GRANT of Options made as of March 27, 2009 (the Grant Date)
WHEREAS, pursuant to the Companys 1998 Equity Incentive Plan
, as amended (the Plan), awards
of Options may be granted to persons including executives of subsidiaries of the Company; and
WHEREAS, the Participant and NUCRYST Pharmaceuticals
Inc. (NPI), the Companys wholly owned
subsidiary, are parties to an Employment Agreement, dated
, 2009 and effective as of January
19, 2009 (the Employment Agreement), whereby the Participant has agreed to serve, and NPI has
agreed to engage the Participant, as the Chief Financial Officer and the Interim President and
Chief Executive Officer of NPI and the Company, subject to the terms of the Employment Agreement;
WHEREAS, pursuant to the Employment Agreement and by resolution of the Board of Directors of
the Company (the Board) made on March 27, 2009, the Board approved a grant of Options provided
for herein to the Participant, such grant to be effective on the Grant Date, subject to the terms
set forth herein;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
hereto agree as follows:
This Award Agreement and the terms and conditions of the grant of Options are subject in all
respects to the terms and conditions of the Plan, which is made a part of this Award Agreement.
The Participant, by acceptance of this Award Agreement, agrees to be bound by the Plan (and any
regulations that may be established under the Plan) and acknowledges receipt of a copy of the Plan
and this Award Agreement. Terms that are defined in the Plan and not otherwise defined in this
Award Agreement shall have the same meaning when used in this Award Agreement as in the Plan.
The Company grants to the Participant, effective the Grant Date, 100,000 options (defined in the
Plan and this Award Agreement as Options or individually as an Option) to purchase Common
Shares of the Company (which Common Shares, when purchased by the exercise of Options, are defined
as Optioned Shares), subject to the terms and conditions of this Award Agreement and the Plan.
The grant of Options herein is intended to be a grant of non-qualified stock options and shall not
be treated or construed as a grant of an incentive stock option as that term is used in Code
Section 422, or any successor provision thereof.
The exercise price of each Option (which is defined in the Plan as the Option Price) is $ .
The Options shall terminate on, and may not be exercised in whole or in part after, 5:00 p.m.
(Edmonton, Alberta, Canada time) on March 27, 2019 (the Expiry Date), unless earlier terminated
in accordance with the terms of the Plan or this Award Agreement.
Unless otherwise set forth in this Award Agreement, the Options shall vest and shall become
||as to 1/3 of the Options on the Grant Date;
||as to 1/3 of the Options on the first anniversary of the Grant Date; and
||as to 1/3 of the Options on the second anniversary of the Grant Date.
Notwithstanding section 5 above, in the event that the Participants employment under the
Employment Agreement is terminated prior to the Expiry Date and within 120 days prior to, or within
12 months following, a Change of Control in a termination governed by Section 4, 6(d) or 6(f) of
the Employment Agreement (relating to terminations without cause or non-extension of the Employment
Agreement by the Company or NPI), the Options shall immediately become fully vested and exercisable
to the extent that such Options were then scheduled to become vested or exercisable on or before
the third anniversary of the Termination Date and shall remain exercisable until the earlier of:
(x) one hundred and twenty (120) days following the date on which the Participants employment
under the Employment Agreement terminates (the Termination Date); and (y) the Expiry Date.
Change of Control shall have the meaning ascribed to such term in the Employment Agreement.
||Other Accelerated Vesting
Notwithstanding section 5 above, in the event that the Participants employment under the
Employment Agreement is terminated prior to the Expiry Date in a termination governed by Section 4,
6(d) or 6(f) of the Employment Agreement (relating to terminations without cause or non-extension
of the Employment Agreement by the Company or NPI) but not governed by section 6 of this Award
Agreement above, the Options shall immediately become fully vested and exercisable to the extent
that such Options were then scheduled to become vested or exercisable on or before the second
anniversary of the Termination Date and shall remain exercisable until the earlier of (x) one
hundred and twenty (120) days following the Termination Date and (y) the Expiry Date.
If the Participant ceases to be employed under the Employment Agreement before the Expiry Date,
then except as otherwise provided in sections 6 and 7 above, the vesting of all Options shall stop
immediately upon the Termination Date, and any Options that have vested as at the Termination Date
shall remain in force and can be exercised by the Participant in accordance with the following
||If the Termination Date occurs for any reason other than the reasons
described in sections 6 and 7 above or Section 8(b) below, then the Participant will
have 30 days after the Termination Date or until the Expiry Date (whichever is
earlier) to exercise all or any portion of his vested Options.
||If the Termination Date occurs by reason of death or Disability (as defined
in the Employment Agreement), then the Participant (or his personal legal
representative) will have one hundred and eight (180) days after the Termination Date
or until the Expiry Date (whichever is earlier) to exercise all or any portion of his
At the end of the periods specified above or the Expiry Date, whichever is earlier, all of the
Options shall terminate and be of no further force or effect. Termination Date is defined in
section 6 above, and in no event shall any period during which the Participant is in receipt of or
entitled to be in receipt of severance pay serve to extend the Termination Date.
||Method of Exercise of Options and Payment
The Options shall be exercised (in accordance with the provisions of this Award Agreement and the
Plan) from time to time by giving notice in writing to the Company and setting forth the number of
Options being exercised. Such notice shall be accompanied by cash or certified check payable to the
Company, or any other form of payment satisfactory to the Company, in the full amount of the
purchase price for the Optioned Shares being purchased (such purchase price being equal to the
number of Options being exercised times the Option Price) plus payment of any applicable federal,
state, provincial or local taxes, or any other taxes which the Company may be obligated to collect
as a result of the issue or transfer of Optioned Shares upon such exercise of the Options. The
Participant shall provide the Company with any additional documents that the Company may require.
As soon as reasonably practicable after the proper exercise of any Options, the Company shall issue
to the Participant a share certificate representing the Optioned Shares acquired.
||If there is any change in the number or character of the Common Shares
(through merger, consolidation, reorganization, recapitalization, stock split, stock
dividend, or otherwise) prior to the Participants exercise of all of the Options,
appropriate adjustments shall be made in the number or kind of securities subject to
this Option, and/or in the exercise price or other terms and conditions applying to
this Option, so as to avoid dilution or enlargement of the rights of the Participant
under this Option and of the value represented by it.
||If the Company is a party to a merger or reorganization with one or more
other corporations, whether or not the Company is the surviving or resulting entity,
or if the Company consolidates with or into one or more other corporations, or if the
Company is liquidated or sells or otherwise disposes of substantially all of its
assets to another corporation (hereinafter referred to as a Transaction), in any
case while any Options remain outstanding, (i) after the effective date of the
Transaction this Option shall remain outstanding and shall be exercisable in Common
Shares or, if applicable, shares of such stock or other securities, cash or property
as the holders of Common Shares received pursuant to the terms of the Transaction; and
(ii) the Companys Board may, in its sole discretion subject to the applicable
provisions of Code Section 409A, accelerate the time for exercise of this Option, so
that from and after a date prior to the effective date of the Transaction this Option
shall be exercisable in full.
||Options are not transferable or assignable.
||This Award Agreement is not an employment contract and nothing in this Award
Agreement shall be deemed to create in any way whatsoever any obligation on the
Participants 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 acknowledges that the Company may be required to disclose to
the securities regulatory authorities, the Toronto Stock Exchange (the Exchange) or
other regulatory authorities duly authorized to make such request, the name, address
and telephone number of the Participant and the number of Options granted. If
required by applicable securities legislation, regulations, rules, policies or orders
or by any securities