Document:

exv10w16

 

EXHIBIT
10.16

NUCRYST PHARMACEUTICALS CORP.

(formerly, Westaim Biomedical Corp.)

(formerly, Westaim Biomedical Canada Inc.)

1998 EQUITY INCENTIVE PLAN

(as amended)

1. Purpose of the Plan

The purpose of this Equity Incentive Plan is to encourage equity ownership in Nucryst
Pharmaceuticals Corp. (currently a wholly-owned subsidiary of Westaim) and to develop the interest
and incentive of eligible employees, directors and other service providers of Nucryst
Pharmaceuticals Corp. (or its Subsidiaries) in the Company’s growth and development and the growth
and development of its Subsidiaries. It is believed that giving eligible employees, directors and
other service providers an opportunity to benefit from increases in value of the Common Shares will
advance the interests of the Company, enhance the value of the Common Shares for the benefit of all
the shareholders and increase the ability of the Company to attract and retain skilled and
motivated individuals in the service of the Company.

2. Definitions

In this Plan:

	(a)	 	“Board of Directors” means the board of directors of the Company;
	 
	(b)	 	“Committee” means the appropriate committee(s) appointed by the Board of Directors to
administer the Plan. Committee members need not be members of the Board of Directors. All
references in the Plan to the Committee means the Board of Directors if no Committee has
been appointed;
	 
	(c)	 	“Common Shares” means the Class A common shares of the Company or, upon the
occurrence
of an event contemplated in Section 7 hereof, such other common shares to which a Participant
may be entitled upon the exercise of an Option as a result of such event;
	 
	(d)	 	“Company” means Nucryst Pharmaceuticals Corp.;
	 
	(e)	 	“Date of Grant” means the date a Participant is granted a Stock Award;
	 
	(f)	 	“Director” means a person occupying the position of director on the Board of Directors;
	 
	(g)	 	“Disability” for purposes of this Plan, means the mental or physical state of the
Participant
such that:

	 	(i)	 	the Committee determines that the Participant has been unable, due to illness,
disease, mental or physical disability or similar cause, to fulfil his or her obligations
as an employee either for any consecutive six month period or for any period of twelve
months (whether or not consecutive) in any consecutive 24 month period; or

 

 

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	 	(ii)	 	a court of competent jurisdiction has declared the Participant to be mentally
incompetent or incapable of managing his or her affairs.

	(h)	 	“Employee” means an employee of the Company or its Subsidiaries;
	 
	(i)	 	“Exchange” means The Toronto Stock Exchange or, if the Common Shares are not then
listed and posted for trading on The Toronto Stock Exchange, on such stock exchange or
quotation system on which such shares are listed, posted for trading or quoted. In the event
the Common Shares are listed, posted for trading or quoted on more than one such stock
exchange or quotation system, the Committee shall, where required, designate one exchange or
quotation system as the relevant Exchange for purposes of the Plan;
	 
	(j)	 	“Insider” means:

	 	(i)	 	an insider of the Company as defined by the Securities Act (Ontario) as
amended from time to time, other than a person who falls within such definition solely by
virtue of being a director or senior officer of a subsidiary of the Company; and
	 
	 	(ii)	 	an associate, as defined in the Securities Act (Ontario), of any person
who is an insider by virtue of clause (i) of this definition;

	(k)	 	“Fair Market Price” at any date in respect of the Common Shares shall be determined
by the Committee in its sole discretion acting reasonably, unless the Common Shares become
listed and posted for trading on the Exchange, in which case the Fair Market Price shall be
equal to the closing trading price of the Common Shares on the Exchange for the last trading
day immediately preceding such date;
	 
	(1)	 	“Option” means an option to purchase Common Shares from the treasury of the Company
granted to a Participant pursuant to the Plan;
	 
	(m)	 	“Option Price” means the price per share at which a Participant may purchase Option
Shares or, in respect of an Independent Right (as defined in Section 6), means the exercise
price of such Independent Right;
	 
	(n)	 	“Option Shares” or “Optioned Shares” means the underlying Common Shares of
the Company which a Participant is entitled to purchase under the Plan upon the exercise of
an Option;
	 
	(o)	 	“Outstanding Issue” has the meaning provided in the relevant policies of The Toronto
Stock Exchange;
	 
	(p)	 	“Participants” means eligible Directors, Employees and Service Providers to whom
Stock Awards are granted pursuant to the Plan and which remain unexercised;
	 
	(q)	 	“Plan” means this Equity Incentive Plan;

 

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	(r)	 	“Service Provider” means any person other than an Employee or Director, engaged
to provide ongoing management, advisory or consulting services for the Company or any of its
Subsidiaries;
	 
	(s)	 	“Stock Award” means any right granted under the Plan, being either an Option or a
stock appreciation right;
	 
	(t)	 	“Stock Award Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of an individual Stock Award grant, in such
form and containing such terms and conditions as may be approved by the Committee from time
to time. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan;
	 
	(u)	 	“Subsidiary” shall have the meaning attributed to such word in the Securities
Act (Ontario), as amended from time to time;
	 
	(v)	 	“Termination Date” means the date which is the earlier of:

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

	(w)	 	“Vesting Period” means the period(s) determined by the Committee as stipulated in
the Stock Award Agreement that the Participant may exercise Stock Awards, or as may be
subsequently shortened in the sole discretion of the Committee; and
	 
	(x)	 	“Westaim” means The Westaim Corporation.

3. Eligibility

Participation in the Plan shall be limited to Participants who are designated from time to time by
the Committee in its sole discretion. Participation shall be voluntary and the extent to which any
Participant shall be entitled to participate in the Plan shall be determined by the Committee.

Each Stock Award granted under the Plan shall be evidenced by a Stock Award Agreement, the terms
and conditions of which need not be the same for all Participants. Any such Stock Award Agreement
may be supplemented or amended in writing from time to time as approved by the Participant and the
Committee, provided that the terms of such agreement as amended or supplemented conform to the
provisions of the Plan. A prospective Participant shall not, with respect to any Stock Award, have
any rights with respect to such Stock Award unless and until such prospective Participant shall
have executed a Stock Award Agreement or other instrument evidencing the Stock Award and has
otherwise complied with the applicable terms and conditions of the Stock Award, the Plan, and the
Stock Award Agreement.

 

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4. Number of Option Shares and Limitations on Issuance

The aggregate amount of stock which may be reserved for issuance pursuant to Stock Awards shall not
exceed 1,950,000 Common Shares. This prescribed maximum may be subsequently increased to any other
specified amount, provided the change is authorized by a vote of the shareholders of the Company
when required by any governing law or regulation. Shares in respect of which Stock Awards have not
been exercised and are no longer subject to being taken up pursuant to the terms of any Stock Award
shall be available for subsequent Stock Awards. Subject to proper payment of the Option Price, all
Common Shares issued pursuant to exercise of Options will be issued as fully paid and
non-assessable. The total number of Common Shares remaining reserved from time to time shall be
adjusted in accordance with Section 7 hereof. The following restrictions shall also apply to this
Plan as well as all other plans or stock option agreements to which the Company may be a party:

	(a)	 	the aggregate number of Common Shares (which for purposes of this paragraph shall be
deemed to include share equivalents in the case of Independent Rights as defined in Section 6)
reserved for issuance pursuant to all Stock Awards granted to Insiders shall not exceed 10% of
the Outstanding Issue;
	 
	(b)	 	Insiders shall not be issued, within any one year period, a number of Stock Awards which
exceeds 10% of the Outstanding Issue;
	 
	(c)	 	no Participant together with such Participant’s associates (as defined in the Securities
Act (Ontario)) shall be issued, within any one year period, a number of Stock Awards which
exceeds 5% of the Outstanding Issue; and
	 
	(d)	 	the number of Common Shares reserved for issuance pursuant to Stock Awards to any one
Participant shall not exceed 5% of the Outstanding Issue.

No fractional shares may be purchased or issued hereunder. Subject to the foregoing, the number of
Stock Awards that a Participant is entitled to under the Plan will be determined by the Committee.

5. Option Provisions

	(a)	 	Number and Price of Option Shares and Vesting Period
	 
	 	 	Any Options issued under the Plan are not intended to constitute an “incentive stock option”
as that term is used in IRS Code, section 422.
	 
	 	 	The Committee shall advise each Participant designated to receive Options in writing of the
number of Option Shares such Participant is entitled to purchase, the Option Price at which
the Option Shares may be purchased and the Vesting Period. The Option Price at which the
Option Shares may be purchased under the Plan shall be fixed by the Committee, but under no
circumstances shall the Option Price be less than the Fair Market Price. The Committee may
impose performance thresholds or any other conditions which will need to be met prior to
vesting of any Options granted.

 

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	(b)	 	Exercise
	 
	 	 	Options granted under the Plan must be exercised, subject always to the Vesting Period, within
a period as determined by the Committee and set forth in the Stock Award Agreement, subject to
a maximum of 10 years from the Date of Grant, failing which the Participant’s right to
purchase such Option Shares lapses.
	 
	(c)	 	Payment
	 
	 	 	The Participant from time to time and at any time after the vesting of any Options and prior
to the lapse of such Options, may elect to purchase all or a portion of the Option Shares
available for purchase by lump sum payment by delivering to the Company at its registered
office, or such other address as the Company may specify from time to time, a completed stock
option purchase form substantially in the form attached hereto as
Appendix “A.1” or such
other form as the Company may specify. Payment may be made by cash, certified cheque, bank
draft, money order or the equivalent payable to the order of Nucryst Pharmaceuticals Corp.,
or other form of payment acceptable to the Company.
	 
	(d)	 	Share Certificates
	 
	 	 	Upon exercise of the Option and payment in full of the purchase price the Company shall cause
to be delivered to the Participant within a reasonable period of time a certificate or
certificates in the name of the Participant representing the number of Option Shares the
Participant has purchased. Prior to listing on the Exchange, the Company may elect to issue a
duplicate certificate, with the original share certificate registered in the name of the
Participant to be held in trust by the Company for the Participant.

6. Stock Appreciation Rights

	(a)	 	Authorized Rights
	 
	 	 	The following three types of stock appreciation rights shall be authorized for issuance under
the Plan:

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

 

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

	 	(A)	 	in an equivalent number of Common Shares based on the Fair Market
Price on the date of the exercise of the Independent Right, or
	 
	 	(B)	 	subject to Westaim’s agreement, in an equivalent number of Common
Shares of Westaim based on the weighted average trading price of Westaim’s shares on the
Toronto Stock Exchange for the five (5) trading days preceding the date of
exercise of the Independent Right.

	 	 	 	The number and/or Option Price of share equivalents contained in the grant of an
Independent Right shall be subject to adjustment in accordance with the provisions of
Section 7, mutatis mutandis.

	(b)	 	Exercise
	 
	 	 	To exercise any outstanding stock appreciation right, the holder shall provide written notice
of exercise to the Company in compliance with the provisions of the Stock Award Agreement
evidencing such right.

 

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	(c)	 	No Rights of Shareholders
	 
	 	 	Neither a Participant nor his personal representative shall be, or have any of the rights and
privileges of, a shareholder of the Company by virtue of receiving or exercising a grant of
stock appreciation rights under the Plan.
	 
	(d)	 	Issuance of Shares
	 
	 	 	Any Common Shares or shares of Westaim issued pursuant to this Section 6 will be issued as
fully paid and non-assessable.

7. Adjustments

	(a)	 	Appropriate adjustments in the number of Common Shares subject to the Plan and, with
respect to Stock Awards granted or to be granted, in the number of Stock Awards granted and
in the Option Price and in the securities which shall be deemed to be Common Shares for
purposes of the Plan, shall be made by the Committee acting reasonably to give effect to the
adjustments in the number, character and value of Common Shares resulting from sub
divisions, consolidations or re-classification of the Common Shares or other relevant changes
in the authorized or issued capital of the Company, or the payment of stock dividends or other
dividends-in-kind by the Company, all as determined by the Committee in its sole discretion
acting reasonably.
	 
	(b)	 	Appropriate adjustments in the number of Stock Awards and the securities which shall be
deemed to be Common Shares for purposes of this Agreement, shall be made by the
Committee in its sole discretion acting reasonably, to give effect to adjustments in the
number, character and value of outstanding Common Shares of the Company resulting from any
reorganization, amalgamation, arrangement, merger, transfer or sale of all or substantially
all of the assets of the Company, or similar transactions affecting the Company or its assets or
the Common Shares, including such transactions as may be undertaken in conjunction with or in
anticipation of an initial public offering of the securities of the Company. For greater
certainty, the Committee may determine in its sole discretion acting reasonably, that each
Stock Award shall be exchangeable for a Stock Award of such other corporation resulting
from such transactions, having such terms and conditions which in the Committee’s sole
opinion are economically equivalent to the Stock Awards exchanged.

 

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8. Cessation of Employment or Directorship or Services

In the event that an Employee’s employment with the Company or any of its Subsidiaries is
terminated for any reason (other than death or Disability), a Director ceases to be a Director for
any reason (other than death or Disability) or a Service Provider ceases to provide services to
the Company or any Subsidiary for any reason (other than death or Disability), the Participant may
elect to exercise all or a portion of the remaining Stock Awards that have vested on the
Termination Date, at any time during the 30 day period following the Termination Date, or such
later date as specified in the Participant’s Stock Award Agreement or as may be subsequently
agreed to in writing by the Company and the Participant, but in no event after the lapse of any
Stock Awards held. For the purposes of this Plan, the transfer of the Employee’s employment to or
from the Company to or from any Subsidiary of the Company shall not be considered a termination of
employment and the Employee’s rights under the Stock Award shall be the same as if such transfer
had not occurred.

9. Death or Disability of Participant

In the event of the death or Disability of a Participant, the personal legal representative (or, in
the case of Disability, the Participant himself or herself if he or she is competent to do so) may
at any time during the 180 day period following the date of death or Disability, or such later date
as specified in the Participant’s Stock Award Agreement, but in no event after the lapse of any
Stock Awards held, exercise all or any portion of such Participant’s Stock Awards that have vested
as of the date of death or Disability. At the end of such period or the term of the applicable
Stock Award, whichever is earlier, the Stock Award shall forthwith terminate and be of no further
force or effect whatsoever.

10. Transfer and Assignment

Except as provided for in Section 9, the Participant’s rights under Stock Awards granted under the
Plan are not assignable or transferable by the Participant or subject to any other alienation,
sale, pledge or encumbrance by such Participant during the Participant’s lifetime. The obligations
of each Participant shall be binding on his or her heirs, executors and administrators.

11. Employment and Board of Directors Position Non-Contractual

The granting of a Stock Award to a Participant under the Plan does not confer upon the Participant
any right to continue in the employment of the Company or any Subsidiary of the Company or as a
member of the Board of Directors or as a Service Provider, as the case may be, nor does it
interfere in any way with the rights of an Employee or of the Company’s rights to terminate an
Employee’s employment at any time or of the shareholders’ right to elect Directors.

12. Rights As Shareholders

Participants shall not have any rights as a shareholder with respect to Stock Awards until, in the
case of an Option which has been duly and properly exercised, full payment of the Option Price for
the number of Option Shares purchased has been made to the Company. Participants receiving a grant
of a stock appreciation right shall have no rights or privileges whatsoever as a shareholder of
the Company.

 

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13. Administration of the Plan

The Plan shall be administered by one or more Committees. The Committee(s) shall have the power to
interpret and construe the terms and conditions of the Plan and the Stock Awards; to establish,
amend or waive rules and regulations for the administration of the Plan (provided that no such
action shall, however, without the consent of the Participant, in any manner materially adversely
affect his rights under any Stock Awards previously granted under the Plan); and to correct
errors, omissions or inconsistencies in the Plan or any Stock Awards granted pursuant to the Plan.
Any determination by the Committee shall be final and conclusive on all persons affected thereby
unless otherwise determined by the Board of Directors, and subject to any applicable arbitration
provisions contained in a Stock Award Agreement. The day-to-day administration of the Plan may be
delegated to such persons as the Committee(s) may determine.

Members of the Committee shall be eligible to receive Stock Awards under the Plan, so long as a
member of the Committee does not participate in any discussion or decision as to the grant of any
Stock Awards to such member. If stipulated by the Board of Directors, a grant of Stock Awards under
the Plan shall be subject to the approval of the Board of Directors. Members of the Board of
Directors shall be eligible to receive Stock Awards under the Plan, so long as a member of the
Board of Directors does not participate in any discussion or decision as to the grant of any Stock
Awards to such member. A majority of the members of the Board of Directors participating in any
decisions as to any grant of Stock Awards under the Plan shall be persons who are not Employees of
the Company.

14. Option to Repurchase Stock Awards

	(a)	 	Unless otherwise specified in a particular Stock Award Agreement, at any time (and from time
to time) prior to the listing of the Common Shares on an Exchange, the Company (or its
designee) shall have, and a Participant hereby grants to the Company (or its designee), an
irrevocable right and option to purchase from a Participant all or any portion of the
Optioned Shares purchased by a Participant (or the Participant’s legal representative) under
this Plan and/or any outstanding Stock Awards, for a purchase price equal to the fair market
value of such Optioned Shares and/or Stock Awards, as determined by the Company (or its
designee) acting reasonably, or such other price or method of determination of fair market
value that the Company and Participant may agree to in writing, including as may be provided
in the Stock Award Agreement. The Company may assign this option to purchase a Participant’s
Optioned Shares and/or Stock Awards. The Committee may require, as a condition of a grant of
a Stock Award, the Participant to enter into an agreement (which may be contained in the
Stock Award Agreement) with the Company (or its designee) reflecting the grant of this option
by a Participant to the Company (or its designee), and containing such other terms and
conditions that the Company may require in its sole discretion, and as are specified in the
Stock Award Agreement or other applicable agreement. The Stock Award Agreement may specify
other terms and conditions applicable to the option granted by the Participant to the Company
pursuant to this paragraph 14(a), including (but not restricted to) whether such option to
purchase applies to Option Shares or Stock Awards or both, any conditions that must be met
before the Company may exercise the option, and the method of payment (cash or other form of
consideration) of the purchase price upon exercise of the option. For greater certainty, the
option granted by the Participant to the Company pursuant to the provisions of this paragraph
14(a) shall apply to each grant of a Stock Award hereunder unless the Stock Award Agreement
for a particular grant specifies that it is not applicable to that grant.

 

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	(b)	 	At any time (and from time to time) prior to the listing of the Common Shares on an Exchange,
the Company may grant to a Participant the right and option to require the Company to
purchase from a Participant all or any portion of the Optioned Shares purchased by a
Participant (or the Participant’s legal representative) under this Plan, for a purchase price
equal to the fair market value of such Common Shares, as determined by the Company acting
reasonably, or such other price or method of determination of fair market value that the
Company and Participant may agree to in writing, including as may be provided in the Stock
Award Agreement, and on such other terms and conditions as are specified in the Stock Award
Agreement or other applicable agreement. The Committee may require, as a condition of a
grant of an Option, the Participant to enter into an agreement with the Company reflecting the
grant of this option by the Company to the Participant. For greater certainty, the option that
may be granted by the Company to the Participant pursuant to the provisions of this paragraph
14(b) shall only apply to those grants of Stock Awards for which the Stock Award Agreement
expressly states that it is to apply.
	 
	(c)	 	For purposes of completing the sale of any Stock Awards or Option Shares pursuant to this
Section 14, the Participant covenants and agrees to take or cause to be taken all such actions
and obtain such approvals as may be necessary to effectively transfer and assign to the
Company (or its assignee) such Stock Awards or Option Shares and the Participant hereby
irrevocably appoints the secretary of the Company to be its attorney in order to execute any
deeds, transfers, conveyances, assignments or other documents in the name and on behalf of
the Participant in order to effect the foregoing including, without limitation, irrevocably
constituting and appointing the secretary of the Company to be the attorney of the Participant
to cancel and/or transfer such Stock Awards or Option Shares on the register of transfers and
books of the Company, with full power of substitution in the premises.
	 
	(d)	 	Upon the closing of the sale of any Stock Awards or Option Shares pursuant to this Section
14, the Participant (the “Releasor”, which term includes the Participant’s successors, assigns,
heirs, executors, personal representatives and administrators) shall provide a release to the
Company in form acceptable to the Company releasing and forever discharging the Company
and its affiliates and their respective directors, officers, employees and agents (the
“Releasees”, which term includes their respective successors, assigns, heirs, executors,
personal representatives and administrators) of and from any and all actions, causes of
action, suits, debts, liabilities, agreements, claims and demands whatsoever which the Releasor ever
had, now has or may hereafter have against the Releasees, or any of them, for or by reason of,
or in any way arising out of the Plan and/or the repurchase of Stock Awards or Option Shares
other than with respect to the unmatured or unexercised rights of the Participant under the
Plan unrelated to the Stock Awards or Option Shares which are the subject of such sale, and if such
a release in form satisfactory to the Company is not provided by the Participant to the
Company at such closing, the Releasor shall be deemed to have so released the Releasees.

 

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15.
Notices

Unless otherwise specified in a Participant’s Stock Award Agreement, all written notices to be
given by the Participant to the Company may be delivered personally or by registered mail, postage
prepaid, addressed as follows:

Nucryst Pharmaceuticals Corp.
 c/o The
Westaim Corporation
 Suite 1010,
144-4th Avenue S.W.
 Calgary, Alberta

T2P 3N4

Attention: Senior Vice President

Any notice given by the Participant pursuant to the terms of a Stock Award shall not be effective
until actually received by the Company at the above address. Any notice to be given to the
Participant shall be sufficiently given if delivered personally or by postage prepaid mail to the
last address of the Participant on the records of the Company and shall be effective seven days
after mailing.

16. Corporate Action

Nothing contained in the Plan or in a Stock Award shall be construed so as to prevent Westaim, the
Company or any Subsidiary of the Company from taking corporate action which is deemed by Westaim,
the Company or any Subsidiary of the Company, acting in good faith, to be appropriate or in its
best interest, whether or not such action would have an adverse effect on the Plan, provided that
Westaim or the Company shall not undertake any such corporate action with the intent to adversely
prejudice any Stock Award previously granted to a Participant. For greater certainty, but not to
restrict the generality of the foregoing, Westaim and the Company shall, in their sole and
unfettered discretion, have the right and ability to issue shares and other securities, purchase
and sell assets and enter into corporate and commercial agreements (including without limitation
joint ventures, partnerships and development agreements) without the consent of any Participant.

17. Conflicts and Amendments

The Board of Directors of the Company shall have the right, in its sole discretion, to alter,
amend or discontinue the Plan from time to time and at any time, subject to any applicable
regulatory approval; provided however that no such amendment or alteration may, without the
consent of the Participant, alter or impair any Stock Award previously granted to a Participant.
Any amendment to the Plan may require the prior approval of the Exchange and may require the
approval of the Company’s shareholders.

 

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18. Governing Law

The Plan is established under the laws of the Province of Alberta and the rights of all parties
and the construction and effect of each provision of the Plan shall be according to the laws of
the Province of Alberta and the laws of Canada applicable therein.

19. Tax Withholding Requirements

Whenever the Company is required to issue Common Shares or make a payment under the Plan, the
Company may require the Participant to remit to the Company an amount sufficient to satisfy any
Federal, Provincial/State and local tax withholding requirements prior to the delivery of any
certificate for such shares or, in the discretion of the Committee, the Company may withhold from
the shares or payment to be delivered, shares or cash sufficient to satisfy all or a portion of
such tax withholding requirements.

20. Government Regulation

Notwithstanding any other provision contained herein, the Company’s obligation to issue and deliver
Common Shares under any Option is subject to:

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

In this connection, the Company shall take all reasonable steps to obtain such approvals and
registrations as may be necessary for the issuance of such Common Shares in compliance with
applicable securities law and for the listing of such Common Shares on any stock exchange on which
such Common Shares are then listed.

DATED as of the 2nd day of January,1998.

AMENDED as of the 16th day of April, 2001.

 

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Appendix
“A.1”

Nucryst Pharmaceuticals Corp.

1998 Equity Incentive Plan

Option Exercise Form

	 	 	 
	 
	Part 1: Identification
	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Name of Participant

	 	Office Phone Number
	 
	 	 
	 
	 	 
	 
	Address
	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Social Insurance Number

	 	Home Phone Number
	 
	 	 
	 
	 	 
	 
	Part 2: Option
	 	 

I hereby exercise the Option granted to me by agreement dated                                          under the Plan.

Total number of Option Shares exercised:                                         

	 	 	 	 	 	 	 	 	 	 	 
	Method of payment:

	 	(a)
	 	Cash	 	 	 	 	 	 
	 	 	(b)	 	Other: (subject to Company approval)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Cash amount:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Number of stock:
	 	 	 	(value:                     )
	 

	 	 	 	 	 	 	 	 	 	 

I hereby acknowledge that I have read, understood and accepted each and all the conditions
described in a document called “Nucryst Pharmaceuticals Corp. 1998 Equity Incentive Plan”.

 

 

Given at                                                              , this       
               day of                                          .

 

 

Signatureexv10w17

 

 

EXHIBIT
10.17

[Name of Subsidiary Company]

STOCK OPTION

GRANT of Options made as of [•.]

TO: • (the “Participant”)

BY: • (the “Company”)

1. Equity Incentive Plan

The grant by the Company to the Participant of Options by this Agreement is made pursuant to the
terms and conditions of the [•] Equity Incentive Plan, as amended (the “Plan”) of the Company. This
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 Agreement. The Participant, by
acceptance of this 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 Agreement.
Terms that are defined in the Plan and not otherwise defined in this Agreement shall have the same
meaning when used in this Agreement as in the Plan.

2. Grant of Options

The Company grants to the Participant, effective the date of this Agreement, • options (defined in
the Plan and this 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 Agreement and the Plan.

3. Option Price

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

4. Expiry Date

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

5. Vesting

The Options shall vest and shall become exercisable as to one-third (1/3) on each of the first,
second and third anniversaries of the date of this Agreement until the Expiry Date, unless
otherwise set forth in this Agreement.

6. Exercise Condition

In addition to the vesting schedule set forth in paragraph 5, prior to the listing of the Common
Shares of the Company on an Exchange, no Options can be exercised until such time as they have all
vested as specified in paragraph 5 above (this is defined as the “Exercise Condition”). This
Exercise Condition will no longer apply once the Common Shares of the Company are listed and
posted for trading on an Exchange, or in other circumstances described in this Agreement.

7. Termination of Employment

If the Participant’s employment with the Company (or any subsidiary of the Company) is terminated
before the Expiry Date, then 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 reason for termination of employment is due to either the resignation of
the Participant or termination by the Company (or any subsidiary of the Company) for just cause, 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 such vested Options, provided that the Exercise Condition (if still in effect) has been met.
	 
	 	(b)	 	If the reason for termination of employment is due to termination by the
Company (or any subsidiary of the Company) without cause, 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 such vested Options. In
these circumstances, the Exercise Condition shall be waived.
	 
	 	(c)	 	If the Participant’s employment is terminated by reason of death or Disability,
then the Participant (or his personal legal representative) may, within 180 days after the Termination Date or before the
Expiry Date (whichever is earlier) exercise all or any portion of such vested Options. In these circumstances,
the Exercise Condition shall be waived.

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 the
Plan, and in no event shall any period during which the Participant is in receipt of or entitled
to be in receipt of severance pay or pay in lieu of notice serve to extend the Termination Date.

8. Method of Exercise of Options and Payment

The Options shall be exercised (in accordance with the provisions of this 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 cheque 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). The Participant shall provide the
Company with any additional documents that the Company may require. Upon the proper exercise of
any Options, the Company shall forthwith issue to the Participant a share certificate representing
the Optioned Shares acquired. The Participant acknowledges and agrees that for so long as the
Repurchase Option granted by the Participant to the Company to purchase the Optioned Shares as
provided for in section 9 below is in effect, that the share certificate(s) for the Optioned
Shares being purchased shall be retained by the Secretary of the Company or his designee and the
Participant agrees to immediately, upon the request of the Company, duly endorse such share
certificate(s) in blank for transfer for purposes of section 9 below.

 

- 2 -

9. Option to Repurchase Optioned Shares

The Participant acknowledges that pursuant to section 14 of the Plan, the Participant hereby
irrevocably grants to the Company an option to purchase from the Participant any Optioned Shares
of the Company owned by the Participant (this option is defined in this Agreement as the
“Repurchase Option”). The Repurchase Option in respect of any Optioned Shares may be exercised by
the Company, in its sole discretion, at any time commencing 185 days (or such longer period of
time as the Company may specify from time to time) after the issuance of any Optioned Shares as a
result of an exercise of Options, and prior to the listing of the Common Shares of the Company on
an Exchange. If the Company elects to exercise the Repurchase Option, then the following
provisions (in addition to section 14 of the Plan) shall apply:

	 	(a)	 	The sale by the Participant to the Company of the Optioned Shares that are
the subject of the exercise by the Company of the Repurchase Option shall take place within five business days after
service of notice by the Company on the Participant.
	 
	 	(b)	 	The purchase price payable for the Optioned Shares to be repurchased shall be
based on the fair market value of such Optioned Shares (as established by the Company, acting reasonably). The
purchase price to be paid to the Participant shall, at the option of the Company, be paid either by:

	 	(i)	 	cash; or
	 
	 	(ii)	 	the issuance to the Participant of a number of common shares
of The Westaim Corporation equal in value to the purchase price, based on the
weighted average trading price of the common shares of The Westaim Corporation
on The Toronto Stock Exchange for the five trading days immediately preceding
the notice date.

	 	(c)	 	Immediately upon payment of the purchase price by the Company to the
Participant for the purchase of the Optioned Shares, the sale of the Optioned Shares by the Participant to the Company
that are the subject of the exercise by the Company of the Repurchase Option shall be effective and the
Participant shall no longer be a shareholder of the Company and the share certificate(s) for such purchased shares
shall be cancelled.

For greater certainty, this Repurchase Option only applies to any Common Shares issued upon the
exercise of the Option (Optioned Shares) and does not apply to the Option itself.

10. General Matters

	 	(a)	 	Options are not transferable or assignable.
	 
	 	(b)	 	This Agreement is not an employment contract and nothing in this 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)	 	This Agreement and the Plan constitute the entire agreement between the
parties relating to the grant of Options to the Participant.
	 
	 	(d)	 	For the grant of the Options to be effective, this Agreement must be executed
by the Participant and returned to the Company.
	 
	 	(e)	 	This Agreement shall be governed by the laws of the Province of Alberta. The
parties agree that any disputes under this Agreement shall be resolved by the courts of Alberta.
	 
	 	(f)	 	Time shall be of the essence of this Agreement.
	 
	 	(g)	 	The Participant acknowledges that neither the Plan or this 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.
	 
	 	(h)	 	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 Agreement.

[Name of Subsidiary Company]

	 	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 

	 	 	 
	 	 	 
	Witness

	 	[Name of Participant]

 

 

[Name of Subsidiary Company]

STOCK OPTION

GRANT of Options made as of [•.]

TO: • (the “Participant”)

BY: • (the “Company”)

1. Equity Incentive Plan

The grant by the Company to the Participant of Options by this Agreement is made pursuant to the
terms and conditions of the [•] Equity Incentive Plan, as amended (the “Plan”) of the Company. This
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 Agreement. The Participant, by
acceptance of this 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 Agreement.
Terms that are defined in the Plan and not otherwise defined in this Agreement shall have the same
meaning when used in this Agreement as in the Plan.

2. Grant of Options

The Company grants to the Participant, effective the date of this Agreement, • options (defined in
the Plan and this 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 Agreement and the Plan.

3. Option Price

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

4. Expiry Date

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

5. Vesting

The Options shall vest and shall become exercisable as to one-third (1/3) on each of the
first, second and third anniversaries of the date of this Agreement until the Expiry Date, unless
otherwise set forth in this Agreement.

6. Exercise Condition

Not applicable.

7. Termination of Employment

If the Participant’s employment with the Company (or any subsidiary of the Company) is terminated
before the Expiry Date, then 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 reason for termination of employment is due to either the resignation of
the Participant or termination by the Company (or any subsidiary of the Company) for any reason whatsoever, 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 such vested Options.
	 
	 	(b)	 	If the Participant’s employment is terminated by reason of death or Disability,
then the Participant (or his personal legal representative) may, within 180 days after the Termination Date or before the
Expiry Date (whichever is earlier) exercise all or any portion of such 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 the
Plan, and in no event shall any period during which the Participant is in receipt of or entitled
to be in receipt of severance pay or pay in lieu of notice serve to extend the Termination Date.

8. Method of Exercise of Options and Payment

The Options shall be exercised (in accordance with the provisions of this 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 cheque 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). The Participant shall provide the
Company with any additional documents that the Company may require. Upon the proper exercise of
any Options, the Company shall forthwith issue to the Participant a share certificate representing
the Optioned Shares acquired. The Participant acknowledges and agrees that for so long as the
Repurchase Option granted by the Participant to the Company to purchase the Optioned Shares as
provided for in section 9 below is in effect, that the share certificate(s) for the Optioned
Shares being purchased shall be retained by the Secretary of the Company or his designee and the
Participant agrees to immediately, upon the request of the Company, duly endorse such share
certificate(s) in blank for transfer for purposes of section 9 below.

9. Option to Repurchase Optioned Shares

The Participant acknowledges that pursuant to section 14 of the Plan, the Participant hereby
irrevocably grants to the Company an option to purchase from the Participant any Optioned Shares
of the Company owned by the Participant (this option is defined in this Agreement as the
“Repurchase Option”). The Repurchase Option in respect of any Optioned Shares may be exercised by
the Company, in its sole discretion, at any time commencing 185 days (or such longer period of
time as the Company may specify from time to time) after the issuance of any Optioned Shares as a
result of an exercise of Options, and prior to the listing of the Common Shares of the Company on
an Exchange. If the Company elects to exercise the Repurchase Option, then the following
provisions (in addition to section 14 of the Plan) shall apply:

 

- 2 -

	 	(a)	 	The sale by the Participant to the Company of the Optioned Shares that are
the subject of the exercise by the
Company of the Repurchase Option shall take place within five business days after
service of notice by the
Company on the Participant.
	 
	 	(b)	 	The purchase price payable for the Optioned Shares to be repurchased shall be
based on the fair market value of
such Optioned Shares (as established by the Company, acting reasonably). The
purchase price to be paid to the
Participant shall, at the option of the Company, be paid either by:

	 	(i)	 	cash; or
	 
	 	(ii)	 	the issuance to the Participant of a number of common shares
of The Westaim Corporation equal in value to the purchase price, based on
the weighted average trading price of the common shares of The Westaim
Corporation on The Toronto Stock Exchange for the five trading days
immediately preceding the notice date.

	 	(c)	 	Immediately upon payment of the purchase price by the Company to the
Participant for the purchase of the
Optioned Shares, the sale of the Optioned Shares by the Participant to the Company
that are the subject of the
exercise by the Company of the Repurchase Option shall be effective and the
Participant shall no longer be a
shareholder of the Company and the share certificate(s) for such purchased shares
shall be cancelled.

For greater certainty, this Repurchase Option only applies to any Common Shares issued upon the
exercise of the Option (Optioned Shares) and does not apply to the Option itself.

10. General Matters

	 	(a)	 	Options are not transferable or assignable.
	 
	 	(b)	 	This Agreement is not an employment contract and nothing in this 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)	 	This Agreement and the Plan constitute the entire agreement between the
parties relating to the grant of Options to the Participant.
	 
	 	(d)	 	For the grant of the Options to be effective, this Agreement must be executed
by the Participant and returned to the Company.
	 
	 	(e)	 	This Agreement shall be governed by the laws of the Province of Alberta. The
parties agree that any disputes under this Agreement shall be resolved by the courts of Alberta.
	 
	 	(f)	 	Time shall be of the essence of this Agreement.
	 
	 	(g)	 	The Participant acknowledges that neither the Plan or this 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.
	 
	 	(h)	 	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
Agreement.

[Name of Subsidiary Company]

	 	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 

	 	 	 
	 	 	 
	Witness

	 	[Name of Participant]

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