Exhibit 10.1

Form of Executive Employment Agreement

Private & Confidential

Date

Address

Dear :

 

Re: Employment Agreement

WHEREAS:

 

A. The Company has employed the Employee as an [insert title of employee]
pursuant to an Employment Agreement or Offer dated (insert date);

 

B. the Company wishes to continue to employ the Employee in the capacity of
[insert title of employee]; and

 

C. both parties, the company and the employee, wish to update and replace the
employee’s previous Employment Agreement to clarify the Employment terms and
recognize the change from a private to a publically traded company.

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual
covenants and agreements herein contained, and for other good and valuable
consideration and the provision of $10 to the employee, the receipt and
sufficiency of which is hereby acknowledged by both parties, the Company and the
Employee agree as follows:

 

1. Definitions

In this Agreement:

 

  (a) “Affiliate” has the same meaning as in the Canada Business Corporations
Act or any successor legislation, as amended from time to time.

 

  (b) “Agreement” means this agreement and schedules attached to this agreement,
as amended or supplemented from time to time by mutual written consent of both
Parties.

 

  (c) “Annual Compensation” means the combined total of Base Salary and Bonus
Compensation paid for services and performance in a calendar year.

 

  (d) “approved by the Company” or words of similar import means approved by an
authorized representative of the Company other than you.

 

  (e) “Base Salary” means the base compensation paid to you on a semi-monthly
basis and does not include benefits, Bonus Compensation or other incentive
compensation.

 

  (f) “Board” means the board of directors of the Company.

 

  (g) “Bonus Compensation” means the discretionary annual performance-based
compensation you are eligible for in accordance with Article 2(m).

 

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  (h) “Business” means the business of investigating, discovering, developing,
evaluating, or commercializing pharmaceutical compositions that may be useful
modifiers of SHIP/SHIP2 enzyme activity, or any other enzyme or technology for
which the Company has initiated a plan or program of investigation, discovery,
development, evaluation or commercialization prior to or during your employment
with the Company.

 

  (i) “Cause” means any one or more of the following:

 

  (i) A material breach of any of your obligations or duties pursuant to this
Agreement, which remains uncured seven days from you becoming aware of the
breach;

 

  (ii) Gross negligence or willful misconduct in the course of employment;

 

  (iii) Any action or activity that is contrary to applicable insider trading
rules or any other applicable securities rules or legislation;

 

  (iv) An act or omission involving dishonesty or fraud;

 

  (v) Substantial and repeated failure to perform the duties reasonably expected
of an employee in the biotechnology industry, or to perform certain duties as
reasonably directed by management or the Board, or

 

  (vi) Any other act, omission or conduct constituting cause at common law or
under the laws of British Columbia.

 

  (j) “Change in Control” means the occurrence, after the Commencement Date, of
one or more of the following:

 

  (i) a merger, a consolidation, a reorganization or an arrangement that results
in a transfer of more than fifty percent (50%) of the total voting power of the
Company’s outstanding securities to a person or a group of persons different
from a person or a group of persons holding those securities immediately prior
to such transaction (other than the Company or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company);

 

  (ii) a direct or indirect sale or other transfer of beneficial ownership of
securities of the Company possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities to a person or a
group of persons different from a person or a group of persons holding those
securities immediately prior to such transaction (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company);

 

  (iii) a direct or indirect sale or other transfer of the right to appoint more
than fifty percent (50%) of the directors of the Board or otherwise directly or
indirectly control the management, affairs and business of the Company to a
person or a group of persons different from a person or a group of persons
holding this right immediately prior to such transaction (other than the Company
or a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company);

 

  (iv) a direct or indirect sale or other transfer of all or substantially all
of the assets of the Company to a person or a group of persons different from a
person or a group of persons holding those assets immediately prior to such
transaction (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company); or

 

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  (v) a complete liquidation, dissolution or winding-up of the Company;

provided, however, that a Change in Control will not be deemed to have occurred
if such Change in Control results solely from the issuance, in connection with a
bona fide financing or series of financings by the Company, of voting securities
of the Company or any rights to acquire voting securities of the Company which
are convertible into voting Securities.

 

  (k) “Good Reason” in conjunction with a Change in Control means one or more of
the following events occurring without your consent:

 

  (i) termination of your employment without cause;

 

  (ii) any material and adverse change to your position, authority or
responsibilities in effect under this Agreement;

 

  (iii) any material reduction in incentives, health benefits, bonuses or other
compensation plans, practices, policies or programs provided to you in the
aggregate under this Agreement;

 

  (iv) an assignment to you of any duties materially inconsistent with your
status as the Enter Title;

 

  (v) any failure to secure the agreement of any successor entity to fully
assume the Company’s obligations under this Agreement; or

 

  (vi) any resolution is passed or any action or proceeding taken with respect
to the liquidation, dissolution or winding-up of the Company that does not
involve continuation of the Company in another form.

 

  (l) “Commencement Date” means your first day of employment which commenced on
Date.

 

  (m) “Competitive Business” means any person, firm, company, partnership,
venture or business that is (or, to your knowledge, is planning on) researching,
developing, producing, licensing, selling or marketing any product or service
that is competitive or substantially similar to the Business.

 

  (n) “Company” means Aquinox Pharmaceuticals (Canada) Inc. Pharmaceuticals
Inc., a corporation continued under the laws of Canada having a business address
at Suite 450 – 887 Great Northern Way, Vancouver, British Columbia, V5T 4T5, and
includes subsidiaries or affiliates of the Company where used in the context of
Confidential Information or intellectual property rights or protection.

 

  (o) “Confidential Information” means trade secrets and other information, in
whatever form or media, in the possession or control of the Company, which is
owned by the Company or by one of its clients or suppliers or a third party with
whom the Company has a business relationship (collectively, the “Associates”),
and which is not generally known to the public and has been specifically
identified as confidential or proprietary by the Company, or its nature is such
that it would generally be considered confidential in the industry in which the
Company or its Associates operate, or which the Company is obligated to treat as
confidential or proprietary.

Confidential Information includes, without limitation, the following: (i) the
Products and confidential or proprietary facts, data, techniques, materials and
other information related to the Products or the

 

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Business of the Company, including all related developmental or experimental
work or research, related documentation owned or marketed by the Company and
related formulas, algorithms, patent applications, concepts, designs,
flowcharts, ideas, programming techniques, specifications and software programs
(including source code listings), methods, processes, inventions, sources,
drawings, prototypes and patterns; (ii) all Developments; (iii) information
regarding the Company’s business operations, methods and practices, including
market strategies, product pricing, margins and hourly rates for staff and
information regarding the financial, legal and corporate affairs of the Company;
(iv) the names of the Company’s Associates and the nature of the Company’s
relationships with such Associates; and (v) technical and business information
of or regarding the Company’s Associates. Confidential Information does not
include information that is or becomes generally available to the public without
your fault or that you can establish, through written records, was in your
possession prior to its disclosure to you in connection with your employment.

 

  (p) “Developments” includes, without limitation, all:

 

  (i) Products, software, documentation, research, data, designs, reports,
flowcharts, trade-marks, specifications and source code listings, and any
related works, including any enhancements, modifications or additions to the
Products owned, licensed, sold, marketed or used by the Company;

 

  (ii) copyrightable works of authorship including, without limitation, any
technical descriptions for Products, user guides, illustrations and advertising
materials; and

 

  (iii) inventions, devices, integrated circuit topographies, discoveries,
concepts, ideas, algorithms, formulae, know-how, processes, techniques, systems,
methods, operating capabilities and improvements, whether patentable or not,

developed, created, generated or reduced to practice by you, alone or jointly
with others, as a result of your employment, which result from your employment
or which result from the use of the premises or property (including equipment,
supplies or Confidential Information) owned, leased or licensed by the Company
or which reasonably relate to the Business of the Company.

 

  (q) “Parties” means, collectively, you and the Company and, for clarity, a
“Party” means any one of the Parties.

 

  (r) “Person” means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with or without
share capital, unincorporated association, trust, trustee, executor,
administrator or other legal personal representative, regulatory body or agency,
government or governmental agency or entity however designated or constituted.

 

  (s) “Products” means (i) therapies, approaches, screening methodologies,
diagnostic assays, therapeutic molecules, compounds, and any other products
derived from the discovery or development of molecular compounds that can be
used to treat human inflammatory diseases, autoimmune disorders and cancer by
altering the activity of SHIP, SHIP2 or any other target enzymes or proteins for
which a research program has been initiated by the Company and disclosed to you;
(ii) any intellectual property or assets owned, licensed, sold, marketed or used
by the Company in connection with the Business, including enhancements,
modifications, additions or other improvements to such intellectual property;
and (iii) any other products or technologies that the Company discovers or
develops during the employment relationship.

 

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  (t) Use of the defined terms will include both the singular and the plural of
each such term, and such use will not be interpreted as changing the meaning
first given thereto.

 

2. Employment

The terms of your employment will be as follows:

 

  (a) Position and Responsibilities: You will be employed as an officer of the
Company in the position of XXXXXXX reporting to the XXXXXXX or his designate.
You will perform or fulfil the duties and responsibilities and exercise the
powers that are normally performed, fulfilled or exercised by the XXXX of a
pharmaceutical company, subject to the Canada Business Corporation Act and the
articles and by-laws of the Company, and any duties reasonably prescribed by the
Board from time to time. You will perform or fulfil the duties and
responsibilities as set out in Schedule A. You will at all times conform to the
reasonable and lawful instructions and directions of the Board.

 

  (b) Scope of Duties: During your employment you will devote the whole of your
working time, attention and abilities to your duties. You agree to give the
Company the full benefit of your knowledge, expertise, skill and ingenuity. The
Company consents to you holding board appointments on the conditions that your
engagement will not affect your duties or obligations to the Company, that your
engagement will not in any way assist a Competitive Business, and that you will
obtain the consent of the Board prior to accepting any such appointments in the
future.

 

  (c) Position May Evolve or Vary: Except as defined in section 1 (k), you
understand and agree that the above noted duties and responsibilities, and your
position, may evolve or vary from time to time over the course of your
employment to deal with changing business conditions, expansion or
reorganization, and/or an evolving regulatory environment, and you consent to
such reasonable variations in such duties and responsibilities, and in the
position, as may reasonably be required by the Company from time to time as a
result. The Company shall not be deemed to have waived the right to require you
to perform any duties hereunder by assigning you to any other duties or services
or by assigning another individual to perform your duties.

 

  (d) Base Salary: You will receive an Annual Base Salary of CDN amount for all
hours worked, exclusive of bonuses, benefits and other compensation, payable in
equal semi-monthly instalments, on the fifteenth day and last day of each month;
this amount will be pro-rated for any partial period of employment or less than
full-time work. Should the fifteenth or last day of any month not be a business
day, then your salary otherwise due on such date shall be paid to you on the
immediately preceding business day and will be subject to source deductions and
other deductions required to be deducted and remitted under applicable laws.

 

  (e) Annual Base Salary Increases: Your Annual Base Salary will be reviewed on
an annual basis and, subject to factors such as Board approval, employee
policies, the financial and operational performance of the company and your
performance in carrying out your responsibilities hereunder, such Annual Base
Salary may be increased. Should the Board increase your Annual Base Salary, then
the Board may, at its option, require you to execute a new form of Employment
Agreement with the Company to reflect such increase. Additionally, and in
further considerati+on of any increase in your Annual Base Salary or other
compensation, the Board reserves the right to make other modifications and
alterations to this Employment Agreement.

 

  (f) Excess Hours: You agree that as a manager or high technology professional
as defined in the Employment Standards Act of British Columbia, your hours of
work will vary and may be irregular and will be those hours required to meet the
objectives of your employment. You agree that the Annual Compensation described
in this Agreement compensates for you all hours worked.

 

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  (g) Stock Options: Subject to the approval of the Board, you will be eligible
to participate in an incentive options program, under which the Board, in its
sole and unfettered discretion, may grant you additional options to purchase
equity in the Company from time to time and subject to the terms and conditions
of our 2014 Equity Incentive Plan. All previous options issued to you are
subject to the terms of the 2014 Equity Incentive Plan.

 

  (h) Vacation Entitlement: You will be entitled to a vacation accrual of 8.0%
of wages paid, which shall be used to take Enter exact Number (4) weeks paid
vacation time per annum, pro-rated for any partial year of employment. Your
vacation must be taken in accordance with the Company’s vacation policy in
effect from time to time.

 

  (i) Benefits: Subject to your insurability, you will be eligible to enrol in
the Company’s benefits program covering MSP premiums, employee health, medical
or other related benefits which the Company shall from time to time provide to
its employees, subject to the policies and procedures as set out by the Company
and the insurer.

 

  (j) Business Equipment and Other Expenses: The Company will provide you with a
laptop computer and smartphone for business use. You acknowledge that during the
term of your employment and thereafter this equipment remains the sole property
of the Company. The Company will reimburse you for all reasonable travelling and
out-of-pocket expenses actually and properly incurred by you in connection with
your duties under this Agreement and in accordance with Company policy and Board
approval, provided that you first furnish statements, and receipts or vouchers
for all such expenses to the Company.

 

  (k) Policies. You will be required to comply with the Company’s policies which
are in effect as are implemented from time to time during the course of
employment. In particular, in compliance with our obligations as a public
company, you will be expected to comply with the Company’s Code of Business
Conduct and Ethics, Whistleblower, Confidential Information and Disclosure,
Communications, Media, and IT Policies.

 

  (l) Tax Returns: To ensure compliance with home country and host country tax
and/or Social Security regulations and as a condition of your employment you are
required to use the services of the Company’s tax adviser to prepare your home
and host country tax returns. The Company will cover the cost of all such
services for any year during which you are required to file tax returns in more
than one country as a result of your employment with the Company. The Company
will not require you to execute a return where you can provide reasonable
grounds to show that the return is not in compliance with law or statute.

It is a requirement of your employment that you cooperate with the Company’s tax
advisers in completing your home and host returns in a timely manner. Any
interest and/or penalties that are incurred due to a failure on your part either
to provide information or to review and approve relevant documentation will be
for your own account. Persistent failure to comply with the above requirements
may be regarded as a disciplinary matter.

The cost of any advice or planning on personal investments provided to you by
the Company’s tax advisers will be for your own account.

 

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  (m) Bonus: The Board may grant you an annual or incentive Bonus in an amount
and on such terms and conditions that the Board in its unfettered discretion
determines from time to time, based upon such factors as the Board in its
unfettered discretion determines are relevant of up to XX% of Base Salary. Any
Bonus the Board grants you over and above the remuneration agreed to herein
constitutes a gift from the Board and shall always be deemed as a gift. Under no
circumstances shall you consider that you have an acquired right to such gift,
which will never be an integral part of your remuneration. Except as set out in
Section 5 (d) you have no right to a Bonus if you are no longer actively
employed by the Company on the date the Bonus is to be paid, whether the reason
for the termination is with cause or without cause, with notice or without
notice, legal or illegal. Except as set out in Section 5 (d) you will have no
right to a Bonus if you have resigned your employment before the date the Bonus
is due to be paid.

 

3. Confidential Information

As consideration for your promotion and continued employment with the Company,
you covenant and agree as follows:

 

  (a) General Obligation of Confidentiality: You acknowledge that the
Confidential Information is the exclusive property of the Company or Persons
from whom the Company has obtained its rights. You will treat the Confidential
Information in strict confidence and will not directly or indirectly, either
during or subsequent to your employment with the Company, disclose, allow access
to, transmit or transfer the Confidential Information to a third party (other
than the Company’s directors, officers, bankers, legal and financial advisors in
the ordinary course of business) unless otherwise required by law or by a
regulatory authority having jurisdiction over the Company, or except as
previously approved in writing by the Company. You will protect such
Confidential Information from disclosure by exercising a standard of care as may
reasonably be expected to preserve its secret and confidential nature. You
acknowledge and agree that nothing contained in this Agreement will be construed
as an assignment to you of any right, title or interest in the Confidential
Information. All right, title and interest relating to the Confidential
Information is expressly reserved by the Company. All documents containing
Confidential Information are the property of the Company. Without limiting the
generality of the foregoing, you hereby transfer to the Company the property
rights in all documents that now or hereafter may contain the Confidential
Information.

 

  (b) Use of Confidential Information: You agree that at all times during and
subsequent to your employment with the Company, you will not use any of the
Confidential Information in any manner except as reasonably required for you to
perform your duties for the Company. Without limiting the generality of the
foregoing, you agree that at all times during and subsequent to your employment,
you will not use or take advantage of the Confidential Information for creating,
maintaining or marketing, or aiding in the creation, maintenance or marketing,
of any product that is competitive with any of the Products.

 

  (c) Prohibition on Copying: You will not copy or reproduce the Confidential
Information except in the course of your employment with and for the benefit of
the Company or with the written approval of the Company. All such copies remain
the property of the Company.

 

  (d) Injunctive Relief: You acknowledge that irreparable harm may result to the
Company if you breach your obligations under this Article or under
subsections 4(c), 4(e) and 4(f). You acknowledge that such a breach may not
properly be compensated by an award of damages. Accordingly, the Company’s
remedy for any such breach may include, in addition to other available remedies
and damages, injunctive relief or other equitable relief enjoining such breach
at the earliest possible date.

 

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  (e) Assignment: You agree to make full disclosure to the Company of each
Development promptly after its creation. You hereby irrevocably assign and
transfer to the Company, and agree that the Company will be the exclusive owner
of, all of your right, title and interest in and to each Development throughout
the world, including all trade secrets, patent rights, copyrights trademarks,
industrial designs and all other intellectual property rights therein, whether
realized within or beyond the scope of your employment, and regardless of the
true purpose of the employment relationship, and you irrevocably waive all moral
rights you may have in these Developments. You further agree to cooperate fully
at all times during and subsequent to your employment with respect to signing
further documents and doing such acts and other things reasonably requested by
the Company, at the Company’s expense, to confirm such transfer of ownership of
rights, including intellectual property rights, effective at or after the time
the Development is created and to apply for and obtain patents or copyrights,
industrial designs trademarks, other intellectual property registrations or
other similar rights covering the Development. The Company will be exclusively
entitled to make applications for registration of all such rights, in the
Company’s sole and unfettered discretion, in any jurisdictions that the company
deems necessary. Should the Company be unable to secure your signature on any
document necessary to apply for, prosecute, obtain, or enforce any patent,
copyright or other right or protection relating to any Development, due to your
incapacity or any other cause, you hereby irrevocably designate and appoint the
Company and each of its duly authorized officers and agents as your agent and
attorney-in-fact to do all lawfully permitted acts to further the prosecution,
issuance, and enforcement of patents, copyrights, or other rights or protection
with the same force and effect as if executed and delivered by you. You agree
that the obligations in this subsection will continue beyond the termination of
your employment with respect to any and all Developments created during your
employment. For purposes of the copyright laws of the United States of America
and other jurisdictions, to the extent, if any, that such laws are applicable to
any Confidential Information, it will be considered a work made for hire and the
Company will be considered the author thereof.

 

4. Obligations of Employment

You further covenant and agree as follows:

 

  (a) Performance and Duty to the Company: Throughout your employment you will
well and faithfully serve the Company and use your best efforts to promote the
Business of the Company. You will act honestly and in good faith in what you
reasonably believe to be in the best interests of the Company. You will adhere
to all applicable policies of the Company and exercise the degree of care,
diligence and skill that a reasonably prudent XXXXXXX would exercise in
comparable circumstances.

 

  (b) Business of the Company: You will not, during your employment with the
Company, engage in any business, enterprise or activity that is contrary to or
detracts from the due performance of the Business of the Company.

 

  (c) Restrictions: You agree to comply with all of the restrictions set forth
below at all times during your employment and for a period of one year from the
termination of your employment (regardless of which Party terminates your
employment and regardless of the reason for such termination, if any) during
which:

 

  (i)

you will not, either individually or in conjunction with any Person, as
principal, agent, director, officer, employee, investor or in any other manner
whatsoever, directly or indirectly, own, operate, carry on, be engaged in the
operations of, have any financial interest in, loan any monies to, guarantee any
liabilities or obligations of, act as a consultant to or provide management
services to a Competitive Business without the prior written consent of the

 

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  Company. The foregoing will not prevent you from holding any class of publicly
held shares of a company, partnership or other organization provided that you,
alone or in conjunction with any other Person, will not directly or indirectly
hold more than 5% of the shares of any such company, partnership or other
organization;

 

  (ii) you will not, either directly or indirectly, on your own behalf or on
behalf of others, solicit, interfere with, divert or appropriate or attempt to
solicit, interfere with, divert or appropriate to any Competitive Business, any
business or actively sought prospective business of the Company or any customers
with whom the Company has current agreements relating to the Business of the
Company, or with whom you have dealt, or with whom you have supervised
negotiations or business relations, or about whom you have acquired Confidential
Information in the course of your employment;

 

  (iii) you will not, either directly or indirectly, on your own behalf or on
behalf of others, solicit, interfere with, divert or hire away, or attempt to
solicit, interfere with divert, or hire away, any person engaged by the Company
or persuade or attempt to persuade any such individual to terminate his or her
employment or consultancy with the Company; and

 

  (iv) you will not directly or indirectly impair or seek to impair any
relationships that the Company has with its employees, consultants, customers,
suppliers, agents or other parties with which the Company does business or has
contractual relations.

 

  (d) No Personal Benefit: You will not receive or accept for your own benefit,
either directly or indirectly, any commission, rebate, discount, financial
gratuity or profit from any Person having or proposing to have one or more
business transactions with the Company, without the prior approval of the Board,
except that you may accept dinners, event tickets and other customary gifts with
values of less than US$200, as long as there is no frequent pattern of such
customary gifts from any person or entity, or related group of persons or
entities, that would give rise to the perception of a conflict of interest.

 

  (e) Business Contacts: During your employment you will communicate and channel
to the Company all knowledge, business and customer contacts and any other
information that could concern or be in any way beneficial to the Business of
the Company. Any such information communicated to the Company as aforesaid will
be and remain the property of the Company notwithstanding the subsequent
termination of your employment.

 

  (f) Return of Company Property: Upon termination of your employment, you will
promptly return to the Company all Company property including all written
information, tapes, discs or memory devices and copies thereof, and any other
material on any medium in your possession or control pertaining to the Business
of the Company, without retaining any copies or records of any Confidential
Information whatsoever. You will also return any keys, pass cards,
identification cards, equipment or other property belonging to the Company.

 

  (g) Pre-existing Obligations: You are hereby requested and directed by the
Company to comply with any existing common law, contractual or statutory
obligations to any former employers and to any other Person. The Company is not
employing you to obtain the confidential information or business opportunities
of any former employers or any other Person.

 

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5. Termination

 

(a) Resignation: If for any reason you should wish to leave the Company, you
will provide the Company with three month’s prior written notice of your
intention (the “Resignation Period”). The Parties hereby agree that in order to
protect the Company’s interests, the Company may, in its sole and unfettered
discretion, waive the Resignation Period or any part thereof, and end your
employment by delivering to you a written notice accompanied by payment of your
Base Salary due to you during the remainder of the Resignation Period.

 

(b) Termination for Cause: The Company may terminate your employment at any time
for Cause, effective upon delivery by the Company to you of a written notice of
termination of your employment for Cause. You will not be entitled to receive
any further pay or compensation (except for pay, if any, accrued and owing under
this Agreement up to the date of termination of your employment), severance pay,
notice, payment in lieu of notice, benefits or damages of any kind, and for
clarity, without limiting the foregoing, you will not be entitled to any bonus
or pro rata bonus payment that has not already been awarded by the Board.

 

(c) Termination Without Cause: The Company may terminate your employment at any
time without Cause, effective upon delivery by the Company to you of a written
notice or pay in lieu of notice of termination of your employment, provided that
the Company provides you with:

 

  (i) all pay owed to the date of termination, including pay for accrued and
unpaid vacation;

 

  (ii) subject to your duty to mitigate the loss of your employment, continuance
of the Base Salary in effect at the time of termination for a period equal to
XXX months (the “Continuance Period”). In the event you secure employment prior
to the end of the Continuance Period, then you agree to notify the Company of
such fact and the Company will only be required to continue 50% of your Base
Salary from the date of new employment until the end of the Continuance Period;

 

  (iii) continuance of the Benefits, subject to the terms of the respective
plans, until the earlier of you obtaining coverage from a new employer or the
expiry of the Continuance Period. In the event the plans do not provide
continuation of coverage after termination of your employment, the Company will
provide, or reimburse you for the cost of, equivalent replacement coverage until
the earlier of you obtaining coverage from your new employer or the expiry of
the Continuance Period; and

 

  (iv) vesting of any unvested options will cease on the date your employment is
terminated for any reason whether with or without cause or notice, or whether
legal or illegal, at which time any unvested portion of such options will expire
and be forfeit, and any vested portion of such options will be exercisable for a
period of ninety (90) days from the date of the termination of your employment.

 

(d) Change in Control: In the event of a Good Reason occurring within the period
of twelve (12) months after a Change in Control, you may terminate your
employment by providing one month’s written notice to the Board. In the event of
such termination, you will be entitled to:

 

  (i) all pay owed to the date of termination, including pay for accrued and
unpaid vacation;

 

  (ii) continuance of the Base Salary in effect at the time of termination for a
period equal to XXX months (the “Change in Control Continuance Period”); and

 

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  (iii) XXX months bonus pay to the date of termination that will be calculated
and based on the previous three-years bonus payment average; and

 

  (iv) continuance of the Benefits, subject to the terms of the respective
plans, until the earlier of you obtaining coverage from a new employer or the
expiry of the Change in Control Continuation Period. In the event the plans do
not provide continuation of coverage after termination of your employment, the
Company will provide, or reimburse you for the cost of, equivalent replacement
coverage until the earlier of you obtaining coverage from your new employer or
the expiry of the Continuance Period; and

 

  (v) all unvested options will immediately vest and will remain exercisable for
a period of ninety (90) days from the termination of your employment, at which
time any vested but unexercised options will expire and be forfeit.

 

(e) Offices and Directorships: Upon delivery of notice of resignation or
termination, regardless of the reason for or manner of termination, you agree to
immediately tender your resignation as an officer and/or director of the Company
and of any of its subsidiaries or affiliates. You agree that failure to tender
you resignation will amount to Cause, for which the Company may treat your
employment as being terminated for Cause.

 

  (f) Release: Any payments referred to in this section are inclusive of any
termination and/or severance payments that may be required under applicable
employment standards legislation. Prior to receiving the payment set out in this
section, you agree to execute a full and final release in favour the Company
substantially in the form attached as Appendix A.

 

6. Agreement Voluntary and Equitable

The Parties agree that they each have carefully considered and understand the
terms of employment contained in this Agreement, that the terms are mutually
fair and equitable, and that they each have executed this Agreement voluntarily
and of their own free will.

 

7. Assignment and Enurement

You may not assign this Agreement, any part of this Agreement or any of your
rights under this Agreement without the prior written consent of the Company.
This Agreement enures to the benefit of and is binding upon you and the Company
and your respective heirs, executors, administrators, successors and permitted
assigns.

 

8. Severability

If any part, article, section, clause, paragraph or subparagraph of this
Agreement is held to be indefinite, invalid, illegal or otherwise voidable or
unenforceable, the entire Agreement will not fail on the account thereof and the
validity, legality and enforceability of the remaining provisions will in no way
be affected or impaired thereby. Further, if any provision of this Agreement is
held by a court of competent jurisdiction to be excessively broad as to
duration, activity, geography, or subject, it shall be deemed to extend only
over the maximum duration, activity, geographic extent, and subject as to which
such provision shall be valid and enforceable under applicable law.

 

9. Entire Agreement

This Agreement constitutes the entire agreement between you and the Company with
respect to the subject matter herein and cancels and supersedes all previous
invitations, proposals, letters, correspondence,

 

11

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negotiations, promises, agreements, covenants, conditions, representations and
warranties with respect to the subject matter of this Agreement. There is no
representation, warranty, collateral term or condition affecting this Agreement
for which any Party can be held responsible in any way, other than as expressed
in writing in this Agreement. No change or modification of this Agreement will
be valid unless it is in writing and signed by both Parties.

 

10. Notice

Any notice required or permitted to be given hereunder must be in writing and
will be sufficiently given or made if delivered by hand to you or to the Chair
of the Board, as appropriate, or delivered or sent by registered mail, fax or
e-mail to the address of the Parties set out below. Any notice so given will be
deemed to have been given and to have been received on the day of delivery if it
is a business day and otherwise on the next succeeding business day or, if
mailed, on the third business day following the mailing thereof (excluding each
day during which there exists any interruption of postal services due to strike,
lockout or other cause). Addresses for notice may be changed by giving notice in
accordance with this section.

 

Aquinox Pharmaceuticals (Canada) Inc.

450 – 887 Great Northern Way, V5T 4T5

Vancouver, British Columbia

Attn: President & CEO

Fax: 604-295-4748

   Employee Name

address

 

Email: email address

 

11. Non-waiver

No failure or delay by you or the Company in exercising any power or right under
this Agreement will operate as a waiver of such power or right. Any consent or
waiver by any Party to this Agreement to any breach or default under this
Agreement will be effective only in the specific instance and for the specific
purpose for which it was given.

 

12. Survival of Terms

The provisions of sections 1, 3, 8, 9, 12, 13, 14 and 17, and of
subsections 4(c), 4(e), and 4(f) of this Agreement will survive the termination
of your employment.

 

13. Further Assistance

The Parties will execute and deliver any documents and perform any acts
necessary to carry out the intent of this Agreement.

 

14. Equitable Remedies

You hereby acknowledge and agree that a breach of your obligations under this
Agreement would result in damages to the Company that could not be adequately
compensated for by monetary award. Accordingly, in the event of any such breach
by you, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled as a matter of right to apply to a court
of competent jurisdiction for such relief by way of restraining order,
injunction, decree or otherwise, as may be appropriate to ensure compliance with
the provisions of this Agreement. The Company hereby acknowledges that any
material unilateral change or modification to this Agreement or a material
adverse change to your position, duties or compensation, without your prior
written consent, except as provided for in section 5, may constitute
constructive dismissal or breach of contract and, in addition to all other
remedies available to you at law or in equity, you shall be entitled as a matter
of right to apply to a court of competent jurisdiction for compensation, relief
or other award as may be determined appropriate in the circumstances to ensure
compliance with the provisions of this Agreement.

 

12

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15. Conflict

In the event of any conflict between the terms and conditions of this agreement
and any other agreement, the terms of this agreement shall prevail.

 

16. Time

Time is of the essence of this Agreement.

 

17. Governing Laws

This Agreement will be governed by and construed in accordance with the laws of
British Columbia and the laws of Canada applicable in British Columbia. Each
Party attorns to the non-exclusive jurisdiction of courts of British Columbia.

 

18. Independent Legal Advice

You acknowledge that you have been given an opportunity to seek independent
legal advice with respect to the terms of this Agreement prior to its execution
and have been advised to do so by the Company and that you understand the terms
and rights and obligations under this Agreement.

 

19. Counterparts

This Agreement may be executed in two or more counterparts, each of which will
be deemed to be an original and all of which will constitute one Agreement.

 

Aquinox Pharmaceuticals (Canada) Inc.

 

[NAME] [Title] Date:  

 

 

13

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I acknowledge and accept the terms and conditions of my employment with the
Company as set out above:

 

SIGNED, SEALED AND DELIVERED by Name in the presence of:      )
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)  

 

       Signature of Witness       

 

      

 

Name of Witness        Name

 

       Date: Address of Witness       

 

      

 

       Occupation of Witness       

 

14

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SCHEDULE A

Responsibilities and Duties

Job responsibilities include, but are not limited to, the following activities:

 

  •   List of duties

Growth Opportunities:

 

  •    

 

Company:   

 

  

Employee:   

 

  

Date:   

 

  

 

15

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APPENDIX “A”

RELEASE AND COVENANT NOT TO SUE

(“RELEASE”)

I, [NAME], in consideration of the payment set forth in the attached letter
dated [Date] which does not include any statutory severance amounts (the
“Consideration”), the receipt and sufficiency of which is hereby acknowledged,
agree:

 

1. I hereby release and forever discharge Aquinox Pharmaceuticals (Canada) Inc.,
(the “Company”), and its successors, assigns, directors, officers, servants,
employees, any affiliated companies and agents, (collectively referred to as the
“Releasees”) from any and all proceedings, claims, demands, any and all actions,
causes of action, claims, suits, debts, contracts, complaints, damages,
interest, costs, expenses and compensation of whatsoever kind and howsoever
arising, whether in law or in equity, contract or tort law, whether known or
unknown which I have or may have now or in the future against the Releasees
(except for the requirement to provide the Consideration), which arise out of or
are in any manner whatsoever, directly or indirectly connected to either or both
of my employment and the cessation of such employment with the Company,
including without limitation any claim or rights under the Employment Standards
Act (BC) and the Human Rights Code (BC), any claims for severance pay or pay in
lieu of notice of termination, any outstanding wages, bonuses, salary, overtime
pay, any vacation pay, holiday pay, pension or other employment benefit
entitlements, including long and short term disability benefits, life insurance,
claims for physical or mental injury or loss of dignity and any other type of
damages, or claims for benefits.

 

2. I agree not to initiate any proceeding or claim against any of the Releasees
in respect of any matters which are the subject matter of this Release. I agree
that if I violate this covenant not to sue, I will pay all costs and expenses of
defending against the proceeding or claim incurred by the Releasees, including
lawyer’s reasonable fees and disbursements.

 

3. I will not take any action detrimental to any of the Releasees, nor disparage
any of the Releasees to any third party.

 

4. In my employment with the Company I had obligations to protect Company
confidential information. I agree that such obligations survive the termination
of my employment and that the Releasees will suffer irreparable harm if Company
confidential information is disclosed or used by me other than strictly for the
benefit of the Company or without their express written authorization.

 

5. The Company will withhold income tax and other statutory deductions from the
Consideration and I will indemnify and hold harmless the Releasees from any
liability for tax, penalty, interest or any other amount of any kind arising
under statutory authority including but not limited to Canada Pension Plan and
Employment Insurance obligations and income tax obligations as required by the
Canada Revenue Agency with respect to the Consideration, my employment with the
Company, or its termination.

 

6. It is a condition of this Release that the circumstances leading to the
termination of my employment and the terms of this Release are strictly
confidential and shall not be disclosed by me, except as required by law or to
my spouse or partner, financial or legal advisors, all of whom shall be advised
on the confidential nature of the terms and be required to maintain
confidentiality over the terms.

 

7. The provision of the Consideration shall not be deemed nor construed as an
admission of liability on the part of the Releasees, or any of them, by whom
liability is expressly denied. I represent and warrant that:

 

16

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a) I have returned all property of the Company including all originals or copies
of the Company’s records, files, financial documents, client list, or any other
material that in any way touches upon the business, customers, personnel or
operations of the Company.

 

b) I have read and fully understand the contents, terms and effect of this
Release. The Consideration is accepted voluntarily for the purpose of making a
full and final settlement of all claims that I have or may have against the
Company and that I have had the opportunity to obtain independent legal advice
as to its terms and I acknowledge that the Company relies on this representation
and declaration.

 

c) I have been advised that my eligibility for coverage for benefits from the
Company will cease on [Date].

This Release will be governed by and construed and interpreted in accordance
with the laws of the Province of British Columbia without regard to principles
of conflict of laws.

Should any provision of this Release be declared or determined by any court of
competent jurisdiction to be illegal, invalid or unenforceable, all remaining
provisions of this Release shall otherwise remain in full force and effect and
be construed as if said illegal, invalid or unenforceable provision had not been
included herein.

IN WITNESS WHEREOF I have set my hand this          day of [Month, Year].

 

  )    

 

      Witness  

)

)

)

   

 

      Name  

)

)

)

   

 

     

 

Occupation  

)

)

)

    [NAME]

 

      Address  

)

)

)

   

 

     

 

17