Document:

Exhibit 4.5

EMPLOYMENT AGREEMENT OF ELLEN MCDONALD

 

ÆTERNA ZENTARIS INC.

 

Dated May 1st, 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:

  	
  ELLEN MCDONALD, MBA.
  domiciled at [civic address redacted for privacy reasons], New Jersey, USA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (hereinafter the “Executive”)

  

 

SECTION 1 – PURPOSE

 

1.1           The
Corporation wishes to employ the Executive as its Senior Vice President,
Business Operations and Chief Business Officer, starting on May 2nd,
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. The Board agrees that the Executive
may maintain his current board assignments (i.e., with Cobalis Corporation) but
will resign such position as soon as it is appropriate or necessary.

 

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, 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

 

2

 

number of Common Shares of the Corporation on the market, within the
first month 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”:

 

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:

 

(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.

 

4

 

(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;

 

5

 

(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

 

6

 

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

 

7

 

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

 

8

 

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.

 

9

 

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 7 day of May, 2007.

 

 

	
  ÆTERNA ZENTARIS INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ David J. Mazzo

  	
   

  	
  /s/ Ellen McDonald

  
	
   

  	
   

  	
   

  
	
  David J. Mazzo, Ph.D.

  	
   

  	
  Ellen McDonald, MBA

  
	
   

  	
   

  	
   

  
	
  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.

 

2Exhibit 4.6

AMENDED EMPLOYMENT AGREEMENT OF
MARIO PARADIS

 

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:

  	
  MARIO PARADIS, CA domiciled at [civic address redacted for
  privacy reasons], Québec, 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 1999, on the terms and
conditions set forth herein in this Amended Employment Agreement (the “Agreement”). The Executive shall act as Senior Vice
President, Administrative & Legal Affairs and Corporate Secretary 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 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 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           Transition
period, moving expenses and relocation incentive

 

The Corporation shall reimburse
the Executive, upon presentation of vouchers, the cost of a furnished
apartment, up to a two bedrooms in size, in New Jersey for a period maximum of twelve 12 months starting in August or September 2007. In
addition, for the same period, the Corporation will reimburse two airline
tickets per month (Quebec City – Newark) for the Executive or a member of his
family. 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.

 

2

 

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.)

 

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.

 

3

 

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”:

 

	
  (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

 

4

 

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
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,

 

5

 

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 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.

 

6

 

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 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:

 

7

 

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 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

 

8

 

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.

 

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

 

9

 

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 2nd day of May, 2007.

 

 

	
  ÆTERNA ZENTARIS INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ David J. Mazzo

  	
   

  	
  /s/ Mario Paradis

  
	
   

  	
   

  	
   

  
	
  David J.
  Mazzo, Ph.D.

  	
   

  	
  Mario Paradis, 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;

 

17

 

(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.

 

18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]