall pay the Executive, for the duration of this Agreement, a base
annual salary (the “Base Salary”) of THREE HUNDRED AND TWENTY-FIVE
THOUSAND US DOLLARS (US$325,000.00), payable in accordance with the Corporation’s
standard payroll practice. Such Base Salary shall be reviewed annually and may
be increased in accordance with the Corporation’s policy.

 

3.2                                 Bonus

 

During
the term of this Agreement, the Executive shall be eligible to receive an
annual lump sum cash bonus (the “Annual Bonus”) in respect of each full or partial
fiscal year of the Corporation, which is from January 1 to December 31.
The Annual Bonus for the 2007 fiscal year shall be equal to an amount
representing thirty-five (35%) of the Base Salary. If an Annual Bonus is to be
paid hereunder in respect of a period that is a partial fiscal year, such
Annual Bonus shall be prorated for service through the Executive’s date of
termination. In all cases, the Executive’s eligibility for such Annual Bonus is
conditional upon the attainment of objectives, which were mutually agreed at
the beginning of the year and revised recently. According the Corporation’s
policy, the granting of Annual Bonus is based upon an assessment of each
individual’s performance as well as the performance of the Corporation and
requires Board approval.

 

3.3                                 Car Allowance

 

The
Corporation shall pay the Executive an annual taxable car allowance of TWENTY
THOUSAND US DOLLARS (US$20,000.00). In addition, the Corporation will assume
all related operating costs of the vehicle (including insurance, registration,
maintenance, repairs and fuel).

 

3.4                                 Moving
expenses, temporary rent and relocation incentive

 

Finally,
at the time of his final move from Canada to the USA, the Corporation will
reimburse all moving expenses incurred by the Executive in connection with the
relocation from Quebec City to New Jersey according to Industry practices and
in mutual agreement between the CEO of the Corporation and the Executive. In
addition, the Corporation will reimburse the Executive, upon presentation of
vouchers, three months of temporary rent, if any.

 

The
Corporation shall pay the Executive a net amount of TEN THOUSAND US DOLLARS
(US$10,000.00) upon the initiation of his physical relocation as a relocation
incentive. (For the sake of clarity, the US$10,000 is paid net of income
taxes.)

 

2

 

3.5           Business
Expenses

 

The
Corporation shall reimburse the Executive, upon presentation of vouchers, for
reasonable entertainment, traveling and other expenses incurred by him on
behalf of the Corporation, in accordance with the Corporation’s policies and
rules.

 

3.6           Double taxation

 

In
the eventuality whereby the Executive has a double taxation situation (double
residency, stock options, etc.), the Corporation shall reimburse the excess tax
costs to the Executive such that his total tax burden would be no more than
that of a similar person residing in New Jersey who did not have the dual
taxation liability. In addition, the Corporation shall assume the cost related
to the consultation of a tax expert by the Executive to analyze his fiscal
situation in connection with the relocation.

 

SECTION 4
– VACATION

 

The
Executive shall be entitled to paid annual vacation of four (4) weeks, in
accordance with the Corporation’s policy, which vacation is to be taken at
times prearranged with the Corporation. Vacation must be taken during the year
and shall not be cumulative. The full vacation for 2007 is vested for the
Executive upon execution of this agreement.

 

SECTION 5
– GROUP INSURANCE

 

5.1           Medical/Dental
Insurance, Life and Disability Insurance

 

The
Corporation shall pay the monthly premium for family benefits plan insurance
according the Corporation’s existing plan Insurance

 

SECTION 6 – DURATION AND TERMINATION

 

6.1           Duration

 

This contract is for an indeterminate term.

 

6.2           Automatic termination

 

The
Executive’s employment shall terminate automatically, without the Corporation
being bound to pay any compensation whatsoever, upon the death of the Executive
or the date upon which his resignation becomes effective.

 

The
Executive’s employment may also be terminated by the Corporation for cause upon
simple notice in writing transmitted to the Executive, without the Corporation
being bound to pay any compensation whatsoever, in the following cases,
hereinafter referred to as “Cause”:

 

3

 

(a)                                  If the
Executive is declared bankrupt or insolvent or makes an assignment of his
property or is placed under protective supervision, which situations the
Executive acknowledges to be incompatible with the continuation of his
employment.

 

(b)                                 If the
Executive becomes physically or mentally disabled to such an extent as to make
him unable to perform his duties normally and adequately for an aggregate of
six (6) months during a period of twelve (12) consecutive months. In such
a case, the Executive may continue to benefit under short-term and long-term
disability insurance plans, subject to the terms of such plans, if any.

 

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

 

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

 

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

 

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

 

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

 

(h)                                 If the
Executive misuses or abuses alcohol, drugs or controlled substances.

 

6.3                                 Termination
without Cause

 

The
Corporation may also terminate the Executive’s employment, without cause, by
paying him the following:

 

(i)            an amount
equivalent to eighteen (18) months of the Executive’s annual Base Salary;

 

(ii)           An amount
equivalent to 1.5 times the Annual Bonus received by the Executive for the last
completed fiscal year prior to the termination date calculated on a yearly
basis; and

 

(iii)          An amount
equivalent to eighteen (18) months of the cost of the benefits which were in
force at the time of termination of the Executive’s employment, calculated on a
yearly basis, including the car allowance but excluding the related operating
costs. However, Stock Options are expressly excluded from this provision and
the Executive shall be treated, in this regard, in accordance with the terms of
the Plan.

 

(i)            The Executive
acknowledges that the said payments are fair and sufficient and, in
consideration of the Corporation giving him such payments in the event of the

 

4

 

	
  termination
  of his employment without cause, the Executive shall grant the Corporation
  and its directors, officers, employees, shareholders, representatives and
  agents, and the directors, officers, employees, shareholders, representatives
  and agents of any affiliate of the Corporation, a full and final release and
  discharge from any and all claims, past, present or future, that he has or
  may have, arising directly or indirectly from the termination of his
  employment, whether for prior notice of termination, severance pay, damages
  in lieu thereof or for any other reason.

  

 

6.4           Resignation

 

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

 

SECTION 7
– TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE OF CONTROL

 

7.1                                 If the
employment of the Executive is terminated by the Corporation within twelve (12)
months following a Change of Control, without Cause by the Corporation or by
the Executive for Good Reason, the whole as defined in Appendix 1, the
Executive shall receive the following:

 

(a)        An amount
equivalent to eighteen (18) months of his annual Base Salary;

 

(b)        An amount
equivalent to 1.5 times the Annual Bonus, if any, which the Executive would
have been entitled to receive in the year during which the Change of Control
occurred; and

 

(c)        An amount
equivalent to eighteen (18) months of the cost of the benefits which were in
force at the time of termination of the Executive’s employment, calculated on a
yearly basis, including the car allowance, but excluding operating costs.
However, Stock Options are expressly excluded from this provision and the
Executive shall be treated, in this regard, in accordance with the terms of the
Plan.

 

SECTION 8
– NO COMPETITION, NO SOLICITATION AND LOYALTY

 

8.1           The Executive
shall not compete with the Corporation, directly nor indirectly. He shall not
participate in any capacity whatsoever in a business that would directly or
indirectly compete with the Corporation, namely one involved in the development
and commercialization of the specific endocrine therapies and oncology
treatments which the Corporation is actively developing, including, without
limitation, as an executive, director, officer, employer, principal, agent,
fiduciary, administrator of another’s property, associate, independent
contractor, franchisor, franchisee, distributor or consultant unless such
participation is fully disclosed to the Corporation and approved in writing in
advance by the Board. In addition, the Executive shall not have any interest
whatsoever in such an enterprise, including, without limitation, as owner,
shareholder, partner,

5

 

limited
partner, lender or silent partner. This no competition covenant is limited as
follows :

 

8.1.1        As to
the time period, to the duration of the Executive’s employment and
for a period of one (1) year as of the date of termination of his employment;

 

8.1.2        As to
the geographical area, the territory in which a specific product
had been actively exploited by the Corporation during the two years preceding
the termination date. For purposes of this clause, the Corporation is deemed to
have actively exploited such territory for such product if, during the two (2)
years immediately preceding the termination date:

 

	
   

  	
  (i)

  	
  Distribution
  rights for this product were granted to a distributor of the Corporation,
  pursuant to a distribution agreement (exclusive or non-exclusive) except if
  such distribution agreement ceased to have effect, prior to the termination
  date, with the Corporation’s consent and provided that the Corporation did
  not actively search for other distributors for the territory covered by this
  Agreement; or if

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  The
  Corporation has completed phase II clinical development work for this product
  in this territory, or searched for commercial partners or applied to protect
  its intellectual property rights in relation to the product and its use,
  including patent applications in relation to the product or its use, which
  applications referred to these territories.

  
	
   

  	
   

  

 

8.1.3        As to
the nature of the activities, to duties or activities
which are identical or substantially similar to those performed or carried on
by the Executive during the twenty-four (24) months preceding the termination
of his employment.

 

8.2           The foregoing
stipulation shall nevertheless not prevent the Executive from buying or holding
shares or other securities of a Corporation whose securities are publicly
traded on a recognized stock exchange where the securities so held by the
Executive do not represent more than five percent (5%) of the voting shares of
such Corporation and do not allow for its control.

 

8.3           The Executive
also undertakes, for the same period and in respect of the same territory
referred to hereinabove in sub-sections 8.1.1 and 8.1.2, not to solicit clients
of the Corporation, directly or indirectly, not to permit the use of his name
in order to solicit said clients or do anything whatsoever to induce or to lead
any person to decide to put an end, in whole or in part, to his business
relations with the Corporation.

 

8.4           The Executive
also undertakes, for the same period and in respect of the same territory
referred to hereinabove in sub-sections 8.1.1 and 8.1.2, not to induce, attempt
to induce or otherwise interfere in the relations which the Corporation has
with its distributors, suppliers, representatives, agents and other parties
with whom the Corporation deals.

 

6

 

8.5                                 The Executive also undertakes,
for the same period and in respect of the same territory referred to
hereinabove in sub-sections 8.1.1 and 8.1.2 not to induce, attempt to induce or
otherwise solicit the personnel of the Corporation to leave their employment
with the Corporation nor to hire the personnel of the Corporation for any
enterprise in which the Executive has an interest.

 

8.6                                 The Executive acknowledges
that the provisions of this section 8 are limited as to the time period, the
geographic area and the nature of the activities to what the parties deem
necessary to protect the legitimate interests of the Corporation, while
allowing the Executive to earn his living.

 

8.7                                 Nothing in this section
shall operate to reduce nor to extinguish the obligations of the Executive
arising at law or under this contract which survive at the termination of the
contract in reason of their nature and, in particular, without limiting the
foregoing, the Executive’s duty of loyalty and obligation to act faithfully and
honestly.

 

SECTION 9
– CONFIDENTIALITY

 

9.1                                 The Executive acknowledges
that he has received and will receive or conceive, in carrying on or in the
course of his work during his employment with the Corporation, confidential
information pertaining to the activities, the technologies, the operations and
the business, past, present and future, of the Corporation or its subsidiaries
or related or associated companies which information is not in the public
domain. The Executive acknowledges that such confidential information belongs
to the Corporation and that its disclosure or unauthorized use could be
prejudicial to the Corporation and contrary to its interests.

 

Accordingly,
the Executive agrees to respect the confidentiality of such information and not
to make use of or disclose or discuss it to or with any person, other than in
the course of his duties with the Corporation, without the explicit prior
written authorization of the Corporation.

 

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

 

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

 

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

 

9.2.2        technical
knowledge and methods, quality control processes, inspection methods,
laboratory and testing methods, information processing programs 

 

7

 

and systems; manufacturing
processes, plans, drawings, tests, test reports and software;

 

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

 

9.2.4                        financial information,
production cost data, marketing strategies, raw materials supplies, suppliers,
staff and client lists and related information, marketing plans, sales
techniques and policies, including pricing policies, sales and distribution
data and present and future expansion plans; and

 

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

 

9.3                                 The Executive
undertakes to keep the terms of this Agreement confidential.

 

SECTION 10
– OWNERSHIP OF INTELLECTUAL PROPERTY

 

10.1        The Executive
hereby assigns and agrees to assign to the Corporation all his intellectual
property rights as of their creation and to make full and prompt disclosure to
the Corporation of all information relating to anything made or designed by him
or that may be made or designed by him during the period of his employment,
whether alone or jointly with other persons, or within a period of two (2) years
following the termination of his employment and resulting from or arising out
of any work performed by the Executive on behalf of the Corporation or
connected with any matter relating or possibly relating to any business in
which the Corporation or any of its subsidiaries or related or associated
companies is involved unless specifically released from such obligation in
writing by the Board.

 

In
addition, the Executive renounces all moral rights in any document or work
realized during the period of his employment. The Executive acknowledges that
the Corporation has the right to use, modify or reproduce any document or work
realized by the Executive, at its entire discretion, without the Executive’s
authorization and without his name being mentioned.

 

10.2         At any time
during the period of his employment or after the termination of his employment,
the Executive shall sign, acknowledge and deliver, at the Corporation’s
expense, but without compensation other than a reasonable sum for his time
devoted thereto if his employment has then terminated, any document required by
the Corporation to give effect to section 10.1, including patent
applications and documents evidencing the assignment of ownership. The
Executive shall also provide such other assistance as the Corporation may
require with respect to any proceeding or litigation relating to the protection
or defense of intellectual property rights belonging to the Corporation.

 

10.3         This section
shall be binding on the Executive’s heirs, assignees and legal representatives.

 

8

 

SECTION 11 – OWNERSHIP
OF FILES AND OTHER PROPERTY

 

11.1         Any
file, sketch, drawing, letter, report, memo or other document, any equipment,
machinery, tool, instrument or other device, any diskette, recording tape,
compact disc or software or any other property which comes into the Executive’s
possession during his employment with the Corporation, in the performance or in
the course of his duties, regardless of whether he has participated in its
preparation or design, how it may have come into his possession and whether or
not it is an original or a copy, shall at all times remain the property of the
Corporation and, upon the termination of the Executive’s employment, shall be
returned to the Corporation or its designated representative before the
Executive leaves his place of work. The Executive may not keep a copy or give
one to a third party.

 

SECTION 12 – TERMINATION
OF PRIOR CONTRACTS

 

12.1         As
of the effective date hereof, this Agreement supersedes and cancels any prior
agreement, verbal or written, with respect to the Executive’s employment with
the Corporation.

 

SECTION 13 – AMENDMENT
OF THE AGREEMENT

 

13.1         To
be valid, any amendment to this Agreement must be confirmed in writing by the Corporation and by the
Executive.

 

SECTION 14 – NOTICES

 

14.1         Any
notice given hereunder shall be given in writing and sent by registered or
certified mail or hand delivered. If such notice is sent by registered or
certified mail, it shall be deemed to have been received five (5) business
days following the date of its mailing if the postal services are working
normally. If such is not the case, the notice must be hand delivered or served
by bailiff, at the discretion of the sender. In the case of hand delivery or
service, the notice shall be deemed to have been received the same day. It is
agreed that if the delivery date is a non-business day, the notice shall be
deemed to have been received on the following business day.

 

SECTION 15 – ELECTION
OF DOMICILE

 

15.1         For
the purposes of the exercise of any rights flowing from this Agreement and the
institution of legal proceedings, the parties elect domicile in the judicial
district of Québec

 

SECTION 16 – SUCCESSORS

 

16.1         This
Agreement shall be binding on the successors, heirs, assignees and legal
representatives of the parties.

 

9

 

SECTION 17 – INTERPRETATION

 

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

 

SECTION 18 – LANGUAGE

 

The parties have expressly requested that this Agreement be drafted in
the English language.  Les parties ont expressément requis que cette
convention d’emploi soit rédigée en anglais.

 

IN WITNESS WHEREOF the parties hereto have duly signed this
Agreement on this 2nd day of May, 2007.

 

 

	
  ÆTERNA ZENTARIS INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ David
  J. Mazzo

  	
   

  	
  /s/ Dennis
  Turpin

  
	
   

  	
   

  	
   

  	
   

  
	
  David J. Mazzo, Ph.D.

  	
   

  	
  DENNIS
  TURPIN, CA

  
	
   

  	
   

  	
   

  
	
  President and Chief Executive Officer

  	
   

  	
   

  

 

10

 

ANNEX 1

 

CHANGE OF
CONTROL PROGRAM (the “Program”)

 

1.             Applicability
of the Program

 

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

 

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

 

(B)          The Executive’s employment
is terminated, within twelve (12) months following a Change of Control :

 

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

 

(ii)     by him, for “Good Reason”.

 

2.             Definitions

 

(A)          For purposes of the Program and unless
otherwise defined, the capitalized terms used herein shall have the following
meaning:

 

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

 

(ii)     Subject to the exceptions set
out in Schedule A hereto, a Person shall be deemed the “Beneficial Owner” of or to “Beneficially Own”  (a) any securities of which such Person or any of such
Person’s affiliates or associates, as such terms are defined in National Instrument 45-106 – Prospectus and Registration Exemptions,
is owner at law or in equity; (b) any securities which the Person or any
of such Person’s affiliates or associates has the right to acquire within 60
days (whether such right is exercisable immediately or after the passage of not
more than 60 days thereafter or upon the occurrence of a contingency or the
making of a payment) pursuant to any securities convertible into Voting Shares,
agreement, arrangement, pledge or understanding, whether or not in writing
(other than customary agreements with and between underwriters and/or banking
group and/or selling group members with respect to a distribution of securities
or pledges of securities in the ordinary course of the pledgee’s business); and
(c) any securities that are Beneficially Owned within the meaning of
clauses (i) or (ii) of this Subsection 2(A)(ii) by any other
Person with which such Person is acting jointly or in concert;

 

11

 

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

 

(B)           For purposes of the Program, involuntary
termination 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 misconduct or 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 any of the following acts:

 

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

 

(ii)     a material reduction or
change in the Executive’s duties, authority, responsibilities, accountability
or a change in the business or corporate structure of the Corporation which
materially affects his authority, compensation or ability to perform duties or
responsibilities (such as 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 of this Program.

 

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

 

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

 

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

 

12

 

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

 

(iv)    if, for any reason, including
an amalgamation, merger or consolidation of the Corporation with or into
another company, the individuals who at the date hereof constitute the Board of
Directors of the Corporation (and any new directors whose appointment by the
Board of Directors of the Corporation or whose nomination for election by the
Corporation’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 date
hereof or whose appointment or nomination for election was previously so
approved) cease to constitute a majority of the members of the Board of
Directors of the Corporation.

 

3.             Payment

 

In the event that the two (2) conditions mentioned in Section 1
above are met, the Executive shall receive, in a lump sum, at the latest within
ten (10) days of the effective date of the termination of employment, the
payment of the amounts mentioned in section 7 of the Agreement.

 

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

 

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

 

4.             Release

 

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

 

5.             General

 

The Executive’s participation in the Program shall end immediately upon
the termination of his employment with the Corporation or one of its affiliates
for any reason whatsoever. The Program is for an indefinite term commencing on
the date of this Agreement. Furthermore, the Corporation shall have the right
prior to the occurrence of a Change of Control, in its sole discretion, to
terminate the Executive’s participation in the Program at the end of each
twelve (12)-month period commencing on the date of this Agreement by sending
him a written notice of termination at least thirty (30) days prior to the
first anniversary date of this Agreement and of

 

13

 

each anniversary date thereafter. For example, the Corporation would be
entitled to exercise its discretion to terminate the Executive’s participation
in the Program if, as of the date of the notice of termination, there has been
during said twelve (12)-month period a material reduction in the
responsibilities of the Executive.

 

6.             Successors

 

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

 

14

 

Schedule A

 

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

 

A Person shall not be deemed the “Beneficial Owner”
of or to “Beneficially Own” any
security:

 

(A)          as a result of such
security having been deposited or tendered pursuant to 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 or associates or any other Person acting jointly or
in concert with such Person until such deposited or tendered security is taken
up and paid for;

 

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

 

(C)          as a result of (a) such
Person or any of the affiliates or associates of such Person holding such
security provided that the ordinary business of any such Person (the “Fund  Manager”)
includes the management of investment funds for others and such security is
held by the Fund Manager in the ordinary course of such business in the
performance of such Fund Manager’s duties for the account of any other Person
(a “Client”); (b) such Person (the “Trust  Company”) being
licensed to carry on the business of a trust company under applicable laws and,
as such, acting as trustee or administrator or in a similar capacity in
relation to the estates of deceased or incompetent Persons (each an “Estate  Account”) or in
relation to other accounts (each an “Other  Account”) and holding such security in the ordinary course
of 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 province
thereof or the laws of the United States of America or any state thereof and
such security being held by the Plan Administrator or the Plan in the ordinary
course 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 ordinary
business or activity of such Person includes, the management of investment
funds for employee benefit plans, pension plans or insurance plans of various
public bodies and such security is held

 

15

 

by the Crown
Agent in the ordinary course of the management of such investment funds; or (e) such
Person being a Plan and such security being held by the Plan in the ordinary
course of such Plan’s activities; provided, however, that in any of the foregoing
cases the Fund Manager, the Trust Company, the Plan Administrator, the Crown
Agent or the Plan, as the case may be, is not then making or has not then
announced a current intention to make a take-over bid (as such term is defined
in the Securities Act (Ontario)), alone or by
acting jointly or in concert with any other Person, other than an offer to
acquire the Voting Shares pursuant to a distribution by the Corporation or by
means of market transactions made in the ordinary course of business of such Person
(including pre-arranged trades entered into in the ordinary course of business
of such Person) executed through the facilities of a stock exchange or
organized over-the-counter-market;

 

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

 

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

 

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

 

16

 

Schedule B

 

Exceptions to the
definition of “Acquiring Person” (Section 2 (D)(i) of the
Program)

 

“ACQUIRING PERSON”
SHALL MEAN ANY PERSON WHO IS AT ANY TIME AFTER THE DATE HEREOF THE BENEFICIAL
OWNER OF FIFTY PERCENT (50%)
OR MORE OF THE OUTSTANDING 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 Shares
as a result of one or any combination of: (a) a Voting Share Reduction; (b) an
Exempt Acquisition; or (c) a Pro Rata Acquisition; provided, however, that
if a Person shall become the Beneficial Owner of fifty
percent (50%) or more of the outstanding Voting Shares by reason of
one or any combination of a Voting Share Reduction, an Exempt Acquisition or a
Pro Rata Acquisition, and thereafter becomes the Beneficial Owner of an
additional one percent of any Voting Shares then outstanding (otherwise than
pursuant to an additional Voting Share Reduction, Exempt Acquisition or Pro
Rata Acquisition), then, as of the date that such Person becomes a Beneficial
Owner of such additional Voting Shares, such Person shall become an “Acquiring Person”; or

 

(iii)          an underwriter or member of a banking or
selling group acting in such capacity that becomes the Beneficial Owner of fifty percent (50%) or more of the Voting Shares in
connection with a distribution of securities pursuant to an underwriting
agreement with the Corporation;

 

For purposes of the Program, the capitalized terms used herein shall
have the following meaning:

 

(a)           “Voting
Share Reduction” means an acquisition or redemption by the
Corporation or any corporation controlled by the Corporation of Voting Shares
which, by reducing the number of Voting Shares outstanding, increases the
percentage of Voting Shares Beneficially Owned by any Person to fifty percent
(50%) or more of the Voting Shares then outstanding;

 

 

(b)           “Exempt
Acquisition” means an acquisition whereby a Person became an
Acquiring Person by inadvertence and without any intention to become, or
knowledge that it would become, an Acquiring Person under this Program and, in
the event that a waiver is granted by the Board of Directors, such acquisition
shall be deemed not to have occurred for the purposes hereof. Any such waiver
may only be given on the condition that such Person, within 10 days after the
foregoing determination by the Board of Directors or such later date as the
Board of Directors may determine (the “Disposition Date”), has reduced its
Beneficial Ownership of Voting Shares such that the Person is no longer an
Acquiring Person and such waiver shall only be effective if the reduction has
occurred within such 10-day period; [NTD: To consider whether
such an event can ever occur]

 

(c)           “Pro Rata Acquisition” means an acquisition
by a Person of Voting Shares pursuant to (i) any dividend reinvestment
plan, such purchase plan or other plan of the Corporation made available to all
holders of Voting Shares (other than holders resident in any jurisdiction where
participation in such plan is restricted or impractical as a result of
applicable law); (ii) a stock dividend, a stock split or other event
pursuant to which such Person becomes the Beneficial Owner of Voting Shares on
the same pro rata basis as all other holders of Voting Shares of the same class
or series; (iii) the acquisition or exercise of rights to purchase Voting
Shares distributed to all holders of Voting Shares (other than holders resident
in any jurisdiction where such distribution or exercise is restricted or
impractical as a result of applicable law) by the Corporation pursuant to a
rights offering (but only if such rights are acquired directly from the
Corporation); or (iv) a distribution of Voting Shares or convertible
securities in respect thereof offered pursuant to a prospectus or by way of a
private placement by the Corporation or a conversion or exchange of any such
convertible security, provided that such Person does not thereby acquire a
greater percentage of Voting Shares or convertible securities so offered than
the Person’s percentage of Voting Shares Beneficially Owned immediately prior
to such acquisition.

 

2

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