Document:

exv10w53

Exhibit 10.53

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”), dated as of May 7, 2008 to be effective
May 8, 2008 (the “Effective Date”), is by and between NUCRYST PHARMACEUTICALS INC., a
Delaware corporation (“Company”) and DAVID B. HOLTZ (“Executive”).

     WHEREAS, the Company desires to employ the Executive to serve as the Vice President and
Chief Financial Officer of the Company and of NUCRYST Pharmaceuticals Inc., an Alberta
corporation of which the Company is a wholly-owned subsidiary (the “Parent”) on the
terms and conditions hereinafter set forth; and

     WHEREAS, the Executive desires to accept such employment with the Company subject to the
terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the promises and the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties agree as follows:

     1.     Employment and Duties.

             (a)     Employment. During the Term (as defined below) the Executive:

     (1)     shall serve as the Vice President and Chief Financial Officer of the
Company and of the Parent; shall have all authorities, duties and responsibilities
customarily exercised by an individual serving in such position in a corporation
of the size and nature of the Company and the Parent; may be assigned such
additional duties and responsibilities, consistent with the foregoing, as the
Chief Executive Officer of the Parent (the “CEO”) may from time to time
reasonably determine; shall report directly to the CEO; and shall devote
substantially all of the Executive’s working time and the Executive’s best efforts
to the Company and the Parent and the Executive’s position.

     (2)     shall faithfully serve the Company and the Parent and at all times act in
and promote the best interests of the Company and the Parent, and shall not,
without the prior approval of the CEO, carry on or engage in any other business or
occupation or become a director, officer, employee or agent of or hold any
position or office with any other company or business entity, provided that
nothing herein shall preclude the Executive from: (A) serving on the boards of a
reasonable number of trade associations and charitable organizations with the
approval of the CEO, such approval not to be unreasonably withheld, (B) engaging in charitable
activities and community affairs, (C) accepting and fulfilling a reasonable

 

 

number of speaking engagements, and (D) managing his personal investments and affairs
(which may include serving as an officer, director or employee of a family held
company); provided that such activities do not in the aggregate interfere with the
proper performance of his duties and responsibilities hereunder, violate any
provision hereof, or otherwise create any conflict of interest with respect to his
duties and responsibilities hereunder or violate the terms of any of the covenants
contained in the Employee Confidentiality and Non-Compete Agreement dated May 1,
2008 between the Executive and the Company (the “Confidentiality
Agreement”); and

     (3)     shall comply with all rules, regulations, policies and procedures of the
Company, the Parent and their respective affiliates as in effect from time to
time, including the Code of Conduct, Whistleblower Policy, Disclosure Policy and
Insider Trading Policy of the Parent and the Company and their respective
affiliates and any rules or policies that may be adopted by the Company or the
Parent from time to time to restrict or prohibit actual or perceived conflicts of
interest.

             (b)     Location. During the Term, the Executive’s principal office, and place of
employment, shall be in Princeton, NJ or such other location as may be determined by the Executive
with the approval of the CEO. The Executive acknowledges that he will be required to travel
frequently to other locations in which the Company and the Parent conduct their activities,
including Canada.

     2.     Compensation.

             (a)     Base Salary. During the Term (as hereinafter defined), the Company shall pay to
the Executive a minimum base salary at the rate of Two Hundred and Twenty-Five Thousand Dollars
($225,000.00) per annum (“Base Salary”). Subsequent increases to the Base Salary will be
determined by the Board of Directors of the Parent (the “Board”) (or committee thereof) in
its sole discretion. The Base Salary cannot be reduced by the Company so long as the Executive is
employed by the Company; provided, that the Base Salary may be reduced by the Company if such
reduction is in conjunction with a Company-wide or Parent-wide reduction in salaries relating to an
on-going business need of the Company or the Parent and such reduction of the Base Salary is
proportional to the decrease in salary to other similarly-positioned executives of the Company or
the Parent. The Base Salary under this Section 2(a) shall be payable to the Executive not less
frequently than twice monthly and shall be reduced by applicable taxes and withholdings.

             (b)     Annual Incentive Award. In addition to the Executive’s Base Salary under Section
2(a) above, the Executive will be eligible to receive an annual cash incentive award (“Annual Incentive Award”) in respect of each calendar year that ends
during the Term to the extent an employee cash incentive award program is established by

 

 

the Company and approved by the Board (the “Incentive Program”). The Executive’s Annual
Incentive Award opportunity will be determined based on the achievement of specific corporate
objectives of the Parent and will be equal to 20% of annualized Base Salary at threshold level
achievement of corporate objectives (with no payout for achievement of corporate objectives below
threshold level), 40% of annualized Base Salary at target level achievement of objectives and a
maximum possible Annual Award of 70% of annualized Base Salary at stretch achievement level with
the Executive’s eligibility commencing with calendar year 2009. The Annual Incentive Award payable
to the Executive shall be based upon the satisfaction of performance criteria and objectives as
determined by the Board (or its Human Resources and Compensation Committee) in its sole discretion
and shall be subject to other terms and conditions set forth in the Incentive Program. The
Executive acknowledges that to be eligible to receive an Annual Incentive Award in respect of any
calendar year during the Term, the Executive must be an employee of the Company on the date of
payout of the Annual Incentive Award and not be in breach of this Agreement or the Confidentiality
Agreement. Except as otherwise set forth herein, any such Annual Incentive Award shall be payable
no later than ninety (90) days following the end of the fiscal year for which it is awarded, and
shall be reduced by applicable taxes and withholdings. For calendar year 2008, in lieu of an
Annual Incentive Award, the Executive will be paid a bonus of forty per cent (40%) of Base Salary
prorated from the Effective Date and will be payable at the same time as the Company pays out the
2008 Annual Incentive Award which shall be no later than ninety (90) days following the end of the
calendar year and shall be payable to the Executive regardless of the satisfaction of corporate
performance criteria and whether or not the Executive is an employee of the Company on the payout
date, unless the Executive’s employment was terminated for Cause (as that term is defined in clause
6(c) below) prior to the date of payout or the Executive is in breach of this Agreement or the
Confidentiality Agreement, in which case no such bonus will be payable in respect of calendar year
2008.

             (c)     Long-Term Incentives. Subject to the approval of amendments to the Parent’s 1998
Equity Incentive Plan, as amend, (the “Plan”) by the shareholder of the Parent, and subject
to Board approval and commencement of employment, Executive will be granted a nonqualified stock
option (the “Option”) to purchase two hundred and forty thousand (240,000) shares of the
common stock of the Parent (the “Shares”) under the Plan, and pursuant to the terms and
conditions of a Stock Option Award Agreement in the form attached hereto as Exhibit A. The price
to be paid for Shares upon exercise of the Option shall be the Fair Market Value on the date of
grant as that term is defined in the Plan or on the earliest date thereafter as is permissible
under applicable law and the rules of the stock exchanges on which the Shares are traded (the
“Option Grant Date”). The Option described in this Section 2(c) will vest and become
exercisable in accordance with the following schedule: (i) options with respect to 1/3 of the
Shares will vest and become exercisable on the first anniversary of the Option Grant Date, (ii)
options with respect to 1/3 Shares will vest and become exercisable on the second anniversary of the Option Grant
Date, and (iii) options with respect to 1/3 Shares will vest and become exercisable

 

 

on the third anniversary of the Option Grant Date, provided (except to the extent otherwise provided in
Section 6 and Section 7 below) that the Executive is employed by the Company on such vesting date.
The Option described in this Section 2(c) will expire on the tenth anniversary of the Option Grant
Date.

     3.     Insurance, Retirement and Employee Benefit Plans; Business Expenses.

             (a)     Other Benefits and Perquisites. During the Term, the Executive shall be eligible
to participate in any plan of the Company relating to stock options, employee stock purchase or
ownership, 401(k), group life insurance, medical coverage, or other employee benefit plans or
arrangements that the Company has adopted or may adopt for the benefit of its employees. The
Company reserves the right to modify or terminate any employee benefit or perquisite at any time.
The benefits described in this Section 3(a) cannot be reduced by the Company so long as the
Executive is employed by the Company; provided, that such benefits may be reduced by the Company if
such reduction is in conjunction with a Company-wide or Parent-wide reduction in benefits relating
to an on-going business need of the Company or the Parent and such reduction of the benefits is
proportional to the decrease in benefits to other similarly-positioned executives of the Company or
the Parent.

             (b)     Equity Compensation. The Executive acknowledges and agrees that the determination
of whether to award to Executive Stock Options, the number of Share or shares of common stock of
the Parent subject to any such Stock Option and the terms and conditions of any such Stock Option,
are in the sole discretion of the Board. For the purposes of this Agreement, “Stock
Option” shall mean any compensatory option to acquire securities of the Parent; any
compensatory stock appreciation right, phantom stock option or analogous right granted by or on
behalf of the Parent; and any security or right received in respect of any of the foregoing options
or rights.

             (c)     Business Expenses. During the Term of this Agreement, the Company shall promptly
reimburse the Executive for all reasonable expenses incurred by the Executive in furtherance of his
duties under this Agreement, including all expenses of travel and living expenses while away from
home on business or at the request of and in the service of the Company, provided that such
expenses are reasonably incurred and accounted for in accordance with the published policies and
procedures established by the Company. Such expenses shall be reimbursed upon submission to the
Company of invoices containing original receipts for all such expenditures and upon review by the
Company of the reasonable nature of such expenditures.

     4.     Term. The initial term of employment under this Agreement shall be from the
Effective Date until the first anniversary of the Effective Date unless the Executive’s employment
terminates earlier pursuant to Section 6 below (“Term”). The Term shall be automatically
extended for additional one (1) year periods as of the end of each year in which the Term of this Agreement otherwise would expire, unless the CEO gives the Executive a
written notice of non-renewal not less than thirty (30) days before the

 

 

scheduled expiration of the Term. In the event of any expiration of the Term due to such non-renewal, the Executive shall be
entitled to his Base Salary for a period of six (6) months following the expiration of such Term
provided that the Executive or his legal representative signs a release of any and all claims in
form satisfactory to the Company. “Term,” as defined above, shall include any such one (1) year
extensions. The Term of this Agreement shall be subject to termination as provided in Section 6.

     5.     Vacations; Illness. The Executive shall be entitled to annual paid vacation of four
(4) weeks per year (which shall include personal days and sick days), provided that no such
vacation may be carried forward from any year during the Term.

     6.     Termination of Employment. The Executive’s employment may be terminated under
the following circumstances:

             (a)     Termination Due to Death. In the event that the Executive’s employment hereunder
is terminated due to his death, his estate or his beneficiaries (as the case may be) shall be
entitled to the following:

     (1)     if within forty-five (45) days of the Termination Date the Executive’s
legal representative signs a release of any and all claims in form satisfactory to
the Company, Base Salary for a period of ninety (90) days following the date of
death; and

     (2)     the continued right to exercise any Stock Options, to the extent that such
Stock Option is vested as of the Termination Date, for at least the lesser of one
hundred and eighty (180) days following the Termination Date and the remainder of
its maximum stated term.

             (b)     Termination Due to Disability. If the Executive is unable to perform his duties
hereunder due to a Disability (defined below), the Company may terminate Executive’s employment
hereunder. In the event that the Executive’s employment hereunder is terminated due to
Disability, he shall be entitled to:

     (1)     the payment of a pro-rata Annual Incentive Award for the year in which
his employment terminates to the extent earned in accordance with the terms set
forth herein. For the purposes of this Agreement, “Disability” shall mean
the Executive’s inability, due to physical or mental incapacity or similar cause,
to substantially perform his duties and responsibilities hereunder for any
consecutive six (6) month period or for any period of twelve months (whether or
not consecutive) in any consecutive twenty-four (24) month period, as determined
by the CEO; and

     (2)     the continued right to exercise any Stock Options, to the extent that
such Stock Option is vested as of the Termination Date, for at least the lesser of
one hundred and eighty (180) days following the Termination Date and the remainder
of its maximum stated term.

 

 

             (c)     Termination by the Company for Cause.

     (1)     For purposes of this Agreement, “Cause” shall mean (A) the
Executive’s breach of the terms of this Agreement or the Confidentiality Agreement;
(B) an act or omission by the Executive as a result of which the Executive is
charged with a criminal offence involving dishonesty, breach of trust or moral
turpitude; (C) the Executive’s commission of, conviction of, or entry of a plea of
guilty or no contest to, a crime that constitutes a felony; (D) theft, fraud,
misappropriation, willful neglect or misconduct, or material dishonesty by the
Executive involving the property or affairs of the Company or any of its affiliates;
(E) the Executive’s chronic absenteeism; (F) the Executive’s lack or performance due
to chronic alcoholism or other form of substance abuse; or (G) the Executive’s
willful and unjustified refusal to perform his duties hereunder; provided,
however, that the Executive shall be permitted ten (10) days’ written notice and
opportunity to cure prior to a termination based on clause (A) or (G) to the extent
capable of being cured. In the event that Executive’s employment is terminated by
the Company for Cause, Executive shall immediately resign from Executive’s
membership (if any) on the Board.

     (2)     At any time during the Term, the Company or the Parent may terminate the
Executive’s employment hereunder for Cause. In the event that the Executive’s
employment hereunder is terminated by the Company or the Parent for Cause in
accordance with Section 6(c)(1), he shall be entitled to: (A) the continued right to
exercise any Stock Options, to the extent that such Stock Option is vested as of the
Termination Date, for at least the lesser of thirty (30) days following the
Termination Date and the remainder of its maximum stated term; and (B) the benefits
described in Section 6(h)(1)(i) and (ii).

             (d)     Termination Without Cause. At any time during the Term, the Company or the Parent
may terminate the Executive’s employment hereunder without Cause. In the event that the
Executive’s employment hereunder is terminated by the Company or the Parent other than (w) for
death in accordance with Section 6(a); (x) for disability in accordance with Section 6(b), (y) for
Cause in accordance with Section 6(c)(1); or (z) by expiration of the Term of Employment, he shall
be entitled to:

     (1)     if within thirty (30) days of the Termination Date the Executive or the
Executive’s legal representative signs a General Release of all claims against the
Company in a form satisfactory to the Company (“General
Release”) an amount equal to six (6) month’s Base Salary, payable within thirty (30) days following Executive’s delivery of the General
Release and expiration of any revocation period contained therein;

 

 

     (2)     full vesting and exercisability, as of the Termination Date, for all
outstanding Stock Options to the extent that such Stock Options were then scheduled
to become vested or exercisable on or before the first anniversary of the
Termination Date, each such Stock Option to remain exercisable for the lesser of (x)
one hundred and twenty (120) days following the Termination Date and (y) the
remainder of its stated term.

             (e)     Constructive Termination Without Cause. In the event that a Constructive
Termination Without Cause occurs, the Executive shall have the same entitlements as provided under
Section 6(d) for a termination by the Company without Cause. As used herein, “Constructive
Termination Without Cause” shall mean: (1) any material breach of this Agreement by the
Company; provided, however, that the Executive gives the Company written notice specifying
the nature of any breach, and the Company has not cured such breach within thirty (30) days’ after
receipt of such written notice; or (2) the relocation of the Executive’s principal office and place
of employment to a location that is more than sixty (60) miles from Princeton, NJ; provided,
however, that the Executive notifies the Company of the Executive’s intent to treat the
relocation as Constructive Termination Without Cause within thirty (30) days of the Executive’s
receipt of the written notice of relocation (the “Relocation Notice”), and provided
further, however, that the Company does not thereafter revoke the Relocation Notice within
thirty (30) days after receipt of such Relocation Notice from the Executive.

             (f)     Voluntary Termination. In the event that the Executive terminates his employment
hereunder prior to the then-scheduled expiration of the Term of Employment on his own initiative,
other than for Disability or by a Constructive Termination Without Cause, he shall give the Company
at least ninety (90) days’ prior written notice of such termination and shall have the same
entitlements as provided in Section 6(c)(2) in the case of a termination by the Company for Cause.
A voluntary termination under this Section 6(f) shall not be deemed a breach of this Agreement.

             (g)     Notice of Termination. Any termination of the Executive’s employment by the
Company or by the Executive (other than termination pursuant to Section 6(a) or (b) hereof) shall
be communicated to the other party by a written Notice of Termination.

             (h)     Miscellaneous.

     (1)     On any termination of the Executive’s employment hereunder, he shall
be entitled to:

     (i)     Base Salary through the Termination Date; and

 

 

     (ii)     a lump-sum payment in respect of accrued but unused vacation days at
his Base Salary rate in effect as of the Termination Date.

     (2)     In the event of any termination of the Executive’s employment hereunder,
the Executive shall be under no obligation to seek other employment or otherwise
mitigate the obligations of the Company under this Agreement. Any amounts due under
this Section 6 are considered to be reasonable by the Company and are not in the
nature of a penalty.

     (3)     There shall be no contractual or similar restrictions on the Executive’s
activities following the Termination Date other than as expressly set forth in this
Agreement, the Confidentiality Agreement or any shareholder agreement with the
Company to which Executive is a party.

     7.     Change in Control.

             (a)     Definition. As used herein, “Change in Control” shall mean the occurrence
of a transaction or series of transactions, either alone or in conjunction with other events or
transactions, as a result of which:

     (1)     any “person,” as such term is currently used in Section 13(d) of
the Securities Exchange Act of 1934 (the, “Act”) (other than the Parent, any of its
subsidiaries, the Executive or The Westaim Corporation [“Westaim”]),
together with any “affiliates” or “associates” (as such terms are defined in Rule
12b-2 of under the Act) of such person, becomes (directly or indirectly) a
“beneficial owner,” as such term is currently used in Rule 13d-3
promulgated under that Act, of more than fifty percent (50%) of the Voting
Securities of the Parent(measured either by number of Voting Securities or by
number of votes entitled to be cast), whether through the acquisition of previously
issued and outstanding Voting Securities, or of Voting Securities that have not
been previously issued, or any combination thereof, or any other transaction having
a similar effect, unless the acquisition of such Voting Securities is approved by a
majority of Incumbent Directors (as defined below). As used herein: (x)“Voting
Securities” shall mean issued and outstanding securities of the Parent of any
class or classes having general voting power, under ordinary circumstances in the
absence of contingencies, to elect one or more members of the Board of the Parent;
and (y) “Incumbent Directors,” means the members of the Board of the Parent
on the Effective Date; provided that any individual becoming a director
subsequent to such date whose election or nomination for election was supported by
two-thirds of the directors who then
comprised the Incumbent Directors shall be considered to be an Incumbent
Director;

 

 

     (2)     fifty percent (50%) or more of the issued and outstanding Voting
Securities become subject to a voting trust in which neither the Parent, nor the
Executive nor any or his associates nor Westaim nor any of its affiliates
participate;

     (3)     a majority of the members of the Board are removed from office at any
annual or special meeting of shareholders of the Parent, or a majority of the
members of the Board resign from office in the course of any 60-day period, unless
the vacancies created thereby are either (A) filled by appointments made by the
remaining members of the Board or (B) are filled by nominees proposed by the Board,
the Executive, or any of his associates or Westaim; or

     (4)     (x) the Parent combines with another entity and is the surviving entity,
or (y) all or substantially all of the assets or business of the Parent is disposed
of pursuant to a sale, merger, consolidation, liquidation or other transaction or
series of transactions, unless the holders of Voting Securities of the
Parent immediately prior to such combination, sale, merger, consolidation,
liquidation or other transaction or series of transactions (collectively, a
“Triggering Event”) own, directly or indirectly, and immediately following
such Triggering Event, by reason of their ownership of Voting Securities of the
Parent immediately prior to such Triggering Event, more than fifty percent (50%) of
the Voting Securities (measured both by number of securities and by voting power)
of: (q) in the case of a combination in which the Parent is the surviving entity,
the surviving entity and (r) in any other case, the entity (if any) that succeeds
to substantially all of the business and assets of the Parent.

             (b)     Notwithstanding the definition in Section 7(a), it is understood and agreed that no Change
in Control shall be deemed to exist or occur as a result of any alteration in the current equity
ownership of, or the current voting control over, the Parent or the Company that is a direct
consequence of Westaim’s realignment of its ownership interests in the Parent, including but not
limited to any transfer by Westaim of its interests; provided, however, that if Westaim transfers
fifty percent (50%) or more of the issued and outstanding Voting Securities in the Parent to a bona
fide third party purchaser from Westaim in an arms’ length negotiated transaction, the occurrence
of such transfer shall constitute a Change in Control.

             (c)     In the event that the Executive’s employment by the Company hereunder is terminated within
twelve (12) months following a Change in Control in a termination that is governed by clause 4,
6(d) or 6(e) (relating to terminations due to non-
renewal of the Term by the Company and terminations by the Company without Cause or
Constructive Termination Without Cause by the Company):

 

 

     (1)     in lieu of any amounts otherwise payable to the Executive under clause 4,
6(d) or 6(e), the Executive shall be entitled to an amount equal to twelve (12)
month’s Base Salary, payable in a lump sum within thirty (30) days following
Executive’s delivery of a General Release and expiration of any revocation period
contained therein; and

     (2)     the Executive will be entitled to full vesting and exercisability, as of
the Termination Date, for all outstanding Stock Options to the extent that such
Stock Options were then scheduled to become vested or exercisable on or before the
second anniversary of the Termination Date, each such Stock Option to remain
exercisable for the lesser of (x) one hundred and twenty (120) days following the
Termination Date and (y) the remainder of its stated term.

     8.     Amendments or Waivers. No amendments or additions to the Agreement shall be binding
unless such amendment is set forth in writing and signed by the Executive and by an authorized
officer of the Company. Any waiver of any breach or default under this Agreement shall only be
effective if in writing signed by the party against whom the waiver is sought to be enforced, and
no waiver shall be implied by any other act or conduct or by any indulgence, delay or omission.
Any waiver shall only apply to the specific matter waived and only in the specific instance in
which it is waived.

     9.     Survival. Sections 3, 6 and 11(c) of this Agreement and the Confidentiality
Agreement shall survive and continue in full force and effect in accordance with their respective
terms, notwithstanding the termination of the Executive’s employment hereunder.

     10.     Representations. The Executive represents and warrants to the Company and the
Parent that (a) the execution, delivery and performance of this Agreement by the Executive does
not and will not conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Executive is a party or by which the Executive
is bound, and (b) upon the execution and delivery of this Agreement by the Company, this Agreement
shall be the valid and binding obligation of the Executive, enforceable in accordance with its
terms.

     11.     Miscellaneous.

             (a)     Notices. Any notice, consent, demand, request, or other communication given to a
party in connection with this Agreement shall be in writing and shall be deemed to have been given
to such person (i) when delivered personally to such party or (ii), provided that a
written acknowledgment of receipt is obtained, five days after being sent by prepaid certified or
registered mail, or two days after being sent

 

 

by a nationally recognized overnight courier, to the address (if any) specified below for
such party (or to such other address as such party shall have specified by ten days’ advance
notice given in accordance with this Section 11):

If notice is to be sent to the Company, it will be sent to:

NUCRYST Pharmaceuticals Inc.

10102 – 114 Street,

Fort Saskatchewan, Alberta T8L 3W4

Attention: Chief Executive Officer

If notice is to be sent to the Executive, it will be sent to:

David B. Holtz

52 Heritage Drive

Allentown, New Jersey 58501

             (b)     Severability and Reformation. Nothing in this Agreement shall be construed so as
to require the commission of any act contrary to law and wherever there is any conflict between any
provision of this Agreement and any law, statute, ordinance, order or regulation, the latter shall
prevail, but in such event any necessary action will be taken to bring it within applicable legal
requirements. If any provision of this Agreement should be held invalid or unenforceable for any
reason, in whole or in part, then such invalid or unenforceable provision or part shall be
severable and severed from this Agreement and the remaining provisions of this Agreement shall
remain in full force and effect and be construed as if such invalid or unenforceable provision or
part had never been contained herein and so as to achieve the intentions of the Parties as set
forth in this Agreement, to the maximum extent possible.

             (c)     Dispute Resolution.

     (1)     Arbitration. The Executive and the Company will arbitrate any and
all controversies, claims or disputes arising out of or relating to this Agreement
or the Executive’s employment with the Company (“Claims”) before the
American Arbitration Association (“AAA”) in accordance with the AAA’s
National Rules for the Resolution of Employment Disputes. Each of the Company and
the Executive waives any right to a trial by jury in any controversy, claim or
dispute with the Company, including those that arise under any federal, state or
local law, including without limitation, claims of harassment, discrimination or
wrongful termination under common law or under Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Americans with Disabilities Act, the Age
Discrimination in Employment Act or the Older

 

 

Workers’ Benefit Protection Act. Except as otherwise set forth in this
Agreement, the cost of any arbitration hereunder, including the cost of the record
or transcripts thereof, of any administrative fees, and all other fees involved
including reasonable attorneys’ fees incurred by the party determined by the
arbitrator to be the prevailing party, shall be paid by the party determined by the
arbitrator not to be the prevailing party.

     (2)     Injunctive Relief. Notwithstanding the agreement to arbitrate, a
breach by the Executive of his obligations under the Confidentiality Agreement
would cause the Company and its Affiliates and Subsidiaries irreparable harm, and
no adequate remedy at law would be available in respect thereof. Accordingly, if
any dispute arises between the parties under the Confidentiality Agreement, the
Company, its Affiliates and Subsidiaries shall not be required to arbitrate such
Claim under Section 11(c)(1), but shall have the right to institute judicial
proceedings in any appropriate jurisdiction and shall be entitled to relief
enjoining such acts without the need to post a bond. If such judicial proceedings
are instituted, such proceedings shall not be stayed or delayed pending the outcome
of any arbitration proceeding under Section 11(c)(1) of this Agreement. Further,
the Executive and the Company waive any objections to the jurisdiction of such
courts based on improper or inconvenient forum.

             (d)     Executive’s Acknowledgement. The Executive acknowledges that he fully understands
the terms of this Agreement, that he knowingly and voluntarily, of his own free will without any
duress, being fully informed and after due deliberation, accepts its terms as his own free act.
The Executive further acknowledges that he has had the opportunity to seek the advice of counsel in
connection with his entry into this Agreement.

             (e)     Withholding Taxes. The Company may withhold from any amounts or benefits payable
under this Agreement taxes that are required to be withheld pursuant to any applicable law or
regulation.

             (f)     Complete Agreement. This Agreement and the Confidentiality Agreement contain the
entire agreement and understanding between the parties relating to the subject matter hereof, and
supersede any prior understandings, agreements or representations by or between the parties,
written or oral, relating to the subject matter hereof.

             (g)     Successors or Assigns. This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of any successor or successors of the Company
and its affiliates by way of reorganization, merger or consolidation and any assignee of all or
substantially all of its business assets, but except as to any such successor or assignee of the
Company, neither this Agreement nor any rights or benefits hereunder may be assigned by the Company
or the Executive.

 

 

Notwithstanding the foregoing, in the event of the death of the Executive all rights to
receive payments hereunder shall become rights of the Executive’s estate.

             (h)     Section Headings. The section headings used in this Agreement are included
solely for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.

             (i)     Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts without regard to principles of conflict of
laws.

             (j)     Counterparts. This Agreement may be executed in two counterparts, each of which
shall be deemed to be an original and both of which together shall constitute one and the same
instrument.

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the day and
year first above written.

	 	 	 
	NUCRYST PHARMACEUTICALS INC.
	 	EXECUTIVE
	 
	 	 
	Per: /s/  Thomas E. Gardner	 	/s/  David B. Holtz
	Thomas E. Gardner
	 	David B. Holtz
	Chairman, President & CEOexv10w54

Exhibit 10.54

NUCRYST PHARMACEUTICALS CORP.

STOCK OPTION AWARD AGREEMENT

GRANT of Options made as of May 8, 2008 (the “Grant Date”)

	TO: 	 	David B. Holtz (the “Participant”)
	 
	BY: 	 	NUCRYST Pharmaceuticals Corp. (the “Company”)

     WHEREAS, on March 19, 2008, the Board of Directors of the Company (the “Board”) approved and
adopted the Company’s 1998 Equity Incentive Plan (as amended) (the “Plan”) and such Plan is subject
to approval by the shareholders of the Company and the Toronto Stock Exchange (the “TSX”); and

     WHEREAS, pursuant to the Plan, awards of Options may be granted to persons including
executives of subsidiaries of the Company; and

     WHEREAS, the Participant and NUCRYST Pharmaceuticals Inc. (“NPI”), the Company’s wholly owned
subsidiary, are parties to an Employment Agreement, dated as of May 7, 2008 to be effective May 8,
2008 (the “Employment Agreement”), whereby the Participant has agreed to serve, and the NPI has
agreed to engage the Participant, as the Vice President and Chief Financial Officer of NPI and the
Company, subject to the terms of the Employment Agreement; and

     WHEREAS, pursuant to the Employment Agreement and by resolution of the Board made on May 7,
2008, the Board approved a grant of Options provided for herein to the Participant, such grant to
be effective on the Grant Date , subject to shareholder and TSX approval of the Plan and subject to
the terms set forth herein;

     NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
hereto agree as follows:

	1.	 	Equity Incentive Plan

The grant by the Company to the Participant of Options by this Award Agreement is made subject to
shareholder and TSX approval of the Plan. Upon approval of the Plan by shareholders and the TSX,
this Award Agreement and the terms and conditions of the grant of Options are subject in all
respects to the terms and conditions of the Plan, which is made a part of this Award Agreement.
The Participant, by acceptance of this Award Agreement, agrees to be bound by the Plan (and any
regulations that may be established under the Plan) and acknowledges receipt of a copy of the Plan
and this Award Agreement. Terms that are defined in the Plan and not otherwise defined in this
Award Agreement shall have the same meaning when used in this Award Agreement as in the Plan.

	2.	 	Grant of Options

Subject to shareholder and TSX approval of the Amendments to the Plan, the Company grants to the
Participant, effective the Grant Date, 240,000 options (defined in the Plan and this Award
Agreement as “Options” or individually as an “Option”) to purchase Common Shares of the Company (which Common
Shares, when purchased by the exercise of Options, are defined as “Optioned Shares”), subject to
the

 

 

terms and conditions of this Award Agreement and the Plan. The grant of Options herein is
intended to be a grant of non-qualified stock options and shall not be treated or construed as a
grant of an “incentive stock option” as that term is used in Code Section 422, or any successor
provision thereof.

	3.	 	Option Price

The exercise price of each Option (which is defined in the Plan as the “Option Price”) is $1.09.

	4.	 	Expiry Date

The Options shall terminate on, and may not be exercised in whole or in part after, 5:00 p.m.
(Edmonton, Alberta, Canada time) on May 8, 2018 (the “Expiry Date”), unless earlier terminated in
accordance with the terms of the Plan or this Award Agreement.

	5.	 	Vesting

Unless otherwise set forth in this Award Agreement, the Options shall vest and shall become
exercisable:

	 	(a)	 	as to 1/3 of the Options on the first anniversary of the Grant Date;
	 
	 	(b)	 	as to 1/3 Options on the second anniversary of the Grant Date; and
	 
	 	(c)	 	as to 1/3 Options on the third anniversary of the Grant Date.

	6.	 	Change of Control

Notwithstanding section 5 above, in the event that the Participant’s employment under the
Employment Agreement is terminated prior to the Expiry Date and within 12 months following, a
Change of Control in a termination governed by Section 4, 6(d) or 6(e) of the Employment Agreement
(relating to terminations without cause or non-extension of the Employment Agreement by the NPI),
the Options shall immediately become fully vested and exercisable to the extent that such Options
were then scheduled to become vested or exercisable on or before the second anniversary of the
Termination Date and shall remain exercisable until the earlier of: (x) one hundred and twenty
(120) days following the date on which the Participant’s employment under the Employment Agreement
terminates (the “Termination Date”); and (y) the Expiry Date. “Change of Control” shall have the
meaning ascribed to such term in the Employment Agreement.

	7.	 	Other Accelerated Vesting

Notwithstanding section 5 above, in the event that the Participant’s employment under the
Employment Agreement terminates prior to the Expiry Date due to his death or Disability (as such
term is defined in the Employment Agreement), or in the event that the Participant’s employment
under the Employment Agreement is terminated prior to the Expiry Date in a termination governed by
Section 4, 6(d) or 6(e) of the Employment Agreement (relating to terminations without cause or
non-extension of the Employment Agreement by the Company) but not governed by section 6 of this
Award Agreement above, the Options shall immediately become fully vested and exercisable to the
extent that such Options were then scheduled to become vested or exercisable on or before the first
anniversary of the Termination Date and shall remain exercisable until the earlier of (x) one
hundred and twenty (120) days following the Termination Date and (y) the Expiry Date.

 

 

	8.	 	Termination

If the Participant ceases to be employed under the Employment Agreement before the Expiry Date,
then except as otherwise provided in sections 6 and 7 above, the vesting of all Options shall stop
immediately upon the Termination Date, and any Options that have vested as at the Termination Date
shall remain in force and can be exercised by the Participant in accordance with the following
provisions:

	 	(a)	 	If the Termination Date occurs for any reason other than the reasons described
in sections 6 and 7 above, then the Participant will have 30 days after the Termination
Date or until the Expiry Date (whichever is earlier) to exercise all or any portion of
his vested Options.
	 
	 	(b)	 	If the Termination Date occurs by reason of death or Disability (as defined in
the Employment Agreement), then the Participant (or his personal legal representative)
will have one hundred and eight (180) days after the Termination Date or until the
Expiry Date (whichever is earlier) to exercise all or any portion of his vested
Options.

At the end of the periods specified above or the Expiry Date, whichever is earlier, all of the
Options shall terminate and be of no further force or effect. “Termination Date” is defined in
section 6 above, and in no event shall any period during which the Participant is in receipt of or
entitled to be in receipt of severance pay serve to extend the Termination Date.

	9.	 	Method of Exercise of Options and Payment

The Options shall be exercised (in accordance with the provisions of this Award Agreement and the
Plan) from time to time by giving notice in writing to the Company and setting forth the number of
Options being exercised. Such notice shall be accompanied by cash or certified check payable to the
Company, or any other form of payment satisfactory to the Company, in the full amount of the
purchase price for the Optioned Shares being purchased (such purchase price being equal to the
number of Options being exercised times the Option Price) plus payment of any applicable federal,
state, provincial or local taxes, or any other taxes which the Company may be obligated to collect
as a result of the issue or transfer of Optioned Shares upon such exercise of the Options. The
Participant shall provide the Company with any additional documents that the Company may require.
As soon as reasonably practicable after the proper exercise of any Options, the Company shall issue
to the Participant a share certificate representing the Optioned Shares acquired.

	10.	 	Certain Adjustments

	 	(a)	 	If there is any change in the number or character of the Common Shares (through
merger, consolidation, reorganization, recapitalization, stock split, stock dividend,
or otherwise) prior to the Participant’s exercise of all of the Options, appropriate
adjustments shall be made in the number or kind of securities subject to this Option,
and/or in the exercise price or other terms and conditions applying to this Option, so
as to avoid dilution or enlargement of the rights of the Participant under this Option
and of the value represented by it.
	 
	 	(b)	 	If the Company is a party to a merger or reorganization with one or more other
corporations, whether or not the Company is the surviving or resulting entity, or if
the Company consolidates with or into one or more other corporations, or if the Company
is liquidated or sells or otherwise disposes of substantially all of its assets to
another corporation (hereinafter referred to as a “Transaction”), in any case while any
Options remain outstanding, (i) after the effective date of the Transaction this Option
shall remain

 

 

	 	 	 	outstanding and shall be exercisable in Common Shares or, if applicable, shares of
such stock or other securities, cash or property as the holders of Common Shares
received pursuant to the terms of the Transaction; and (ii) the Company’s Board may,
in its sole discretion subject to the applicable provisions of Code section 409A,
accelerate the time for exercise of this Option, so that from and after a date prior
to the effective date of the Transaction this Option shall be exercisable in full.

	11.	 	General Matters

	 	(a)	 	Options are not transferable or assignable.
	 
	 	(b)	 	This Award Agreement is not an employment contract and nothing in this Award
Agreement shall be deemed to create in any way whatsoever any obligation on the
Participant’s part to continue to work for the Company (or any subsidiary of the
Company), or of the Company (or any subsidiary of the Company) to continue to employ
the Participant.
	 
	 	(c)	 	The Participant acknowledges that the Company may be required to disclose to
the securities regulatory authorities, the Exchange or other regulatory authorities
duly authorized to make such request, the name, address and telephone number of the
Participant and the number of Options granted. If required by applicable securities
legislation, regulations, rules, policies or orders or by any securities commission,
the Exchange or other regulatory authority, the Participant will, in a timely manner,
execute, deliver, file and otherwise assist the Company in filing, such reports,
undertakings, and other documents with respect to the Options as may be required or
requested by the Company to enable the Company to comply with applicable securities
legislation, regulations, rules, policies or orders or the requirements of any
securities commission or other regulatory authority or the Exchange.
	 
	 	(d)	 	This Award Agreement, the Employment Agreement and the Plan constitute the
entire agreement between the parties relating to the grant of Options to the
Participant and supersede all prior communications, representations and negotiations in
respect thereto.
	 
	 	(e)	 	For the grant of the Options to be effective, this Award Agreement must be
executed by the Participant and returned to the Company.
	 
	 	(f)	 	This Award Agreement shall be governed by the laws of the Province of Alberta.
The parties agree that any disputes under this Award Agreement shall be resolved by the
courts of Alberta and each of the parties irrevocably attorn to the non-exclusive
jurisdiction thereof with respect to all such matters and the transactions contemplated
herein.
	 
	 	(g)	 	Time shall be of the essence of this Award Agreement.
	 
	 	(h)	 	The Participant acknowledges that neither the Plan nor this Award Agreement
restricts the Company’s ability to conduct its business (including, but not limited to,
such decisions as transactions with related parties, new product development efforts,
cancellation of existing products, mergers and acquisitions, or corporate dissolution)
regardless of the effect those decisions may have on the value of Options.

 

 

	 	(i)	 	The Participant shall not have any of the rights and privileges of a shareholder of
the Company by virtue of being granted Options.

The Company and the Participant have executed this Award Agreement on the ___day of May, 2008.

NUCRYST PHARMACEUTICALS CORP.

	 	 	 	 	 
	By:
	 	 	 	 
	 
	 	Carol L. Amelio, Vice President General	 	David B. Holtz (Participant)
	 
	 	Counsel & Corporate Secretary

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