Document:

ex42.htm

    INVESTMENT
LETTER

    

    CAPITAL
EQUITY FINANCE, INC.

    5775
Blue Lagoon Drive

    Suite
100

    Miami,
Florida 33126

    

    January
5, 2008

    

    Ladies
and Gentlemen:

    

    You have
informed the undersigned (the “Purchaser”) that CAPITAL EQUITY FINANCE, INC, a
Florida corporation that has no assets and no business other than to seek a
merger with a private operating business (the “Company” or “you”), wishes to
raise a maximum of Thirty Thousand Dollars USD ($30,000 USD) to pay for
administrative, accounting, and legal expenses from various accredited investors
by selling the Company’s Common Stock, $0.001 par value (the “Shares”), at a
price of Two and One-Half Cents USD ($0.025 USD) per Share.

    

    I, the
Purchaser, understand that you will rely on the following information to confirm
that I am an “Accredited Investor”, as defined in Regulation D promulgated under
the Securities Act of 1933, as amended (the “Securities Act”), and that I am
qualified to be a Purchaser.

    

    I, the
Purchaser, also understand that this Agreement is entered into solely upon the
premise that the purchase and sale of the Shares and any resale thereof will be
made in compliance with the exemption from registration afforded by the
provisions of Regulation S (“Regulation S”) as promulgated under the Securities
Act of 1933, as amended (“Securities Act”), unless the resale thereof is made
pursuant to registration under the Securities Act or pursuant to an applicable
exemption therefrom.

    

    In
connection with and as consideration for the receipt of ____________ Shares for
a total price of $______________ USD by the undersigned Purchaser, the Purchaser
hereby represents, warrants, covenants and agrees as set forth
below.

    

    1.           Purchase
Entirely for Own Account. The Shares are being acquired for investment purposes
only, for the Purchaser's own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the Shares or any portion thereof. Further, the Purchaser does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to all or any portion of the Shares.

    

    2.           Non-Affiliate
Status; Common Stock Ownership. Purchaser represents and warrants that it is
neither an affiliate nor an associate (as such terms are defined in Rule 12b-2
promulgated under the Exchange Act) of the Company or of any other Purchaser and
is not acting in association or concert with any other Purchaser in regard to
its purchase of the Shares or otherwise in regard to the Company. Such
Purchaser's investment in the Shares is not for the purpose of acquiring,
directly or indirectly, control of, and it has no intent to acquire or exercise
control of, the Company or to influence the decisions or policies of the
Company's Board of Directors.

    
      
        Initials
_____

         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    3.           Hedging.  Purchaser
represents and warrants that for offers and sales of the Shares,
that it will not engage in hedging transactions with regard to such securities
prior to the expiration of one (1) year from the end of the distribution period
unless in compliance with the Securities Act.

     

    4.           Offshore
Transaction. Purchaser represents and warrants that:

     

    a.           It
is not a citizen or resident of the United States of America, or it is a U.S.
person who purchased securities in a transaction that did not require
registration under the Securities Act;

     

    b.           It
is not acquiring the securities for the account or benefit of any U.S. person;
and

     

    c.           At
the time the purchase order for the Shares is originated by the Purchaser, the
Purchaser was outside of the United States of America, the purchase by the
Purchaser having occurred in the Country of _______________ and in the City of
__________ on or about ____________________, 2008.

     

    5.           No
Securities Act Registration. The Purchaser understands that the Shares have not
been registered under the Securities Act by reason of a specific exemption or
specific exemptions from the registration provisions of the Securities Act which
depend upon, among other things, the bona fide nature of the Purchaser's
investment intent as expressed herein.

    

    6.           Restricted
Securities. The Purchaser acknowledges that, because the Shares have been issued
to a founder of, or early investor in, a shell company or blank check company,
the Shares must be held by the Purchaser indefinitely unless subsequently
registered under the Securities Act, or unless the federal securities laws are
amended to reduce applicable holding periods and/or to eliminate founder
securities resale restrictions.  Therefore, the provision of Rule 144
promulgated under the Securities Act that permits the limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions is not available for the resale of the Shares under current
law.

    

    7.           No
Market for Shares.  The Purchaser is fully aware that there is no
public market where the Shares may be resold, that the Shares are illiquid, and
that the Purchaser must hold the Shares indefinitely.

    

    8.           No
Representations by the Company.  The Purchaser represents to the
Company that the Company has not made any representations or promises, material
or otherwise, concerning the Company, its business model, the target of any
proposed acquisition, the Company’s prospects for a merger, its financial
condition, or the backgrounds of any individual involved in the Company or in
selling the Shares, as an inducement to purchase the Shares.

    

    9.           Information.  The
Purchaser is aware that all information about the Company is either set forth in
this Investment Letter or in the Company’s Form 10-SB, as amended, filed by the
Company with the U.S. Securities & Exchange Commission (“SEC”) at
www.sec.gov (by following the link to “Filing and Forms (EDGAR),” then “Search
for Company Filings”, then “Companies & Other Filers” and then entering the
words “Capital Equity Finance”), and in other disclosure documents filed by the
Company with the SEC from time to time.

    
      
        Initials
_____

         

      

      
        -2-

        
          

        

      

      
         

      

    

    

    10.           Accredited
and Sophisticated Investor. The Purchaser represents and warrants that: (a)
either alone or with the Purchaser's professional advisor or advisors, he or she
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of acquiring the Shares, (c) is able
to bear the economic risk of the investment in the Shares, including a complete
loss of the investment, and (c) (a) is an accredited investor as defined in Rule
501(a) of Regulation D of the Securities and Exchange Commission; and, because
Purchaser:

     

    (CHECK
ALL BOXES BELOW THAT APPLY TO YOUR CIRCUMSTANCES)

     

    INDIVIDUALS

     

    ____                      (a)           is
an individual with a net worth, or a joint net worth together with his or her
spouse, in excess of $1,000,000 USD.  (In calculating net worth, you
may include equity in personal property and real estate, including your
principal residence, cash, short-term investments, stock and
securities.  Equity in personal property and real estate should be
based on the fair market value of such property minus debt secured by such
property.)

    

    ____                      (b)           is
an individual that had an individual income in excess of $200,000 USD in each of
the prior two years and reasonably expects an income in excess of $200,000 USD
in the current year; or

    

    ____                      (c)           is
an individual that had with his/her spouse joint income in excess of $300,000
USD in each of the prior two years and reasonably expects joint income in excess
of $300,000 USD in the current year.

    

    ____                      (d)           is
a director or executive officer of Capital Equity Finance, Inc. or its
subsidiaries.

     

    ENTITIES

    

    ____                      (e)           is
an entity all of whose equity owners meet one of the tests set forth in (a)
through (d) above.

    

    ____                      (f)           is
an entity, and one or more of the following statements is applicable (check the
applicable boxes):

    ____                      (i)           The
Purchaser (or, in the case of a trust, the Purchaser trustee) is a bank or
savings and loan association as defined in Sections 3(a)(2) and 3(a)(5)(A),
respectively, of the Securities Act acting either in its individual or fiduciary
capacity.

    

    ____                      (ii)           The
Purchaser is an insurance company as defined in Section 2(13) of the Securities
Act.

    

    ____                      (iii)           The
Purchaser is an investment company registered under the Investment Company Act
of 1940 or a business development company as defined in Section 2(a)(48) of that
Act.

    

    ____                      (iv)           The
Purchaser is a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.

    

    
      
        Initials
_____

         

      

      
        -3-

        
          

        

      

      
         

      

    

    ____                      (v)           The
Purchaser is an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 and either (check one
or more, as applicable):

    

    
      	
               
      

            	
              ____

            	
              (a)

            	
              the
      investment decision is made by a plan fiduciary, as defined in Section
      3(21) of such Act, which is either a bank, savings and loan association,
      insurance company, or registered investment adviser;
  or

            

    

    

    
      	
               
      

            	
              ____

            	
              (b)

            	
              the
      employee benefit plan has total assets in excess of $5,000,000 USD;
      or

            

    

    
      

      
        	
                 
      

              	
                ____

              	
                (c)

              	
                      
                  the
      plan is a self-directed plan with investment decisions made solely by
      persons who are “Accredited Investors” as defined under the 1933
      Act.

                

              

      

       

    

    ____                      (vi)           The
Purchaser is a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.

    

    ____                      (vii)           The
Purchaser has total assets in excess of $5,000,000 USD, was not formed for the
specific purpose of purchasing the Shares and is one or more of
the following (check one or more, as appropriate):

    

    
      	
               
      

            	
              ____

            	
              (a)

            	
              an
      organization described in Section 501(c)(3) of the Internal Revenue Code;
      or

            

    

    
      

      
        	
                 
      

              	
                ____

              	
                (b)

              	
                a
      corporation; or

              

      

      
        

        
          	
                   
      

                	
                  ____

                	
                  (c)

                	
                  a
      Massachusetts or similar business trust;
or

                

        

        
          

          
            	
                     
      

                  	
                    ____

                  	
                    (d)

                  	
                    a
      partnership; or

                  

          

           

        

      

    

    
      	
               
      

            	
              ____

            	
              (e)

            	
              a
      plan established by a state, its political subdivisions, or any agency or
      instrumentality of a state or its political subdivisions, for the benefit
      of its employees.

            

    

    

    ____                      (viii)                      The
Purchaser is a trust with total assets exceeding $5,000,000 USD, which was not
formed for the specific purpose of purchasing the Shares and whose purchase is
directed by a person who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
investment in the Shares.

    

    11.           Opportunity
to Ask Questions. No offering memorandum or prospectus is being distributed in
connection with this offer. Therefore, the Purchaser has had an opportunity to
ask questions of, and receive answers from, the Company or its representatives
concerning the terms of the Purchaser's investment in the Shares; all such
questions have been answered to the full satisfaction of the Purchaser, and the
Purchaser has had the opportunity to request and obtain any additional
information the Purchaser deemed necessary to verify or supplement the
information contained therein.

    
      
        Initials
_____

         

      

      
        -4-

        
          

        

      

      
         

      

    

    

    12.           Investment
Risks. The Purchaser recognizes that an investment in the Shares and the
investment in any shell corporation involves substantial risks, and the
Purchaser is fully aware of and understands all of the risk factors related to
the acquisition of the Shares. The Purchaser has determined that the acquisition
of the Shares is consistent with the Purchaser's investment objectives. The
Purchaser is able to bear the economic risks of an investment in the Shares, and
at the present time could afford a complete loss of such
investment.

    

    13.           Limitation
on Manner of Offering. The Shares were not offered to the Purchaser by any means
of general solicitation or general advertising.

    

    14.           Tax
and Other Matters. The Purchaser is not relying on the Company with respect to
tax and other economic considerations involved in the acquisition of the Shares.
The Purchaser has carefully considered and has, to the extent the Purchaser
believes such discussion necessary, discussed with the Purchaser's professional,
legal, tax, accounting and financial advisors the suitability of an investment
in the Shares for the Purchaser's particular tax and financial situation and the
Purchaser has determined that the Shares are a suitable investment for
him.

    

    15.           Restrictive
Legends. The Purchaser understands that the Shares shall bear one or more of the
following restrictive legends:

    

    (a) "The
Shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state, and
transfer is prohibited except in accordance with the provisions of Regulation S
(Rule 901 through Rule 905, and Preliminary Notes), pursuant to an effective
registration statement under the Securities Act and applicable state securities
laws, or pursuant to an available exemption from registration under said
Securities Act and applicable state securities laws, and hedging transactions
involving those securities may not be conducted unless in compliance with the
Securities Act and applicable state securities laws."

    

    (b) Any
legend required by applicable state law.

    

    16.           Successors.
The representations and warranties contained herein shall be binding upon the
heirs, executors, administrators, personal representatives and other successors
of the Purchaser and shall inure to the benefit of and be enforceable by the
Company.

    

    17.           Address.
The address, telephone number and facsimile number set forth at the end of this
Investment Letter are the Purchaser's true and correct address.

    

    18.           Counsel.
The Purchaser has had the opportunity to discuss this Investment Letter with
counsel of its selection, and the Purchaser has availed itself of the
opportunity to do so to the extent he or she desires. The Purchaser is not
relying upon the advice of the Company or counsel to the Company to advise the
Purchaser in connection with the risks and merits of consummating the
transactions contemplated by this Investment Letter.

    

    19.           Governing
Law. The terms of this Investment Letter shall be governed by and construed in
accordance with the laws of the State of Florida applicable to contracts made
and to be performed entirely within Florida.

     

    20.           Entire
Agreement.  This Investment Letter sets forth the entire understanding
of the parties hereto with respect to their commitments to each other and their
undertakings vis-à-vis each other on the subject matter hereof.  Any
previous agreements or understandings among the parties regarding the subject
matter hereof are merged into and superseded by this Investment
Letter.

    
      
        Initials
_____

         

      

      
        -5-

        
          

        

      

      
         

      

    

    SHAREHOLDER

    

    _______________________________              _______________________________

    (Signature)                                                                           (Signature
of Spouse)

    

    _______________________________             _______________________________

    (Print
Name)                                                                           (Print
Name)

    

    _______________________________          ________________________________

    (Dated)                                                                                 
 (Dated)

    

    Mailing
Address:                  _______________________

    

    _______________________

    

    _______________________

    

    _______________________

    

    Telephone:                            _______________________

    

    U.S. Tax
ID
Number:             _______________________

    

    

    Number of
Shares:____________________

    

    Purchase
Price: $_____________________USD

    

    

    We Accept
the above Investment.

    

    CAPITAL
EQUITY FINANCE, INC.

    

    

    

    By:_________________________________

    Luz M.
Weigel

    President

    

    

    
      
        Initials
_____

         

      

      
        -6-exv10w55

Exhibit 10.55

NUCRYST PHARMACEUTICALS CORP.

1998 Equity Incentive Plan

(as amended)

1. Purpose of the Plan

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

2. Definitions

In this Plan:

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

 

- 2 -

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

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

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

 

- 3 -

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

 

- 4 -

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

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

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

3. Eligibility

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

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

4. Common Shares Subject to the Plan and Limitations on Issuance

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

 

- 5 -

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

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

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

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

 

- 6 -

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

No fractional shares may be purchased or issued hereunder. To the extent any Common Shares covered
by an Award are not delivered to a Participant or beneficiary because the Award (or portion
thereof) is forfeited, expired, surrendered, cancelled, or otherwise terminated prior to the
issuance or transfer of such Common Shares or the Common Shares are not delivered on an
unrestricted basis (including, without limitation, by reason of the Award being settled in cash or
used to satisfy the applicable tax withholding obligation), such Common Shares shall not be deemed
to have been delivered for purposes of the determinations to be made pursuant to this Section 4 and
shall be again available for grant under this Plan. Common Shares that have been issued pursuant
to the exercise of Awards under this Plan shall, upon issuance to the Participant, again become
available for grant under this Plan. If the exercise price of any Option or Stock Appreciation
Right granted under the Plan, or the tax withholding obligation with respect to any Award granted
under the Plan, is satisfied by tendering Common Shares to the Company, only the number of Common
Shares issued net of the Common Shares tendered shall be deemed delivered for purposes of
determining the number of Common Shares available for delivery under the Plan.

Payments or transfers to be made upon the exercise or settlement of an Award may, in the discretion
of the Committee, be made in: (i) Common Shares currently authorized but unissued, or (ii) to the
extent permitted by applicable law, Common Shares purchased in the open market or in private
transactions. At the discretion of the Committee, an Award under the Plan may be settled in cash
rather than Common Shares.

Subject to the foregoing, the number of Awards that a Participant is entitled to under the Plan
will be determined by the Committee.

5. Option Provisions

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

 

- 7 -

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

6. Stock Appreciation Rights

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

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

 

- 8 -

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

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

 

- 9 -

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

7. Full Value Awards

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

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

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

8. Adjustments

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

 

- 10 -

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

9. Cessation of Employment or Directorship or Services

In the event that an Employee’s employment with the Company or any of its Subsidiaries ceases or is
terminated for any reason (other than death or Disability), a Director ceases to be a Director for
any reason (other than death or Disability) or a Service Provider ceases to provide services to the
Company or any Subsidiary for any reason (other than death or Disability), the Participant may
elect to exercise all or a portion of the remaining Options and Stock Appreciation Rights that have
vested on the Termination Date, at any time during the 30 day period following the Termination
Date, or such later date as specified in the Participant’s Award Agreement or, subject to the
applicable provisions of Code section 409A, as may be subsequently agreed to in writing by the
Company and the Participant, but in no event after the lapse of any Options or Stock Appreciation
Rights held. For the purposes of this Plan, the transfer of the Employee’s employment to or from
the Company to or from any Subsidiary of the Company shall not be considered a cessation or a
termination of employment and the Employee’s rights under any Options or Stock Appreciation Rights
shall be the same as if such transfer had not occurred.

10. Death or Disability of Participant

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

11. Transfer and Assignment

Except as provided for in Section 10 or as otherwise provided by the Committee in its sole
discretion, the Participant’s rights under Awards granted under the Plan are not assignable or
transferable by the Participant or subject to any other alienation, sale, pledge or encumbrance by
such Participant during the Participant’s lifetime. The obligations of each Participant shall be
binding on his or her heirs, executors and administrators.

12. Employment and Board of Directors Position Non-Contractual

 

- 11 -

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

13. Rights As Shareholders

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

14. Administration of the Plan

The Plan shall be administered by one or more Committees. The Committee(s) shall have the power
and discretion to interpret and construe the terms and conditions of the Plan and the Awards; to
establish, amend or waive rules and regulations for the administration of the Plan (provided that
no such action shall, however, without the consent of the Participant, in any manner materially
adversely affect his rights under any Awards previously granted under the Plan); and to correct
errors, omissions or inconsistencies in the Plan or any Awards granted pursuant to the Plan.

Any determination by the Committee shall be final and conclusive on all persons affected thereby
unless otherwise determined by the Board of Directors, and subject to any applicable arbitration
provisions contained in an Award Agreement. The day-to-day administration of the Plan may be
delegated to such persons as the Committee(s) may determine.

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

15. Stock Exchange Rules

The Plan and any Award Agreements entered into hereunder shall comply with the requirements from
time to time of the Exchange.

16. Right to Issue Other Shares

The Company shall not by virtue of this Plan be in any way restricted from declaring and paying
stock dividends, issuing further Common Shares, varying or amending its share capital or corporate
structure or conducting its business in any way whatsoever.

17. Notices

 

- 12 -

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

NUCRYST Pharmaceuticals Corp.

10102 — 114 Street

Fort Saskatchewan, AB T8L 3W4

Canada

Attention: President

with a copy to:

NUCRYST Pharmaceuticals Corp.

50 Audubon Road, Suite B

Wakefield, MA 01880

USA

Attention: President

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

18. Corporate Action

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

19. Conflicts and Amendments

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

 

- 13 -

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

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

20. Governing Law

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

21. Acceleration of Options

Without limiting the generality of the powers and discretions granted to the Committee herein, the
Committee may determine that any Option granted under the Plan shall include provisions which
accelerate the date on which any Option shall become exercisable, upon the happening of such events
as the Committee may determine and as may be prescribed in the applicable Award Agreement. Without
limiting the generality of the foregoing, and subject to the terms and provisions of the individual
Award Agreement, the Committee may determine that such acceleration should occur in the event of an
actual or anticipated change of effective control of the Company, or in the event of other
fundamental changes to the Company or its business or affairs.

 

- 14 -

22. Tax Withholding Requirements

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

23. Government Regulation

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

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

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

24. Exercise and Settlement of Awards During Blackout Periods

Where the expiry date of an Option or Tandem Right occurs during a Blackout Period or within ten
Non Blackout Trading Days following the end of a Blackout Period, the expiry date for such Option
or Tandem Right shall be the date which is ten Non-Blackout Trading Days following the end of such
Blackout Period. Where the date for the settlement of Restricted Stock Units or Full Value Awards
occurs during a Blackout Period, the Company shall make such settlement to the holder of such Award
within ten Non-Blackout Trading Days following the end of such Blackout Period.

25. Termination of Plan

This Plan will terminate on the tenth anniversary of the Amendment Date, unless terminated earlier
pursuant to Section 19. The full powers of the Committee and the Board of Directors as provided for
in

 

- 15 -

this Plan shall survive the termination of this Plan until all Awards have been exercised or
settled in full or have otherwise expired.

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

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

AMENDED as of the 19th day of December, 2005.

AMENDED as of the 8th day of May, 2008

 

 

Appendix “A.1”

NUCRYST Pharmaceuticals Corp.

1998 Equity Incentive Plan (as amended)

Option Exercise Form

Part 1: Identification

	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	Name of Participant	 	 	 	Office Phone Number	 	 
	 
	 	 	 	 	 	 
	 	 	 
	Address
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	Social Insurance/Security Number	 	 	 	Home Phone Number	 	 

Part 2: Option

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

	 	 	 	 	 	 	 
	 	 	Number of	 	 	 	Aggregate
	Grant Date	 	Common Shares	 	Exercise Price	 	Consideration
	 

	 	 
	 	 
	 	 

I will deliver to you a bank draft payable to NUCRYST Pharmaceuticals Corp. in the amount of
$                    , equivalent to the full exercise price, on                     , 2007.

I direct that the shares be issued in the name of and delivered to:

[name

address]

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

Given at ________________, this __________ day of ________________, 2007.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Signature

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