Document:

exv10w49

 

    Exhibit 10.49

 

    NUCRYST
    PHARMACEUTICALS 

    Employee Incentive Program

 

 

    Revised 2007
    

 

    Contents

 

    Overview
    

 

    How the
    Employee Incentive Program Works

 

		
	    • 
	    Plan Objective

	 
	    • 
	    Performance Period

	 
	    • 
	    Corporate Performance Measure

	 
	    • 
	    Performance Levels

 

    How
    Payouts are Made

 

		
	    • 
	    Individual Payout Levels

	 
	    • 
	    Receiving Your Annual Award

 

    Tax
    Implications

 

    More
    Program Details

 

		
	    • 
	    Who’s Eligible

	 
	    • 
	    Who’s Eligible to Receive a Payout

	 
	    • 
	    Sale of Part of Business

	 
	    • 
	    The Last Word

	 
	    • 
	    Key Dates

 

    Questions
    and Answers

 

    Overview

 

    NUCRYST Pharmaceuticals Corp. (“NUCRYST” or the
    “Company”) is pleased to introduce this new short-term
    incentive plan — the Employee Incentive
    Program — which is a bonus plan for all employees
    of NUCRYST and its subsidiaries (“Participants”) that
    is designed to reward them for contributing to the achievement
    of NUCRYST’s annual goals, as established by the Company
    (“Annual Goals”) in any calendar year. The plan is
    designed to provide greater rewards for significant or
    outstanding achievement. The amount each Participant is eligible
    to receive under the Program each year (“Annual
    Award”) is determined on an annual basis, based on whether
    and to what extent NUCRYST achieves its Annual Goals for the
    relevant calendar year (the “Performance Period”).

 

    How the
    Employee Incentive Program Works

 

    Plan
    Objective

 

    While NUCRYST includes competitive base pay and a comprehensive
    pension and benefits program as critical components of total
    compensation, an equally important component is linking
    compensation to company performance. The Employee Incentive
    Program is a dynamic plan that is intended to accomplish this
    linkage by providing employees with an opportunity to share in
    the corporate success they help to achieve through their efforts.

 

    Performance
    Period

 

    Each calendar year, beginning on January 1 of each year,
    constitutes a separate Performance Period.

 

    Company
    Performance Measures

 

    Prior to the beginning of each Performance Period, the Company
    will establish Annual Goals and financial measures and
    weightings for each Annual Goal. The Annual Goals (typically 1
    to 6 per year) will have three performance payout levels:
    Threshold, Target, and Stretch. These goals and corresponding
    payout levels will be communicated on an annual basis to all
    employees.

 

    Individual
    Payout Levels

 

    There are three key performance levels under the Employee
    Incentive Program which are as follows:

 

	 	 	 
	

    Threshold

	
 
	

    •  the minimum level of performance necessary to
    earn a payout

	
 
	
 
	

    •  there will be no payout for performance below
    Threshold

	
 
	
 
	

    •  there is an 80% probability of attaining at
    least Threshold performance measures

	

    Target

	
 
	

    •  the expected level of performance

	

    Stretch

	
 
	

    •  the level of performance beyond Target that
    earns the maximum payout

	
 
	
 
	

    •  the largest payout opportunity; there is a 20%
    probability of attaining Stretch performance measures

 

    Although specific goals are established annually for each of the
    three levels, actual results may come in at any
    number — from below the minimum Threshold level
    through to the maximum Stretch level. Typically, the STIP will
    interpolate between the three levels: Threshold, Target and
    Stretch. However, if the Annual Goal is defined as a milestone,
    where a definitive goal must be achieved at each of the three
    levels, no interpolation is made.

 

    How
    Payouts are Made

 

    Annual
    Award Calculation

 

    The Annual Award amount each Participant is eligible to receive
    in respect of a Performance Period is determined based upon two
    circumstances — first, how well the Company performed
    relative to the Annual Goals set and second, the
    Participant’s position within the Company, as follows:

 

	 	 	 	 	 	 	 
	
 
	
 
	
    Incentive Payout

    

	
 
	
 
	
    (as a % of base salary)

	
 
	
 
	
    Threshold
	
 
	
    Target
	
 
	
    Stretch

	 

	

    Vice Presidents

	
 
	
    20%
	
 
	
    40%
	
 
	
    70%

	

    Directors/Associate Directors

	
 
	
    10%
	
 
	
    20%
	
 
	
    40%

	

    Manager/Professional

	
 
	
     5%
	
 
	
    10%
	
 
	
    20%

	

    •  includes those who have attained full
    professional status, or are employed in a profession and have
    equivalent knowledge through direct field experience

	
 
	
 
	
 
	
 
	
 
	
 

	

    Technical/Operating

	
 
	
    2.5%
	
 
	
     5%
	
 
	
    10%

	

    •  includes technologists, technicians,
    operators, clerks, secretaries, analysts, material processors,
    production assistants and developing professionals

	
 
	
 
	
 
	
 
	
 
	
 

 

    Base Salary Defined:  Base salary is your total
    regular earnings as per your pay stub, excluding benefits,
    overtime, and any other special pay.

 

    In calculating Annual Awards, if the Company does not achieve
    the Threshold performance level for a particular Annual Goal, no
    payout will be made in respect of that Annual Goal.

 

    Receiving
    Your Annual Award

 

    Annual Awards will be paid out to an eligible Participant by
    February 28 of the year following the Performance Period,
    provided that the Participant is on the Company payroll at the
    time of the payment. Payment will be in the form of a lump-sum
    cheque.

 

    Tax
    Implications

 

    Incentive earnings are considered taxable income in the year you
    receive your payout. All applicable taxes will be withheld.

 

    More
    Program Details

 

    Who’s
    Eligible

 

    All regular full-time, salaried employees are eligible to
    participate in this Program. Regular part-time employees are
    also eligible, however, their payout will be prorated based on
    the hours worked throughout the Performance Period. Compliance
    with all NUCRYST policies, guidelines and all applicable laws is
    a prerequisite to receiving an Annual Award. A determination
    that an employee is not eligible to receive an Annual Award due
    to his or her failure to demonstrate compliant behaviour may be
    made by the Chief Executive Officer and the Chief Financial
    Officer.

 

    Employees who are hired throughout the Program year will be
    eligible effective on their date of hire for the Incentive
    Program; however, their payout will be prorated from their date
    of hire. Any change to an employee’s variable pay level
    will also be prorated for the time spent at each level.

 

    Temporary, casual and contract employees are not eligible to
    participate in the Employee Incentive Program.

 

    Who’s
    Eligible to Receive a Payout

 

    To receive an Annual Award from the Incentive Program, you must
    be actively at work on the Company payout date —
    assuming the Program is paying out for the previous year. For
    example, if the payout date for the 2007 year is
    February 25, 2008, you must be on the Company’s
    payroll on that date. If you have resigned before that date or
    been terminated, with or without cause, from employment before
    that date you will not be eligible for an Annual Award.

 

    There are exceptions: If you retire as defined by the Company
    pension plans, become disabled, or go on an approved leave of
    absence during the year, you will receive a payout for the
    portion of the year you worked. If you die during the
    Performance Period, your beneficiary will receive a payout for
    the portion of the year you worked.

 

    Sale of
    Part of the Business

 

    If a part of NUCRYST is sold or spun out during the year,
    affected employees will receive a payout at the Target level.
    You will receive the payout for the portion of the year you were
    an employee of NUCRYST.

 

    The Last
    Word

 

    NUCRYST’s Employee Incentive Program is designed to reward
    you when the Company meets or exceeds its Annual Goals. With
    this Program, you have the opportunity to increase your cash
    compensation when the Company does well. And in those years when
    business targets are not met, you continue to earn a competitive
    base salary. Both the base pay and incentive pay plans work
    together to reward you for your contribution to NUCRYST’s
    success.

 

    Key
    Dates

 

	 	 	 
	

    Corporate Performance Measures Set

	
 
	
    Fourth Quarter for next Program year

	

    Individual Performance Measures Set

	
 
	
    Fourth Quarter for next Program year

	

    Performance Updates

	
 
	
    Quarterly

	

    Incentive Program Payouts

	
 
	
    Prior to February 28

 

    Questions
    and Answers

 

    Q: Who
    is eligible to participate in the Program?

 

    A: Eligibility
    for participation in the Incentive Program is established as
    follows:
    

 

			
	 	    • 
	
    Employees:  Designated employees of the Company

	 
	 	    • 
	
    New hires:  prorated based on start date

	 
	 	    • 
	
    Regular part-time:  prorated based on time
    worked in a given year

	 
	 	    • 
	
    Leave of Absence:  prorated based on time
    worked in a given year

	 
	 	    • 
	
    Involuntary Leave-Short Term
    Disability:  prorated for any absence that exceeds
    2 months of continuous absence or 40 working days in a
    calendar year

	 
	 	    • 
	
    Eligible Retirement:  prorated based on time
    worked

	 
	 	    • 
	
    Resignation or Termination (with or without
    cause):  no payout

	 
	 	    • 
	
    Death:  prorated based on time worked during
    the year; payout to eligible beneficiary or estate

	 
	 	    • 
	
    Employment:  must be on company payroll on
    payout date

	 
	 	    • 
	
    Temporary and casual, including summer
    students:  not eligible to participate

	 
	 	    • 
	
    Contract employees:  not eligible to
    participate (the incentive may be built into a long term
    contract at the time of hire)

 

    Q: How
    does the plan work?

 

		
	    A: 	
    The Employee Incentive Program features the setting of specific
    Annual Goals (from 1 to 6 goals) each year that support the
    achievement of the overall business strategy. Three levels of
    measurements are established for each goal: Threshold,
    Target, and Stretch. The plan is designed so company performance
    must meet at least the Threshold level for each goal in order
    for employees to receive payouts.

 

    Q: Is
    there a chance the Employee Incentive Program will not pay
    out?

 

		
	    A: 	
    Yes. If the Threshold corporate measure is not attained in
    respect of each Annual Goal, you will not receive a payout.

 

    Q: Will
    all employees receive the same payout?

 

		
	    A: 	
    The amount of payout an employee receives is based on two
    circumstances — first, how well the corporation
    performed relative to the measures set. Second, the actual
    payout amount received will depend on the employee’s
    position within the Company: Vice President (from 20% to 70% of
    their base earnings), Director/Associate Director (from 10% to
    40% of their base earnings) Manager/Professional (from 5% to 20%
    of their base earnings), or Technical/Operating/Clerical (from
    2.5% to 10% of their base earnings).

 

    Q: How
    much can I expect to earn?

 

		
	    A: 	
    The payout will be a percentage of your base salary and will be
    determined based on the level of results attained for each of
    the Annual Goals set by the Company and on your position within
    NUCRYST, as follows:

 

	 	 	 	 	 	 	 
	
 
	
 
	
    Threshold
	
 
	
    Target
	
 
	
    Stretch

	 

	

    Vice President

	
 
	
    20%
	
 
	
    40%
	
 
	
    70%

	

    Manager/Professional

	
 
	
    10%
	
 
	
    20%
	
 
	
    40%

	

    Manager/Professional

	
 
	
     5%
	
 
	
    10%
	
 
	
    20%

	

    Technical/Operating

	
 
	
    2.5%
	
 
	
     5%
	
 
	
    10  

 

    The plan will therefore payout anywhere from the minimum
    Threshold level within the measure to the maximum Stretch level
    within the measure.

 

    Q How
    will my payout be calculated if I receive a salary increase
    during the year?

 

		
	    A 	
    Your regular earnings as reported on your paystub will be used
    to calculate your payout. Regular earnings at the end of the
    year will have taken into account any changes to your regular
    earnings, such as a salary increase. Regular earnings excludes
    any overtime, premiums, bonuses or taxable benefits.

 

 

    Q What
    if my variable pay level changes during the year?

 

		
	    A 	
    Your payout will be prorated for the time spent at each level.
    So, if you were at a 5% Technical/Operating level and were
    increased to the Manager/Professional Level of 10% on
    July 1st, your payout would be prorated 6 months at
    the 5% level and 6 months at the 10% level.

 

    Q: How
    many decimal points will we use on our calculations for variable
    pay?

 

		
	    A: 	
    The percentage payout will be calculated using 1 decimal point.
    Eg. (5.32% will be 5.3%) and (5.35% will be 5.4%).

 

    Q: Why
    are there two levels of payout based on the position of the
    employee?

 

		
	    A: 	
    If we hit at least the minimum Threshold level and there is a
    payout, the amount each employee receives will depend on their
    position within the Company. This decision was made based on
    comparative market practices. We went to the external market and
    looked at our comparator companies to see what they were doing
    in terms of distributing a payout.

 

    We found that for most companies, the higher the level of
    responsibility for the individual, the higher the portion of
    variable pay within the individual’s total compensation
    package. We designed our Incentive Program to reflect this
    market practice.

 

    Q: How
    are the actual numbers established for each of the three
    measures (Threshold, Target and Stretch)?

 

		
	    A: 	
    The measures are set based on input from a variety of sources:
    industry data, financial reports, past performance, senior
    business leaders, the Executive team, the Board of Directors
    and, of course, employees.

 

    Q: How
    are the numbers finalized?

 

    A: The
    measures are finalized based on the probability of actually
    attaining the set measures, as follows:
    

 

			
	 	    •  
	
    Threshold — there is an 80% probability the measure
    will be attained

	 
	 	    •  
	
    Target — the expected outcome

	 
	 	    •  
	
    Stretch — there is a 20% probability the measure will
    be attained

 

    Q: How
    will the plan payout for measures attained between the three
    levels — Threshold, Target and Stretch?

 

		
	    A: 	
    As an example, if the goal is to increase revenue by 5%
    (Threshold), 10% (Target), and 25% (Stretch), we see that the
    plan will payout as long as the revenue increases anywhere from
    5% to 25%. The plan is designed so that performance levels
    attained between the Threshold, Target and Stretch measures will
    be interpolated to determine the payout levels.

 

    Some measures may include “milestone” measures which
    are specific results that must be attained at Threshold, Target
    and Stretch levels before any payout is made. These milestone
    measurements will not be subject to interpolation.

 

    Q: Will
    the measures change each year?

 

		
	    A: 	
    Most Likely. As our business strategy changes, it may be
    necessary to change the corporate measure to support our
    corporate objectives. The intent is to set measures that are
    appropriate for the business strategy, measures that may change
    as the strategy changes.

 

    In any case, we will not set corporate or business
    unit/subsidiary measures that are not reasonably attainable.
    This is why we set a range of targets (Threshold, Target and
    Stretch), so that there is a good chance (80%) at least
    Threshold will be attained and a payout will result. And, once a
    plan year begins, we do not intend to change the measures midway
    through the plan year, unless there is a substantial change in
    our business.

 

    Q: How
    will we know how well we are doing?

 

		
	    A: 	
    We are committed to timely, effective communication to ensure
    that all employees know exactly where we stand relative to our
    targets. Business unit/subsidiaries will provide updates with
    respect to their performance. In this way, we can support our
    collective efforts to reach our maximum payout targets.

 

    Q: Will
    I receive cash?

 

		
	    A: 	
    Payout will be cash paid out by separate cheque in addition to
    your regular paycheque. Applicable income taxes will be withheld.

 

 

    Q: When
    will I get paid?

 

		
	    A: 	
    NUCRYST will make every effort to pay out before the end of
    February following the completion of the previous year’s
    plan. This will allow enough time for the financial results to
    be calculated and cheques to be issued before the close of the
    RRSP season.

 

    Q: What
    happens if I take a voluntary leave of absence?

 

		
	    A: 	
    If you take a voluntary leave of absence, retire as defined by
    the Company pension plans, or die during the Program year, you
    will receive a payout based on your regular earnings as reported
    on your pay stub.

 

    Q What
    happens if I go on Short Term Disability during the
    year?

 

		
	    A 	
    When an employee’s total accumulated involuntary leave or
    short term disability exceeds 2 months of continuous
    absence or 40 working days in the calendar year, an
    employee’s Variable Pay will be prorated. In the event that
    the employee returns to work on a partial work schedule, the
    Variable Pay will be prorated to the work schedule. It is the
    Manager/Supervisor’s responsibility to track and maintain
    accurate records of the absence.

 

    Q: What
    happens if I terminate my employment near the end of the Program
    year, or in early January?

 

		
	    A: 	
    You must be actively at work on the Company payout date. If you
    have resigned or you have been terminated, whether with or
    without cause, from employment prior to the payout date you will
    not receive any payout. The exceptions are outlined in the
    previous question.

 

    Q: What
    happens if part of the business I work in is sold or spun out
    during the year?

 

		
	    A: 	
    You will receive a payout at the Target level. The payout will
    be for the portion of the year you were an employee of NUCRYST.
    For example, if the sale or spin out transaction is effective
    May 1, you will receive 4/12 X the Target level X your
    regular earnings as on your pay stub.

 

    Q: How
    will the plan be maintained?

 

		
	    A: 	
    The plan and its outcomes will be reviewed at the end of each
    year by the Executive Team to ensure it continues to reflect
    business performance and priorities.exv10w50

 

Exhibit 10.50

February 1, 2006

Personal & Confidential

Carol Amelio

714 Burley Drive

Edmonton, Alberta

T6R 1W6

Re: Offer of Employment

Dear Carol,

I am pleased to offer you a new full time position with NUCRYST Pharmaceuticals Corp., on the
following terms and conditions:

	 	 	 
	Position:

	 	General Counsel and Corporate Secretary
	 
	 	 
	Reporting To:

	 	Scott Gillis, President
	 
	 	 
	Start Date:

	 	February 1, 2006
	 
	 	 
	Base Salary:

	 	$160,000.00 per annum, payable in equal semi-monthly installments.
	 
	 	 
	Variable Pay:

	 	An annual bonus based on the Company’s variable pay program, utilizing
the following percentages of base salary:

	 	 	 	 	 
	Threshold
	 	 	15%	 
	 
	 	 	 	 
	Target
	 	 	25%	 
	 
	 	 	 	 
	Stretch
	 	 	35%	 

	 	 	 
	 

	 	Variable Pay under the Nucryst program for 2006 will be calculated from January 1, 2006.
	 	 	 
	Long Term 

Incentives:

	 	You will participate in the NUCRYST Pharmaceuticals Corp. 1998
Equity Incentive Plan, as amended, (“Plan”) whereby you will
be granted 10,000 stock options. Your options will have an
exercise price equal to the exercise price for options issued
under the Plan in effect on your commencement date.

 

 

	 	 	 
	 

	 	Vesting in the Westaim Bonus Appreciation Unit Plan will continue until
February 1, 2007. At that time you will retain the vested BAUs until you elect
to exercise them or they expire.
	 
	 	 
	Confidentiality 

Agreement:

	 	As a term of your employment, you will be required to sign
the Company’s standard form of non-disclosure and
confidentiality agreement relating to confidentiality of
information and assignment of inventions, prior to
commencing employment.

Your years of service with Westaim will transfer to Nucryst and participation in the benefit and
pension plans will continue without interruption. Vacation entitlement will continue to be
granted at 20 days annually.

Please confirm your acceptance of this offer by signing below and forwarding to my attention.

Carol, we are very excited about your new role at NUCRYST and I look forward to working with you
to build a great company.

	 	 	 	 	 
	Sincerely,

 	 	 
	/s/ Scott Gillis
 	 	 
	Scott Gillis 	 	 
	President, NUCRYST 	 	 
	 

Accepted this 2nd day of February, 2006.

	 	 	 	 	 
	 	 	 
	/s/ Carol Amelio
 	 	 
	Carol Amelio

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