Exhibit 10.27
EXECUTION COPY
June 12, 2008
Dr. William Sheridan
892 Toro Canyon Rd.
Montecito, CA 93108
Dear Dr. Sheridan:
On behalf of BioCryst Pharmaceuticals, Inc., a Delaware corporation (“BioCryst”
or the “Company”), we are very excited to offer you the position of Senior Vice
President and Chief Medical Officer. We, along with the other members of the
Company’s Board of Directors (the “Board”), and the Company’s management team,
are all very impressed with you and what you will bring to the Company. We
believe that with your background, you will make significant contributions to
the success of the Company.
This letter agreement (the “Agreement”) will serve to confirm our agreement with
respect to the terms and conditions of your employment.
1. Term of Employment. Subject to the terms and conditions of this Agreement,
BioCryst hereby employs Dr. William Sheridan (the “Employee”); effective July 1,
2008, as Senior Vice President and Chief Medical Officer of BioCryst, and
Employee hereby accepts such employment. Employee shall commence employment at
the Company’s Gary, North Carolina office. The Employee shall not, during the
term of his employment, engage in any other business activity that would
interfere with, or prevent him from carrying out, his duties and
responsibilities under this Agreement BioCryst hereby agrees and acknowledges
that any compensation which the Employee receives from participation in such
allowable activities shall be outside the scope of this Agreement and in
addition to any compensation received hereunder. The term of employment of
Employee under this Agreement shall commence as of July 1, 2008, and shall
terminate on June 30, 2011 unless earlier terminated in accordance with the
provisions of paragraph 4 hereof. In the event Employee is retained by the
Company as Senior Vice President and Chief Medical Officer past June 30, 2011,
the terms of his employment shall continue to be governed by this Agreement
unless otherwise provided by the Board.

 

 

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Dr. William Sheridan
June 12, 2008
Page 2

2.   Basic Full-Time Compensation and Benefits.

(a) As basic compensation for services rendered under this Agreement, Employee
shall be entitled to receive from BioCryst, a salary of $31,250 per month
($375,000 per annum) payable in bi-monthly payments for each calendar month
during the term of this Agreement, beginning on July 15th, 2008. This salary
will be reviewed annually by the CEO and the Board of Directors and may be
raised at the discretion of the Board.
(b) In addition to the basic compensation set forth in (a) above, Employee shall
be eligible to earn a cash bonus, payable as soon as reasonably practicable in
the calendar year following each calendar year during the term of this
Agreement, based on the Company’s achievement of performance related goals
proposed by management and approved by the Board for the Company’s applicable
fiscal year (the “Fiscal Year”), and the Employee’s performance during the year.
The bonus actually earned, if any, shall be based on a target amount equal to
25% of the base compensation earned by executive during such Fiscal Year (the
“Target Amount”), and shall be pro-rated based on the degree to which the
performance goals have been achieved, subject to a minimum level of achievement
proposed by management and approved by the Board. The Target Amount for the 2008
Fiscal Year shall be prorated based on Employee’s base salary as of December 31,
2008. Employee must be employed through April 1, of the next succeeding Fiscal
Year in order to receive the annual bonus for each Fiscal Year.
(c) In addition to the basic compensation set forth in (a) and (b) above,
Employee shall be entitled to receive such other benefits provided to other
executive officers of BioCryst which benefits may include, without limitation,
reasonable vacation (currently 4 weeks), sick leave, medical benefits, life
insurance, and participation in profit sharing or retirement plans.
(d) In addition to the compensation set forth in paragraphs 2(a), (b) and
(c) above, the Board of Directors of BioCryst may from time to time, in its
discretion, also grant such other cash or stock bonuses to the Employee either
as an award or as an incentive as it shall deem desirable or appropriate.

3.  
Initial Equity Awards. In connection with Employee’s execution of this
Agreement, Employee shall be issued initial equity incentive awards as follows:

(a) The Company shall grant to Employee an option to purchase 200,000 shares of
the Company’s common stock (“Common Stock”), with an exercise price equal to the
fair market value of the Common Stock on the date of the grant, which option
shall vest and become exercisable in accordance with paragraph 3(c) below. The
option will be an “incentive stock option” up to the maximum number of shares
that may be covered under an incentive stock option pursuant to the tax code.

 

 

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Dr. William Sheridan
June 12, 2008
Page 3
(b) The award set forth in paragraph 3(a) above will vest, contingent on
Employee’s continued provision of services to the Company on each respective
vesting date, over a period of 4 years as follows: one year after Employee’s
start date, 25% of the awards will vest, thereafter, the remaining shares will
vest on a monthly schedule of 1/48 of the total number of shares subject to the
grants upon the completion of each month of service.
(c) The stock option awards set forth in paragraph 3(a) above shall be granted
under and subject to the terms of the BioCryst Pharmaceuticals, Inc. Stock
Incentive Plan (the “Stock Incentive Plan”). All awards shall be subject to the
terms of specific award agreements between the Employee and the Company, which
Employee will be required to execute as a condition of the grants.

4.  
Relocation Assistance. In connection with Employee’s execution of this
Agreement, Employee shall be provided with relocation assistance to assist with
the relocation to the Cary, North Caroline office:

  (a)  
Temporary Housing — Temporary housing will be provided to you for up to 6 months
within the North Carolina Triangle area. BioCryst will work with you to locate
suitable housing.
    (b)  
Household Goods — Arrangements with a moving company of BioCryst’s choice will
be made to pack, load and unload your household goods from his California
residence to the North Carolina residence. BioCryst will also include the cost
to ship a maximum of one vehicle to North Carolina.
    (c)  
Final Move — Coach air travel to your new location for you and your spouse will
be provided to you. Should you drive, reasonable and actual travel expenses such
as lodging, meals and mileage will be reimbursed at the prevailing IRS rate.

5.   Termination.

(a) If Employee’s employment is terminated as a result of (i) the expiration of
the stated term of this Agreement, (ii) the Employee’s resignation, (iii) the
Employee’s death, (iv) by the Company for Cause, or (v) by the Company as a
result of Disability, Employee will receive base salary, as well as any accrued
but unused vacation (if applicable) and other compensation, earned through the
effective termination date, and no additional compensation, except as set forth
in Section 5(d) below.
For all purposes under this Agreement, a termination for “Cause” shall mean a
determination by the Board that Employee’s employment be terminated for any of
the following reasons: (i) failure or refusal to comply in any material respect
with lawful policies, standards or regulations of Company; (ii) a violation of a
federal or state law or regulation applicable to the business of the Company;
(iii) conviction or plea of no contest to a felony under the laws of the United
States or any State; (iv) fraud or misappropriation of property belonging to the
Company or its affiliates; (v) a breach in any material respect of the terms of
any confidentiality, invention assignment or proprietary information agreement
with the Company or with a former employer, (vi) failure to satisfactorily
perform Employee’s duties after having received written notice of such failure
and at least thirty (30) days to cure such failure, or (vii) misconduct or gross
negligence in connection with the performance of Employee’s duties.

 

 

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Dr. William Sheridan
June 12, 2008
Page 4
“Disability” shall mean the inability of Employee to perform his duties
hereunder by reason of physical or mental incapacity for ninety (90) days,
whether consecutive or not, during any consecutive twelve (12) month period.
(b) If the Company terminates Employee’s employment without Cause, it shall
provide written notice of termination to Employee, along with any base salary
and accrued but unused vacation or other compensation earned through the
effective termination date, and, conditioned on Employee (a) signing and not
revoking a release of any and all claims, in a form prescribed by the Company,
and (b) returning to the Company all of its property and confidential
information that is in Employee’s possession, Employee will receive the
following: (i) continuation of base salary for one (1) year beyond the effective
termination date, payable in accordance with the regular payroll practices of
the Company; and (ii) Employee will receive relocation assistance to move
Employee’s personal belongings back to his California residence, the moving
company to be identified by the Company; (iii) if Employee elects to continue
health insurance coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”) following termination of employment, the
Company shall pay the monthly premium under COBRA until the earlier of
(x) 6 months following the effective termination date, or (y) the date upon
which Employee commences employment with an entity other than the Company.
Employee will notify the Company in writing within 5 days of your receipt of an
offer of employment with any entity other than the Company, and will accordingly
identify the date upon which you will commence employment in such writing.
(c) If, during Employee’s employment with the Company, there is a Change of
Control, all equity awards granted to Employee under paragraph 3 and otherwise
shall vest in full. In addition, if the Company terminates Employee’s employment
without Cause or Employee is Constructively Terminated within 6 months of the
Change in Control, then Employee will be eligible to receive the benefits
provided in paragraph 4(b), under the terms and conditions set forth in that
paragraph, except in the event the effective date of termination occurs within
one year of the effective date of this agreement, in which case the benefits
provided in section 4(b) will be calculated at 50% of the total benefit.

 

 

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Dr. William Sheridan
June 12, 2008
Page 5
“Change of Control” shall be defined as (i) 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: (ii) the
sale, transfer or other disposition of all or substantially all of the assets of
the Company in liquidation or dissolution of the Company; (iii) 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 a person or persons
different from the persons holding those securities immediately prior to such
merger; (iv) any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule l3d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company’s outstanding securities pursuant to a tender or exchange offer made
directly to the Company’s stockholders; or (v) a change in the composition of
the Board over a period of twenty-four (24) consecutive months or less such that
a majority of the Board members (rounded up to the next whole number) ceases, by
reason of one or more contested elections for Board membership, to be comprised
of individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least two-thirds of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board.
“Constructive Termination” shall mean a resignation of employment within 30 days
of the occurrence of any of the following events which occurs within 6 months
following a Change of Control: (i) a material reduction in Employee’s
responsibilities; (ii) a material reduction in Employee’s base salary, unless
such reduction is comparable in percentage to, and is part of, a reduction in
the base salary of all executive officers of the Company; or (iii) a relocation
of Employee’s principal office to a location more than 50 miles from the
location of Employee’s principal office immediately preceding a Change of
Control.
(d) If (i) Employee remains an employee of the Company after the expiration of
the four year term of this Agreement; and (ii) within 6 months thereafter,
Employee resigns as a result of a material and adverse change in the Company’s
business, then Employee shall be entitled to receive the severance benefits on
the terms and conditions specified in
paragraph 4(b) above.
(e) In the event (i) any payments described in paragraphs 4(b), (c) or (d) above
would be “deferred compensation” subject to Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”); and (ii) Employee is a “specified
employee” (as defined in Code Section 409A(2)(B)(i)), such payments shall, to
the extent required by Code Section 409A, be delayed for the minimum period and
in the minimum manner necessary to avoid the imposition of the tax required by
Code Section 409A.

 

 

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Dr. William Sheridan
June 12, 2008
Page 6

6.   Non-Competition; Proprietary Information and Inventions.

(a) Proprietary Information and Inventions Agreement. As a condition precedent
to the employment of Employee by the Company, Employee shall execute the
Company’s standard Proprietary Information and Inventions Agreement, attached
hereto as Exhibit A.
(b) Non-Competition Agreement. The Employee agrees that for one (1) year
following the termination of this Agreement by reason of the voluntary
termination by the Employee, without cause on the part of BioCryst, the Employee
shall not become the Chief Financial Officer or become a key executive of
another for-profit business enterprise whose activities are at such time
directly competitive with BioCryst.
(c) Equitable Remedies. Employee acknowledges and recognizes that a violation of
this paragraph by Employee may cause irreparable and substantial damage and harm
to BioCryst or its affiliates, could constitute a failure of consideration, and
that money damages will not provide a full remedy for BioCryst for such
violations. Employee agrees that in the event of his breach of this paragraph,
BioCryst will be entitled, if it so elects, to institute and prosecute
proceedings at law or in equity to obtain damages with respect to such breach,
to enforce the specific performance of this paragraph by Employee, and to enjoin
Employee from engaging in any activity in violation hereof.

7.   Miscellaneous.

(a) Entire Agreement. This Agreement, including the exhibits hereto, constitutes
the entire agreement between the parties relating to the employment of the
Employee by BioCryst and there are no terms relating to such employment other
than those contained in this Agreement. No modification or variation hereof
shall be deemed valid unless in writing and signed by the parties hereto. No
waiver by either party of any provision or condition of this Agreement shall be
deemed a waiver of similar or dissimilar provisions or conditions at any time.
(b) Assignability. This Agreement may not be assigned without prior written
consent of the parties hereto. To the extent allowable pursuant to this
Agreement, this Agreement shall be binding upon and shall inure to the benefit
of each of the parties hereto and their respective executors, administrators,
personal representatives, heirs, successors and assigns.
(c) Notices. Any notice or other communication given or rendered hereunder by
any party hereto shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, at the respective addresses of
the parties hereto as set forth below.

 

 

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Dr. William Sheridan
June 12, 2008
Page 7
(d) Captions. The section headings contained herein are inserted only as a
matter of convenience and reference and in no way define, limit or describe the
scope of this Agreement or the intent of any provision hereof.
(e) Taxes. All amounts to be paid to Employee hereunder are in the nature of
compensation for Employee’s employment by BioCryst, and shall be subject to
withholding, income, occupation and payroll taxes and other charges applicable
to such compensation.
(f) Governing Law. This Agreement is made and shall be governed by and construed
in accordance with the laws of the State of Alabama without respect to its
conflicts of law principles.
(g) Date. This Agreement is dated as of June 12, 2008.

 

 

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Dr. William Sheridan
June 12, 2008
Page 8
If the foregoing correctly sets forth our understanding, please signify your
acceptance of such terms by executing this Agreement, thereby signifying your
assent, as indicated below.

                  Yours very truly,    
 
                BIOCRYST PHARMACEUTICALS, INC.    
 
           
 
  By:   /s/ Jon Stonehouse
 
Jon Stonehouse    
 
      Chief Executive Officer    
 
                Address:    
 
                2190 Parkway Lake Drive
Birmingham, Alabama 35244    

AGREED AND ACCEPTED, as of this 12th day of June, 2008.

         
 
  /s/ William Sheridan    
 
 
 
Dr. William Sheridan    
 
       
 
  Address:    
 
       
 
  892 Toro Canyon Rd.    
 
  Montecito, CA 93108