Exhibit 10.55
NUCRYST PHARMACEUTICALS CORP.
1998 Equity Incentive Plan
(as amended)
1. Purpose of the Plan
The purpose of this Stock Option Plan is to encourage equity ownership in
Nucryst Pharmaceuticals Corp. (the “Company”) and to develop the interest and
incentive of eligible Employees, Directors and other Service Providers (each as
hereinafter defined) of the Company and Subsidiaries in the Company’s growth and
development and the growth and development of its Subsidiaries (as hereinafter
defined). It is believed that giving eligible Employees, Directors and other
Service Providers an opportunity to benefit from increases in value of the
Common Shares will advance the interests of the Company, align the interests of
such persons with the interests of the Company’s shareholders, enhance the value
of the Common Shares for the benefit of all the Company’s shareholders and
increase the ability of the Company to attract and retain skilled and motivated
individuals in the service of the Company.
2. Definitions
In this Plan:

  (a)   “Amendment Date” means May 8, 2008;     (b)   “Award” means any award or
benefit granted under the Plan, including, without limitation, the grant of
Options, Stock Appreciation Rights, and Full Value Awards (including Stock Unit
Awards and Restricted Stock Unit Awards);     (c)   “Award Agreement” means a
written agreement between the Company and a Participant evidencing the terms and
conditions of an individual Award grant, in such form and containing such terms
and conditions as may be approved by the Committee from time to time, provided
that each Award Agreement shall be subject to the terms and conditions of the
Plan;     (d)   “Blackout Period” means any interval of time during which
trading in securities of the Company by officers, directors and employees of the
Company is prohibited pursuant to the Company’s Insider Trading Policy;     (e)
  “Board of Directors” means the board of directors of the Company;     (f)  
“Code” means the United States Internal Revenue Code of 1986, as amended. A
reference to any provision of the Code shall include reference to any successor
provision of the Code;     (g)   “Committee” means the appropriate committee(s)
appointed by the Board of Directors to administer the Plan. All references in
the Plan to the Committee means the Board of Directors if no Committee has been
appointed;

--------------------------------------------------------------------------------

 

- 2 -

  (h)   “Common Shares” means the common shares of the Company or, upon the
occurrence of an event contemplated in Section 8 hereof, such other common
shares to which a Participant may be entitled upon the exercise of an Option as
a result of such event;     (i)   “Company” means Nucryst Pharmaceuticals Corp.;
    (j)   “Date of Grant” means the date on which the Committee or Board of
Directors, as applicable, authorizes the grant of an Award to a Participant or
such other date as the may be specified by the Committee or Board of Directors,
as applicable, at the time of such authorization;     (k)   “Director” means a
person occupying the position of director on the Board of Directors;     (l)  
“Disability” for purposes of this Plan, means the mental or physical state of
the Participant such that:

  (i)   the Committee determines that the Participant has been unable, due to
illness, disease, mental or physical disability or similar cause, to fulfill his
or her obligations as an employee either for any consecutive six month period or
for any period of twelve months (whether or not consecutive) in any consecutive
24 month period; or     (ii)   a court of competent jurisdiction has declared
the Participant to be mentally incompetent or incapable of managing his or her
affairs.

  (m)   “Employee” means an officer or employee of the Company or its
Subsidiaries;     (n)   “Exchange” means the NASDAQ Stock Market or, if the
Common Shares are not then listed and posted for trading on the NASDAQ Stock
Market, on such stock exchange or quotation system on which such shares are
listed, posted for trading or quoted. In the event the Common Shares are listed,
posted for trading or quoted on more than one such stock exchange or quotation
system, the Committee shall, where required, designate one exchange or quotation
system as the relevant Exchange for purposes of the Plan;     (o)   “Fair Market
Price” per Common Share at any date shall be the closing price of the Common
Shares of the Company on the Exchange for the trading day immediately preceding
the date on which the granting of the Option is approved by the Committee. In
the event that the Common Shares are not listed and posted for trading on any
stock exchange, the Fair Market Price shall be determined in accordance with the
provisions in section 409A of the Code;     (p)   “Full Value Award” means the
grant of one or more Common Shares or a right to receive one or more Common
Shares in the future as described in Section 7;     (q)   “Incentive Stock
Option” means an Option that is intended to satisfy the requirements applicable
to an “incentive stock option” described in section 422(b) of the Code;     (r)
  “Non-Blackout Trading Day” means a day on which (i) a Trading Session occurs,
and (ii) no Blackout Period is in place;

--------------------------------------------------------------------------------

 

- 3 -

  (s)   “Nonqualified Option” means an Option that is not intended to be an
“incentive stock option” as that term is described in section 422(b) of the
Code;     (t)   “Option” means an option to purchase Common Shares from the
treasury of the Company granted to a Participant pursuant to the Plan. An Option
granted under the Plan may be either an Incentive Stock Option or a Nonqualified
Option;     (u)   “Option Price” means the price per Common Share at which a
Participant may purchase Option Shares or, in respect of an Independent Right
(as defined in Section 6 hereof), means the exercise price of such Independent
Right; provided, however, that under no circumstances shall the Option Price be
less than the Fair Market Price;     (v)   “Option Shares” or “Optioned Shares”
means the underlying Common Shares of the Company which a Participant is
entitled to purchase under the Plan upon the exercise of an Option;     (w)  
“Outstanding Issue” means the total number of issued and outstanding Common
Shares of the Company from time to time, calculated on a non-diluted basis;    
(x)   “Participants” means eligible Directors, Employees and Service Providers
to whom Options or Stock Appreciation Rights are granted pursuant to the Plan
and which remain unexercised, or to whom Full Value Awards are granted pursuant
to the Plan.     (y)   “Performance-Based Compensation” shall have the meaning
ascribed to it under Code section 162(m) and the regulations thereunder;     (z)
  “Performance Measures” shall be based on any one or more of the following
Company, Subsidiary, operating unit or division performance measures: net
investment income; operating expenses; cash flow(s); operating income; earnings
before interest and taxes; net income; stock price; dividends; strategic
business objectives, consisting of one or more objectives based on meeting
specified cost targets, business expansion goals, and goals relating to
acquisitions or divestitures; or any combination thereof. Each goal may be
expressed on an absolute and/or relative basis, may be based on or otherwise
employ comparisons based on internal targets, the past performance of the
Company and/or the past or current performance of other companies, and in the
case of earnings-based measures, may use or employ comparisons relating to
capital, shareholders equity and/or shares outstanding, investments or to assets
or net assets;     (aa)   “Plan” means this Stock Option Plan;     (bb)  
“Restricted Stock Unit” means the grant of a Stock Unit subject to a substantial
risk of forfeiture or other restrictions such as the achievement of certain
milestones (based on performance or passage of time);     (cc)   “Securities
Act” means the Securities Act, R.S.O. 1990, c.S.5, as amended from time to time;

--------------------------------------------------------------------------------

 

- 4 -

  (dd)   “Service Provider” means a person or company engaged by the Company to
provide services to the Company of an ongoing or recurring nature;     (ee)  
“Stock Appreciation Right” shall, as the context prescribes, mean the applicable
stock appreciation right as referred to in Section 6 hereof;     (ff)   “Stock
Unit” means the grant of a right to receive Common Shares in the future;    
(gg)   “Subsidiary” shall have the meaning attributed to such word by applicable
securities legislation;     (hh)   “Termination Date” means the date which is
the earlier of:

  (i)   the effective date on which the Participant’s employment with the
Company or any Subsidiary is terminated or ceases, a Director ceases to be a
Director, or a Service Provider ceases to provide services to the Company; and  
  (ii)   the date the Company notifies the Participant or the Participant
notifies the Company of such termination of employment, directorship or service
provision, as the case may be; and

  (ii)   “Trading Session” means a trading session on a day which the applicable
Exchange is open for trading;     (jj)   “Vesting Period” means the period, as
determined by the Committee and stipulated in the Award Agreement, over which an
Option or Stock Appreciation Right becomes exercisable.

3. Eligibility
Participation in the Plan shall be limited to Participants who are designated
from time to time by the Committee in its sole discretion. Participation shall
be voluntary and the extent to which any Participant shall be entitled to
participate in the Plan shall be determined by the Committee.
Each Award granted under the Plan shall be evidenced by an Award Agreement, the
terms and conditions of which need not be the same for all Participants. Any
such Award Agreement may be supplemented or amended in writing from time to time
as approved by the Participant and the Committee, provided that the terms of
such agreement as amended or supplemented conform to the provisions of the Plan
and provided that Awards granted under the Plan shall be contingent on
shareholder approval of the Plan to the extent required by applicable law or the
applicable rules of any stock exchange. A prospective Participant shall not,
with respect to any Award, have any rights with respect to such Award unless and
until such prospective Participant shall have executed an Award Agreement or
other instrument evidencing the Award and has otherwise complied with the
applicable terms and conditions of the Award, the Plan, and the Agreement.
4. Common Shares Subject to the Plan and Limitations on Issuance

  (a)   The aggregate number of Common Shares which may be reserved for issuance
pursuant to Awards shall not exceed such number which represents 15% of the
issued and

--------------------------------------------------------------------------------

 

- 5 -

      outstanding Common Shares of the Company at any given time. This
prescribed maximum may be subsequently increased to any other specified amount,
subject to the approval of the Exchange and any requisite regulatory approvals
and such shareholder approvals as may be required by the Exchange. For purposes
of this paragraph (a), if an Option is in tandem with a Stock Appreciation
Right, such that the exercise of the Option or Stock Appreciation Right with
respect to a Common Share cancels the tandem Stock Appreciation Right or Option
right, respectively, with respect to such Common Share, the tandem Option and
Stock Appreciation Rights with respect to each Common Share shall be counted as
covering but one Common Share for purposes of applying the limitations of this
paragraph (a). Subject to proper payment of the Option Price, all Common Shares
issued pursuant to Awards will be issued as fully paid and non-assessable. The
total number of Common Shares remaining reserved from time to time shall be
adjusted in accordance with Section 8 hereof. The following restrictions shall
also apply to this Plan:

  (i)   no Participant together with such Participant’s associates, as defined
under the Alberta Business Corporations Act, shall be issued, within any one
year period, a number of Options or Stock Appreciation Rights which exceeds 5%
of the Outstanding Issue;     (ii)   the number of Common Shares reserved for
issuance pursuant to Options and Stock Appreciation Rights granted to any one
Participant shall not exceed 5% of the Outstanding Issue; and     (iii)   the
maximum number of Common Shares that may be issued under the Plan through
Incentive Stock Options shall be 2,756,019.

  (b)   Subject to the foregoing provisions of Section 4, the following
additional maximums are imposed under the Plan:

  (i)   The maximum number of Common Shares that may be covered by Awards
granted to any one Participant during any one calendar-year period pursuant to
Sections 5 and 6 (relating to Options and Stock Appreciation Rights) shall be
15% of all issued and outstanding Common Shares.     (ii)   The maximum number
of Common Shares that may be issued in conjunction with Awards granted pursuant
to Section 7 (relating to Full Value Awards) shall be 15% of all issued and
outstanding Common Shares.     (iii)   For Full Value Awards that are intended
to be Performance-Based Compensation, no more than 15% of all issued and
outstanding Common Shares may be delivered pursuant to such Awards granted to
any one Participant during any one calendar-year period (regardless of whether
settlement of the Award is to occur prior to, at the time of, or after the time
of vesting); provided that Awards described in this paragraph (iii) that are
intended to be Performance-Based Compensation shall be subject to the following:

--------------------------------------------------------------------------------

 

- 6 -

  (A)   If the Awards are denominated in Common Shares but an equivalent amount
of cash is delivered in lieu of delivery of Common Shares, the foregoing limit
shall be applied based on the methodology used by the Committee to convert the
number of Common Shares into cash.     (B)   If delivery of Common Shares is
deferred until after Common Shares have been earned, any adjustment in the
amount delivered to reflect actual or deemed investment experience after the
date the shares are earned shall be disregarded.

No fractional shares may be purchased or issued hereunder. To the extent any
Common Shares covered by an Award are not delivered to a Participant or
beneficiary because the Award (or portion thereof) is forfeited, expired,
surrendered, cancelled, or otherwise terminated prior to the issuance or
transfer of such Common Shares or the Common Shares are not delivered on an
unrestricted basis (including, without limitation, by reason of the Award being
settled in cash or used to satisfy the applicable tax withholding obligation),
such Common Shares shall not be deemed to have been delivered for purposes of
the determinations to be made pursuant to this Section 4 and shall be again
available for grant under this Plan. Common Shares that have been issued
pursuant to the exercise of Awards under this Plan shall, upon issuance to the
Participant, again become available for grant under this Plan. If the exercise
price of any Option or Stock Appreciation Right granted under the Plan, or the
tax withholding obligation with respect to any Award granted under the Plan, is
satisfied by tendering Common Shares to the Company, only the number of Common
Shares issued net of the Common Shares tendered shall be deemed delivered for
purposes of determining the number of Common Shares available for delivery under
the Plan.
Payments or transfers to be made upon the exercise or settlement of an Award
may, in the discretion of the Committee, be made in: (i) Common Shares currently
authorized but unissued, or (ii) to the extent permitted by applicable law,
Common Shares purchased in the open market or in private transactions. At the
discretion of the Committee, an Award under the Plan may be settled in cash
rather than Common Shares.
Subject to the foregoing, the number of Awards that a Participant is entitled to
under the Plan will be determined by the Committee.
5. Option Provisions

  (a)   Number and Price of Option Shares and Vesting Period         The
Committee shall advise each Participant designated to receive Options in writing
of the number of Option Shares such Participant is entitled to purchase, the
Option Price at which the Option Shares may be purchased and the Vesting Period.
The Option Price at which the Option Shares may be purchased under the Plan
shall be fixed by the Committee, but under no circumstances shall the Option
Price be less than the Fair Market Price on the Date of Grant. The Committee may
impose performance thresholds or any other conditions which will need to be met
prior to vesting of any Options granted.     (b)   Exercise

--------------------------------------------------------------------------------

 

- 7 -

      Options granted under the Plan must be exercised, subject always to the
Vesting Period, within a period as determined by the Committee in its sole
discretion, acting reasonably and set forth in the Award Agreement, subject to a
maximum of 10 years from the Date of Grant, failing which the Participant’s
right to purchase such Option Shares lapses. No Option in respect of which
shareholder approval is required under the rules of the Exchange shall be
exercisable until such time as the Option has been approved by the shareholders
of the Company.     (b)   Payment         The Participant, from time to time,
and at any time after the vesting of any Options and prior to the lapse of such
Options, may elect to purchase all or a portion of the Option Shares,
corresponding to the then vested Options, available for purchase by delivering
to the Company at its registered office, or such other address as the Company
may specify from time to time, a completed stock option purchase form
substantially in the form attached hereto as Appendix “A.1” or such other form
as the Company may specify. Payment may be made by cash, certified cheque, bank
draft, money order or the equivalent payable to the order of “Nucryst
Pharmaceuticals Corp.”, or other form of payment acceptable to the Company.    
(c)   Share Certificates         Upon exercise of the Option and payment in full
of the purchase price the Company shall cause to be delivered to the Participant
within a reasonable period of time a certificate or certificates in the name of
the Participant representing the number of Option Shares the Participant has
purchased.

6. Stock Appreciation Rights

  (a)   Authorized Rights         The following three types of Stock
Appreciation Rights shall be authorized for issuance under the Plan:

  (i)   Tandem Rights. A “Tandem Right” means a Stock Appreciation Right granted
appurtenant to an Option which is subject to the same terms and conditions
applicable to the particular Option grant to which it pertains with the
following exceptions. The Tandem Right shall require the holder to elect between
the exercise of the underlying Option to purchase the Option Shares and the
surrender, in whole or in part, of such Option for an appreciation distribution.
The appreciation distribution payable by the Company to the Participant on the
exercised Tandem Right shall be in cash (or, if so provided in the Award
Agreement, at the option of the Company in an equivalent number of shares of
Common Shares based on Fair Market Price on the date of the Option surrender) in
an amount equal to the excess of (A) the Fair Market Price (on the date of the
Option surrender) of the number of Common Shares covered by that portion of the
surrendered Option in which the Option holder is vested over (B) the aggregate
Option Price payable for such vested shares.

--------------------------------------------------------------------------------

 

- 8 -

  (ii)   Concurrent Rights. A “Concurrent Right” means a Stock Appreciation
Right granted appurtenant to an Option which applies to all or a portion of
Option Shares subject to the underlying Option and which is subject to the same
terms and conditions applicable to the particular Option grant to which it
pertains with the following exceptions: A Concurrent Right shall be exercised
automatically at the same time the underlying Option is exercised with respect
to the particular Option Shares to which the Concurrent Right pertains. The
appreciation distribution payable by the Company to the Participant on an
exercised Concurrent Right shall be in cash (or, if so provided in the Award
Agreement, at the option of the Company in an equivalent number of Common Shares
based on the Fair Market Price on the date of the exercise of the Concurrent
Right) in an amount equal to such portion as determined by the Board of
Directors at the time of the grant of the excess of (A) the aggregate Fair
Market Price (on the date of the exercise of the Concurrent Right) of the vested
Option Shares purchased under the underlying Option which have Concurrent Rights
appurtenant to them over (B) the aggregate Option Price paid for such shares.  
  (iii)   Independent Rights. An “Independent Right” means a Stock Appreciation
Right granted independently of any Option but which is subject to the same terms
and conditions applicable to an Option (including the applicable provisions of
Section 5) with the following exceptions: An Independent Right shall be
denominated in share equivalents. The appreciation distribution payable by the
Company to the Participant on the exercised Independent Right shall be an amount
equal to the excess of (A) the aggregate Fair Market Price (on the date of the
exercise of the Independent Right) of a number of Common Shares equal to the
number of share equivalents in which the holder is vested under such Independent
Right, and with respect to which the holder is exercising the Independent Right
on such date, over (B) the aggregate Option Price for the Independent Rights
exercised. The appreciation distribution payable on the exercised Independent
Right shall be in cash or, if so provided in the Award Agreement, at the option
of the Company in an equivalent number of Common Shares based on the Fair Market
Price on the date of the exercise of the Independent Right. The number and/or
Option Price of share equivalents contained in the grant of an Independent Right
shall be subject to adjustment in accordance with the provisions of Section 8,
mutatis mutandis.

  (b)   Exercise         To exercise any outstanding Stock Appreciation Right,
the holder shall provide written notice of exercise to the Company in compliance
with the provisions of the Award Agreement evidencing such right.     (c)   No
Rights of Shareholders         Neither a Participant nor his personal
representative shall be, or have any of the rights and privileges of, a
shareholder of the Company by virtue of receiving or exercising a grant of Stock
Appreciation Rights under the Plan.

--------------------------------------------------------------------------------

 

- 9 -

  (d)   Issuance of Shares         Any Common Shares issued pursuant to this
Section 6 will be issued as fully paid and non-assessable.

7. Full Value Awards

  (a)   Full Value Awards (including Stock Unit Awards and Restricted Stock Unit
Awards) may be granted by the Committee subject to one or more of the following,
as determined by the Committee:

  (i)   The grant shall be in consideration of a Participant’s previously
performed services, or surrender of other compensation that may be due.     (ii)
  The grant shall be contingent on the achievement of Performance Measures or
other objectives during a specified period.     (iii)   The grant shall be
subject to a risk of forfeiture or other restrictions that will lapse upon the
achievement of Performance Measures or other objectives (including the passage
of time).         The grant of Full Value Awards may also be subject to such
other conditions, restrictions and contingencies, as determined by the
Committee.

  (b)   The Committee may designate a Full Value Award granted to any
Participant as Performance-Based Compensation. To the extent required by Code
section 162(m), any Full Value Award so designated shall be conditioned on the
achievement of one or more performance objectives. The performance objectives
shall be based on the Performance Measures selected by the Committee. For Awards
under this Section 7 intended to be Performance-Based Compensation, the grant of
the Awards and the establishment of the Performance Measures shall be made
during the period required under Code section 162(m).

8. Adjustments

  (a)   Subject to the applicable provisions of Code section 409A, appropriate
adjustments in the number of Common Shares subject to the Plan and, with respect
to Awards granted or to be granted, in the number of Awards granted and in the
Option Price and in the securities which shall be deemed to be Common Shares for
purposes of the Plan, shall be made by the Committee acting reasonably to give
effect to the adjustments in the number, character and value of Common Shares
resulting from sub-divisions, consolidations or re-classification of the Common
Shares or other relevant changes in the authorized or issued capital of the
Company, or the payment of stock dividends or other dividends-in-kind by the
Company, all as determined by the Committee in its sole discretion acting
reasonably.     (b)   Subject to the applicable provisions of Code section 409A,
appropriate adjustments in the number of Awards and the securities which shall
be deemed to be Common Shares

--------------------------------------------------------------------------------

 

- 10 -

      for purposes of this Agreement, shall be made by the Committee in its sole
discretion acting reasonably, to give effect to adjustments in the number,
character and value of outstanding Common Shares of the Company resulting from
any reorganization, amalgamation, arrangement, merger, transfer or sale of all
or substantially all of the assets of the Company, or similar transactions
affecting the Company or its assets or the Common Shares, including such
transactions as may be undertaken in conjunction with or in anticipation of an
initial public offering of the securities of the Company. For greater certainty,
the Committee may determine in its sole discretion acting reasonably, that each
Award shall be exchangeable for a Award of such other corporation resulting from
such transactions, having such terms and conditions which in the Committee’s
sole opinion are economically equivalent to the Awards exchanged.

9. Cessation of Employment or Directorship or Services
In the event that an Employee’s employment with the Company or any of its
Subsidiaries ceases or is terminated for any reason (other than death or
Disability), a Director ceases to be a Director for any reason (other than death
or Disability) or a Service Provider ceases to provide services to the Company
or any Subsidiary for any reason (other than death or Disability), the
Participant may elect to exercise all or a portion of the remaining Options and
Stock Appreciation Rights that have vested on the Termination Date, at any time
during the 30 day period following the Termination Date, or such later date as
specified in the Participant’s Award Agreement or, subject to the applicable
provisions of Code section 409A, as may be subsequently agreed to in writing by
the Company and the Participant, but in no event after the lapse of any Options
or Stock Appreciation Rights held. For the purposes of this Plan, the transfer
of the Employee’s employment to or from the Company to or from any Subsidiary of
the Company shall not be considered a cessation or a termination of employment
and the Employee’s rights under any Options or Stock Appreciation Rights shall
be the same as if such transfer had not occurred.
10. Death or Disability of Participant
In the event of the death or Disability of a Participant, the personal legal
representative (or, in the case of Disability, the Participant himself or
herself if he or she is competent to do so) may at any time during the 180 day
period following the date of death or Disability, or such later date as
specified in the Participant’s Award Agreement, but in no event after the lapse
of any Options or Stock Appreciation Rights held, exercise all or any portion of
such Participant’s Options or Stock Appreciation Rights that have vested as of
the date of death or Disability. At the end of such period or the term of the
applicable Options or Stock Appreciation Rights, whichever is earlier, the
Options or Stock Appreciation Rights shall forthwith terminate and be of no
further force or effect whatsoever.
11. Transfer and Assignment
Except as provided for in Section 10 or as otherwise provided by the Committee
in its sole discretion, the Participant’s rights under Awards granted under the
Plan are not assignable or transferable by the Participant or subject to any
other alienation, sale, pledge or encumbrance by such Participant during the
Participant’s lifetime. The obligations of each Participant shall be binding on
his or her heirs, executors and administrators.
12. Employment and Board of Directors Position Non-Contractual

--------------------------------------------------------------------------------

 

- 11 -

The granting of an Award to a Participant under the Plan does not confer upon
the Participant any right to continue in the employment of the Company or any
Subsidiary of the Company or as a member of the Board of Directors or as a
Service Provider, as the case may be, nor does it interfere in any way with the
rights of an Employee or of the Company’s rights to terminate an Employee’s
employment at any time or of the shareholders’ right to elect Directors.
13. Rights As Shareholders
Participants shall not have any rights as a shareholder with respect to Options
until, in the case of an Option which has been duly and properly exercised, full
payment of the Option Price for the number of Option Shares purchased has been
made to the Company. Participants receiving a grant of a Stock Appreciation
Right shall have no rights or privileges whatsoever as a shareholder of the
Company.
14. Administration of the Plan
The Plan shall be administered by one or more Committees. The Committee(s) shall
have the power and discretion to interpret and construe the terms and conditions
of the Plan and the Awards; to establish, amend or waive rules and regulations
for the administration of the Plan (provided that no such action shall, however,
without the consent of the Participant, in any manner materially adversely
affect his rights under any Awards previously granted under the Plan); and to
correct errors, omissions or inconsistencies in the Plan or any Awards granted
pursuant to the Plan.
Any determination by the Committee shall be final and conclusive on all persons
affected thereby unless otherwise determined by the Board of Directors, and
subject to any applicable arbitration provisions contained in an Award
Agreement. The day-to-day administration of the Plan may be delegated to such
persons as the Committee(s) may determine.
Members of the Committee shall be eligible to receive Awards under the Plan, so
long as a member of the Committee does not participate in any discussion or
decision as to the grant of any Awards to such member. If stipulated by the
Board of Directors, a grant of Awards under the Plan shall be subject to the
approval of the Board of Directors. Members of the Board of Directors shall be
eligible to receive Awards under the Plan, so long as a member of the Board of
Directors does not participate in any discussion or decision as to the grant of
any Awards to such member. A majority of the members of the Board of Directors
participating in any decisions as to any grant of Awards under the Plan shall be
persons who are not Employees of the Company.
15. Stock Exchange Rules
The Plan and any Award Agreements entered into hereunder shall comply with the
requirements from time to time of the Exchange.
16. Right to Issue Other Shares
The Company shall not by virtue of this Plan be in any way restricted from
declaring and paying stock dividends, issuing further Common Shares, varying or
amending its share capital or corporate structure or conducting its business in
any way whatsoever.
17. Notices

--------------------------------------------------------------------------------

 

- 12 -

Unless otherwise specified in a Participant’s Award Agreement, all written
notices to be given by the Participant to the Company may be delivered
personally or by registered mail, postage prepaid, addressed as follows:
NUCRYST Pharmaceuticals Corp.
10102 — 114 Street
Fort Saskatchewan, AB T8L 3W4
Canada
Attention: President
with a copy to:
NUCRYST Pharmaceuticals Corp.
50 Audubon Road, Suite B
Wakefield, MA 01880
USA
Attention: President
Any notice given by the Participant pursuant to the terms of an Award shall not
be effective until actually received by the Company at the above address. Any
notice to be given to the Participant shall be sufficiently given if delivered
personally or by postage prepaid mail to the last address of the Participant on
the records of the Company and shall be effective seven days after mailing.
18. Corporate Action
Nothing contained in the Plan or in an Award shall be construed so as to prevent
the Company or any Subsidiary from taking corporate action which is deemed by
the Company or any Subsidiary, acting in good faith, to be appropriate or in its
best interest, whether or not such action would have an adverse effect on the
Plan, provided that the Company shall not undertake any such corporate action
with the intent to adversely prejudice any Award previously granted to a
Participant. For greater certainty, but not to restrict the generality of the
foregoing, the Company shall, in their sole and unfettered discretion, have the
right and ability to issue shares and other securities, purchase and sell assets
and enter into corporate and commercial agreements (including without limitation
joint ventures, partnerships and development agreements) without the consent of
any Participant.
19. Conflicts and Amendments

  (a)   The Board of Directors shall have the right, in its sole discretion and
without the approval of shareholders, to alter, amend, suspend or discontinue
the Plan and amend any Award Agreements from time to time and at any time,
subject to, as applicable, the approval of the Exchange and any requisite
regulatory approvals and, subject to Section 19(b).     (b)   In exercising the
rights pursuant to Section 19(a), the Board of Directors will not have the right
to:

--------------------------------------------------------------------------------

 

- 13 -

  (i)   without the prior approval of shareholders and except as permitted by
Section 8: (A) extend the term of an Option or Tandem Right held by a
Participant; or (B) reduce the Option Price per Common Share under any Option
held by a Participant;     (ii)   affect in a manner that is adverse or
prejudicial to, or that impairs, the benefits and rights of any Participant
under any Award previously granted under this Plan (except as permitted by
Section 8 and except for the purpose of complying with applicable securities
laws or the bylaws, rules and regulations of any regulatory authority to which
the Company is subject, including the Exchange);     (iii)   without the prior
approval of shareholders, materially expand the class of Participants eligible
to participate under the Plan;     (iv)   reduce the Option Price per Common
Share under any Option held by a Participant or replace such Option with a lower
Option Price per Common share under such replacement Option, without shareholder
approval except as permitted by Section 8 and except for the purpose of
complying with applicable securities laws or the bylaws, rules and regulations
of any regulatory authority to which the Company is subject, including the
Exchange;     (v)   decrease the number of Common Shares which may be purchased
pursuant to any Option (except as permitted pursuant to Section 8) without the
consent of the Participant;     (vi)   set the Option Price of any Option below
the Fair Market Value of such Option on the Grant Date; or

  (vii)   extend the term of any Option beyond a period of ten years or the
latest date permitted under the applicable rules and regulations of all
regulatory authorities to which the Company is subject, including the Exchange.

20. Governing Law
The Plan is established under the laws of the Province of Alberta and the rights
of all parties and the construction and effect of each provision of the Plan
shall be according to the laws of the Province of Alberta and the laws of Canada
applicable therein.
21. Acceleration of Options
Without limiting the generality of the powers and discretions granted to the
Committee herein, the Committee may determine that any Option granted under the
Plan shall include provisions which accelerate the date on which any Option
shall become exercisable, upon the happening of such events as the Committee may
determine and as may be prescribed in the applicable Award Agreement. Without
limiting the generality of the foregoing, and subject to the terms and
provisions of the individual Award Agreement, the Committee may determine that
such acceleration should occur in the event of an actual or anticipated change
of effective control of the Company, or in the event of other fundamental
changes to the Company or its business or affairs.

--------------------------------------------------------------------------------

 

- 14 -

22. Tax Withholding Requirements
Whenever the Company is required to issue Common Shares or make a payment under
the Plan, the Company may require the Participant to remit to the Company an
amount sufficient to satisfy any Federal, Provincial/State and local tax
withholding requirements prior to the delivery of any certificate for such
shares or, in the discretion of the Committee, the Company may withhold from the
shares or payment to be delivered, shares or cash sufficient to satisfy all or a
portion of such tax withholding requirements.
23. Government Regulation
Notwithstanding any other provision contained herein, the Company’s obligation
to issue and deliver Common Shares under any Option is subject to:

  (a)   the satisfaction of all requirements under applicable securities law in
respect thereof and obtaining all regulatory approvals as the Company shall
determine to be necessary or advisable in connection with the authorization,
issuance or sale thereof, including shareholder approval, if required;     (b)  
the requirements of any Exchange on which the Common Shares are or may become
listed;     (c)   the admission of such Common Shares to listing on any Exchange
on which Common Shares may then be listed; and     (d)   the receipt from the
Participant of such representations, agreements and undertakings as to future
dealings in such Common Shares as the Company reasonably determines to be
necessary or advisable in order to safeguard against the violation of the
securities law of any jurisdiction.

In this connection, the Company shall take all reasonable steps to obtain such
approvals and registrations as may be necessary for the issuance of such Common
Shares in compliance with applicable securities law and for the listing of such
Common Shares on any stock exchange on which such Common Shares are then listed.
24. Exercise and Settlement of Awards During Blackout Periods
Where the expiry date of an Option or Tandem Right occurs during a Blackout
Period or within ten Non Blackout Trading Days following the end of a Blackout
Period, the expiry date for such Option or Tandem Right shall be the date which
is ten Non-Blackout Trading Days following the end of such Blackout Period.
Where the date for the settlement of Restricted Stock Units or Full Value Awards
occurs during a Blackout Period, the Company shall make such settlement to the
holder of such Award within ten Non-Blackout Trading Days following the end of
such Blackout Period.
25. Termination of Plan
This Plan will terminate on the tenth anniversary of the Amendment Date, unless
terminated earlier pursuant to Section 19. The full powers of the Committee and
the Board of Directors as provided for in

--------------------------------------------------------------------------------

 

- 15 -

this Plan shall survive the termination of this Plan until all Awards have been
exercised or settled in full or have otherwise expired.
DATED as of the 2nd day of January, 1998.
AMENDED as of the 16th day of April, 2001.
AMENDED as of the 19th day of December, 2005.
AMENDED as of the 8th day of May, 2008

--------------------------------------------------------------------------------

 

 

Appendix “A.1”
NUCRYST Pharmaceuticals Corp.
1998 Equity Incentive Plan (as amended)
Option Exercise Form
Part 1: Identification

             
 
     
 
    Name of Participant       Office Phone Number    
 
                 
Address
           
 
           
 
     
 
    Social Insurance/Security Number       Home Phone Number    

Part 2: Option
I hereby exercise my Option to purchase                      common shares of
NUCRYST Pharmaceuticals Corp. (“NUCRYST”) pursuant to the following option
grants:

                  Number of       Aggregate Grant Date   Common Shares  
Exercise Price   Consideration
 
           

I will deliver to you a bank draft payable to NUCRYST Pharmaceuticals Corp. in
the amount of $                    , equivalent to the full exercise price, on
                    , 2007.
I direct that the shares be issued in the name of and delivered to:
[name
address]
I hereby acknowledge that I have read, understood and accepted each and all the
conditions described in a document called “NUCRYST Pharmaceuticals Corp. 1998
Equity Incentive Plan (as amended)”.
Given at ________________, this __________ day of ________________, 2007.

                                               
Signature