Exhibit 10.5
BIOCRYST PHARMACEUTICALS, INC.
STOCK INCENTIVE PLAN
NOTICE OF GRANT OF STOCK OPTION
     Notice is hereby given of the following stock option grant (the “Option”)
to purchase shares of the Common Stock of BioCryst Pharmaceuticals, Inc. (the
“Company”) pursuant to the BioCryst Pharmaceuticals, Inc. Stock Incentive Plan
(the “Plan”):

         
 
  Optionee:    
 
       
 
  Grant Date:    
 
       
 
  Option Price:    
 
       
 
  Number of Optioned Shares:    
 
       
 
  Option Expiration Date:    
 
       
 
  Type of Option:                        Incentive Stock Option (ISO)
 
      (up to tax code limits — any portion
 
      of the option covering Option Shares in
 
      excess of tax code limits shall be
 
      accounted for as a non-qualified stock
 
      option)
 
                           Non-Statutory Stock Option (NSO)

     Exercise Schedule / Vesting Terms:
     Optionee understands that the Option is granted subject to and in
accordance with the express terms and conditions of the Plan and agrees to be
bound by and conform to the terms and conditions of the Plan, the Plan
Prospectus, this Notice of Grant of Stock Option and its accompanying Stock
Option Agreement. Optionee acknowledges that copies of the Plan, the Plan
Prospectus, and the Stock Option Agreement are available to Optionee on the
Company’s intranet and have been made available to Optionee.
     No Employment or Service Contract. Nothing in the Option Agreement or the
Plan shall confer upon the Optionee the right to continue in the Service of the
Company for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Company or the Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee’s Service at any time
for any reason whatsoever, with or without cause.
     By my signature below, I hereby acknowledge receipt of this Option granted
on the Grant Date specified above and issued to me under the terms and
conditions of the Plan.

                  Optionee:       BIOCRYST PHARMACEUTICALS, INC.    
 
 
 
           
Address:
      By:        
 
 
 
     
 
   
 
      Name:        
 
         
 
   
Dated:
      Title:        
 
 
 
     
 
   

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BIOCRYST PHARMACEUTICALS, INC.
STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
     A. The Board of Directors of the Company has adopted the Company’s Stock
Incentive Plan (the “Plan”) for the purpose of attracting and retaining the
services of selected key employees (including officers and directors),
non-employee Board members and consultants and other independent contractors who
contribute to the financial success of the Company or its parent or subsidiary
corporations.
     B. Optionee is an individual who is to render valuable services to the
Company or its parent or subsidiary corporations, and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Company’s grant of a stock option to Optionee.
     NOW, THEREFORE, it is hereby agreed as follows:
     1. Grant of Option. Subject to and upon the terms and conditions set forth
in this Agreement, the Company hereby grants to Optionee, as of the grant date
(the “Grant Date”) specified in the accompanying Notice of Grant of Stock Option
(the “Grant Notice”), a stock option to purchase up to that number of shares of
the Company’s Common Stock (the “Optioned Shares”) specified in the Grant
Notice. The Optioned Shares shall be purchasable from time to time during the
option term at the option price per share (the “Option Price”) specified in the
Grant Notice.
     2. Option Term. This option shall expire at the close of business on the
Expiration Date specified in the Grant Notice, unless sooner terminated in
accordance with Paragraph 5 , 6 or 19 of this Agreement.
     3. Limited Transferability. During the lifetime of the Optionee, this
option (together with its tandem stock appreciation right), shall be exercisable
only by the Optionee and shall not be assignable or transferable by the Optionee
except for a transfer by will or by the laws of descent and distribution
following the Optionee’s death. Notwithstanding the foregoing, this option may,
to the extent it is a non-statutory stock option, in connection with the
Optionee’s estate plan, be assigned in whole or in part during the during
Optionee’s lifetime either as (i) as a gift to one or more members of Optionee’s
immediate family, to a trust in which Optionee and/or one or more such family
members hold more than fifty percent (50%) of the beneficial interest or an
entity in which more than fifty percent (50%) of the voting interests are owned
by Optionee and/or one or more such family members, or (ii) pursuant to a
domestic relations order. The assigned portion shall be exercisable only by the
person or persons who acquire a proprietary interest in the option pursuant to
such assignment. The terms applicable to the assigned portion shall be the same
as those in effect for this option immediately prior to such assignment and
shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
     4. Exercisability. This option shall become exercisable for the Optioned
Shares in installments as is specified in the Grant Notice. As the option
becomes exercisable for one or more installments, the installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or the sooner termination of the option
term under this Agreement.
     5. Acceleration; Termination. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be exercisable) prior to the
Expiration Date should one of the following provisions become applicable:
     (a) Except to the extent otherwise provided in subparagraphs (ii) through
(v) below, should optionee cease to remain in Service at any time during the
option term, then the period for exercising this option shall be reduced to a
three (3)-month period commencing with the date of such cessation of Service,
but in no event shall this option be exercisable at any time after the
Expiration Date. Upon the expiration of such three (3) month period or (if

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earlier) upon the Expiration Date, this option shall terminate and cease to be
outstanding. However, should Optionee die during the three (3)-month period
following his or her cessation of Service, the personal representative of the
Optionee’s estate or the person or persons to whom this option is transferred
pursuant to the Optionee’s will or in accordance with the laws of descent or
distribution shall have a twelve (12)-month period following the date of the
Optionee’s death during which to exercise this Option.
          (b) Should Optionee, after completing five (5) full years of Service,
die while in Service, then the exercisability of each of his or her outstanding
options shall automatically accelerate so that each such option shall become
fully exercisable with respect to the total number of Optioned Shares at the
time subject to such option and may be exercised for all or any portion of such
shares. The personal representative of the Optionee’s estate or the person or
persons to whom this option is transferred pursuant to the Optionee’s will or in
accordance with the laws of descent and distribution shall have a twelve
(12)-month period following the date of the Optionee’s death during which to
exercise this option, but in no event shall this option be exercisable at any
time after the Expiration Date.
          (c) Should Optionee die while in Service prior to completing five
(5) full years of Service, then the period for which each outstanding vested
option held by the Optionee at the time of death shall be exercisable by the
Optionee’s estate or the person or persons to whom the option is transferred
pursuant to the Optionee’s will shall be limited to the twelve (12)-month period
following the date of the Optionee’s death, but in no event shall this option be
exercisable at any time after the Expiration Date.
          (d) Should Optionee become permanently disabled (as defined in
Section 22(e)(3) of the Internal Revenue Code) and cease by reason thereof to
remain in Service at any time during the option term, then the period for
exercising this option shall be reduced to a twelve (12)-month period commencing
with the date of such cessation of Service, but in no event shall this option be
exercisable at any time after the Expiration Date. Upon the expiration of such
twelve (12)-month period or (if earlier) upon the Expiration Date, this option
shall terminate and cease to be outstanding.
          (e) Should (1) the Optionee’s Service be terminated for misconduct
(including, but not limited to, any act of dishonesty, willful misconduct, fraud
or embezzlement) or (2) the Optionee make any unauthorized use or disclosure of
confidential information or trade secrets of the Company or its parent or
subsidiary corporations, then in any such event this option shall terminate
immediately and cease to be exercisable.
          (f) During the limited period of exercisability applicable in
accordance with subparagraphs (a) through (d) above, this option may not be
exercised for more than the number of the Optioned Shares (if any) for which
this option is, at the time of the Optionee’s cessation of Service, exercisable
in accordance with the exercise provisions specified in this Agreement and the
Grant Notice.
          (g) For purposes of this Paragraph 5 and for all other purposes under
this Agreement, the following definitional provisions shall be in effect:
               (1) The Optionee shall be deemed to remain in Service for so long
as the Optionee continues to render periodic services to the Company or any
parent or subsidiary corporation, whether as an Employee, a non-employee member
of the Company’s Board of Directors or an independent consultant or advisor.
               (2) The Optionee shall be deemed to be an Employee and to
continue in the Company’s employ for so long as the Optionee remains in the
employ of the Company or one or more of its parent or subsidiary corporations,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance.
               (3) A corporation shall be considered to be a subsidiary
corporation of the Company if it is a member of an unbroken chain of
corporations beginning with the Company, provided each such corporation in the
chain (other than the last corporation) owns, at the time of determination,
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
               (4) A corporation shall be considered to be a parent corporation
of the Company if it is a member of an unbroken chain ending with the Company,
provided each such corporation in the chain (other than the

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Company) owns, at the time of determination, stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
     6. Corporate Transaction.
          (a) In the event of one or more of the following transactions (a
“Corporate Transaction”):
               (1) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company’s incorporation,
               (2) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in liquidation or dissolution of
the Company, or
               (3) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company’s outstanding securities are
transferred to holders different from those who held such securities immediately
prior to such merger,
then the exercisability of this option (if outstanding at the time) shall
automatically accelerate so that such option shall, immediately prior to the
specified effective date for the Corporate Transaction, become fully exercisable
for all of the Optioned Shares and may be exercised for all or any portion of
such shares. No such acceleration of this option, however, shall occur if and to
the extent: (i) the option is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation or parent thereof or be
replaced with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof or (ii) the option is to be replaced by
a comparable cash incentive program of the successor corporation based on the
option spread (the excess of the fair market value of the shares of Common Stock
at the time subject to the option over the Option Price payable for such shares)
at the time of the Corporate Transaction. The determination of comparability
under clause (i) or (ii) of the preceding sentence shall be made by the Plan
Administrator and its determination shall be final, binding and conclusive.
          (b) This option, to the extent not previously exercised, shall
terminate upon the consummation of the Corporate Transaction and cease to be
exercisable, unless it is expressly assumed by the successor corporation or
parent thereof. The Plan Administrator shall have complete discretion to
provide, on such terms and conditions as it sees fit, for a cash payment to be
made to Optionee on account of such termination of this option, in an amount
equal to the excess (if any) of (A) the Fair Market Value (as defined below) of
the Optioned Shares subject to this option as of the date of the Corporate
Transaction, over (B) the Option Price for such shares.
          (c) In the event of a Change in Control (as defined in the Plan), the
exercisability of this option (if outstanding at the time) shall automatically
accelerate so that such option shall, immediately prior to the specified
effective date for the Change in Control, become fully exercisable for all of
the Optioned Shares and may be exercised for all or any portion of such shares.
          (d) The exercisability of this option as an incentive stock option
under the Federal tax laws (if designated as such in the Grant Notice) shall, in
connection with any such Corporate Transaction or Change in Control, be subject
to the applicable dollar limitation of Paragraph 17.
          (e) This Agreement shall not in any way affect the right of the
Company to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
     7. Adjustment in Optioned Shares.
          (a) In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares, or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the total number and/or class of
Optioned Shares subject to this option and (ii) the Option Price payable per
share in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.

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          (b) If this option is to be assumed or is otherwise to remain
outstanding after a Corporate Transaction, then this option shall be
appropriately adjusted to apply and pertain to the number and class of
securities which would have been issuable to the Optionee in the consummation of
such Corporate Transaction had the option been exercised immediately prior to
such Corporate Transaction, and appropriate adjustments shall also be made to
the Option Price payable per share, provided the aggregate Option Price payable
hereunder shall remain the same.
     8. Privilege of Stock Ownership. The holder of this option shall not have
any shareholder rights with respect to the Optioned Shares until such individual
shall have exercised the option and paid the Option Price.
     9. Manner of Exercising Option.
          (a) In order to exercise this option with respect to all or any part
of the Optioned Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after Optionee’s death, the Optionee’s
executor, administrator, heir or legatee, as the case may be) must take the
following actions:
               (1) Provide the Plan Administrator (or its designee) with written
notice of the option exercise (the “Exercise Notice”) specifying the number of
Optioned Shares for which the option is being exercised.
               (2) Pay the aggregate Option Price for the purchased shares in
one of the following alternative forms:
                    (A) full payment in cash or check payable to the Company’s
order;
                    (B) full payment in shares of Common Stock held by Optionee
for the requisite period necessary to avoid a charge to the Company’s reported
earnings and valued at Fair Market Value on the Exercise Date;
                    (C) full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the Company’s
earnings and valued at Fair Market Value on the Exercise Date and cash or check
drawn to the Company’s order; or
                    (D) If the Company’s outstanding Common Stock is registered
under Section 12(g) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”), at the time this option is exercised, then payment of the Option
Price may also be effected through a broker-dealer sale and remittance procedure
pursuant to which Optionee (i) shall provide irrevocable written instructions to
a designated brokerage firm to effect the immediate sale of the purchased shares
and remit to the Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Option Price payable for the
purchased shares plus all applicable Federal and state income and employment
taxes required to be withheld by the Company by reason of such purchase and
(ii) shall provide written directives to the Company to deliver the certificates
for the purchased shares directly to such brokerage firm in order to complete
the sale.
               (3) Furnish to the Company appropriate documentation that the
person or persons exercising the option (if other than Optionee) have the right
to exercise this option.
          (b) For purposes of subparagraph (a) above and for all other valuation
purposes under this Agreement, the Fair Market Value per share of Common Stock
on any relevant date shall be determined in accordance with the following
provisions:
               (1) If the Common Stock is not at the time listed or admitted to
trading on any national securities exchange but is traded in the
over-the-counter market, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices (or, if such information is available, the
closing selling price) per share of Common Stock on the date in question in the
over-the-counter market, as such prices are reported by the National Association
of Securities Dealers through the Nasdaq system or any successor system. If
there are no reported bid and asked prices (or closing selling price) for the
Common Stock on the date in question, then the mean between the highest bid
price and lowest asked price (or the closing selling price) on the last
preceding date for which such quotations exist shall be determinative of Fair
Market Value.

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               (2) If the Common Stock is at the time listed or admitted to
trading on any national securities exchange, then the Fair Market Value shall be
the closing selling price per share of Common Stock on the date in question on
the securities exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the composite
tape of transactions on such exchange. If there is no reported sale of Common
Stock on such exchange on the date in question, then the Fair Market Value shall
be the closing selling price on the exchange on the last preceding date for
which such quotation exists.
               (3) If the Common Stock is on the date in question neither listed
or admitted to trading on any stock exchange nor traded in the over-the-counter
market, then the fair market value shall be determined by the Plan Administrator
after taking into account such factors as the Plan Administrator shall deem
appropriate.
          (c) The Exercise Date shall be the date on which the Exercise Notice
is delivered to the Plan Administrator. Except to the extent the sale and
remittance procedure specified above is utilized for the exercise of the option,
payment of the Option Price for the purchased shares must accompany such notice.
          (d) As soon as practical after the Exercise Date, the Company shall
issue to or on behalf of Optionee (or other person or persons exercising this
option) the Purchased Options Shares via electronic means or through delivery of
a certificate or certificates representing the purchased Optioned Shares.
          (e) In no event may this option be exercised for any fractional share.
     10. Compliance with Laws and Regulations.
          (a) The exercise of this option (or of its tandem stock appreciation
right) and the issuance of Common Stock hereunder shall be subject to compliance
by the Company and the Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange or
over-the-counter market on which shares of the Company’s Common Stock may be
listed or traded at the time of such exercise and issuance.
          (b) In connection with the exercise of this option (or its tandem
stock appreciation right), Optionee shall execute and deliver to the Company
such representations in writing as may be requested by the Company in order for
it to comply with the applicable requirements of federal and state securities
laws.
     11. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Company.
     12. Liability of Company.
          (a) If the Optioned Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of the Plan.
          (b) The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this Agreement shall
relieve the Company of any liability with respect to the non-issuance or sale of
the Common Stock as to which such approval shall not have been obtained. The
Company, however, shall use its best efforts to obtain all such approvals.
     13. No Employment or Service Contract. Nothing in this Agreement or in the
Plan shall confer upon the Optionee any right to continue in the Service of the
Company (or any parent or subsidiary corporation of the Company employing or
retaining Optionee) for any period of time or interfere with or otherwise
restrict in any way the rights of the Company (or any parent or subsidiary
corporation of the Company employing or retaining Optionee) or the Optionee,
which rights are hereby expressly reserved by each, to terminate the Optionee’s
Service at any time for any reason whatsoever, with or without cause.

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     14. Notices. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated below Optionee’s signature line
on the Grant Notice. All notices shall be deemed to have been given or delivered
upon personal delivery or upon deposit in the U.S. mail, postage prepaid and
properly addressed to the party to be notified.
     15. Construction. This Agreement and the option evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject
to the express terms and provisions of the Plan. All decisions of the Plan
Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest
in this option.
     16. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Alabama without resort
to that State’s conflict-of-laws rules.
     17. Additional Terms Applicable to an Incentive Stock Option. In the event
this option is designated as an incentive stock option in the Grant Notice, the
following terms and conditions shall also apply to the grant:
          (a) This option shall cease to qualify for favorable tax treatment as
an incentive stock option under the federal tax laws if (and to the extent) this
option is exercised for one or more Optioned Shares: (i) more than three
(3) months after the date the Optionee ceases to be an Employee for any reason
other than death or permanent disability (as defined in Paragraph 5) or
(ii) more than one (1) year after the date the Optionee ceases to be an Employee
by reason of permanent disability.
          (b) No installment under this option (whether annual or monthly) shall
qualify for favorable tax treatment as an incentive stock option under the
Federal tax laws if (and to the extent) the aggregate fair market value
(determined at the Grant Date) of the Common Stock for which such installment
first becomes exercisable hereunder will, when added to the aggregate fair
market value (determined as of the respective date or dates of grant) of any
earlier installments of Common Stock for which this option or one or more other
incentive stock options granted to the Optionee prior to the Grant Date (whether
under the Plan or any other option plan of the Company or any Parent or
Subsidiary corporations) first become exercisable during the same calendar year,
exceed One Hundred Thousand Dollars ($100,000) in the aggregate.
          (c) Should the exercisability of this option be accelerated upon a
Corporate Transaction or a Change in Control, then this option shall quality for
favorable tax treatment as an incentive stock option under the Federal tax laws
only to the extent the aggregate Fair Market Value (determined at the Grant
Date) of the Common Stock for which this option first becomes exercisable in the
calendar year in which the Corporate Transaction or Change in Control occurs
does not, when added to the aggregate Fair Market Value (determined as of the
respective date or dates of grant) of any earlier installments of Common Stock
for which this option or one or more other incentive stock options granted to
the Optionee prior to the Grant Date (whether under the Plan or any other option
plan of the Company or any Parent or Subsidiary corporations) first become
exercisable during the same calendar year, exceed One Hundred Thousand Dollars
($100,000) in the aggregate.
          (d) To the extent this option should fail to qualify as an incentive
stock option under the Federal tax laws, the Optionee will recognize
compensation income in connection with the acquisition of one or more Optioned
Shares hereunder, and the Optionee must make appropriate arrangements for the
satisfaction of all Federal, State or local income tax withholding requirements
and Federal social security employee tax requirements applicable to such
compensation income.
     18. Additional Terms Applicable to a Non-Statutory Stock Option. In the
event this option is designated as a non-statutory stock option in the Grant
Notice, Optionee hereby agrees to make appropriate arrangements with the Company
or parent or subsidiary corporation employing Optionee for the satisfaction of
any federal, state or local income tax withholding requirements and federal
social security employee tax requirements applicable to the exercise of this
option.
     19. Tandem Stock Appreciation Right. Optionee is hereby granted a tandem
stock appreciation right,

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which entitles Optionee to surrender all or part of this option with respect to
Optioned Shares for which it is then vested and exercisable, for a distribution
from the Company in an amount equal to the excess of (A) the Fair Market Value
(on the option surrender date) of the Optioned Shares for which the option is
surrendered, over (B) the Option Price for such Optioned Shares. The
distribution may be made in cash, or partly in shares and partly in cash, as the
Plan Administrator determines in its sole discretion. Any portion of this option
that is surrendered in accordance with this Paragraph shall cease to be
outstanding and shall no longer be exercisable by Optionee.

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