Biocryst Pharmaceuticals




      	
            EXHIBIT
              10.9

          





	

      March
        17, 2004

       

       

      Dr.
        Charles E. Bugg

      Chairman
        and CEO

      BioCryst
        Pharmaceuticals, Inc.

      2190
        Parkway Lake Drive

      Birmingham,
        Alabama 35244

       

      Dear
        Dr. Bugg:

       

      This
        letter agreement (the “Agreement”) will serve to confirm our agreement
        with respect to the terms and conditions of the employment of Dr. Charles
        E. Bugg (the “Employee”) by BioCryst Pharmaceuticals, Inc., a Delaware
        corporation (“BioCryst”), after March 17, 2004.

       

      The
        terms and conditions of such employment are as follows:


       


      1.              Term
        of Employment. Subject to the terms and conditions
        of this Agreement, BioCryst hereby employs Employee, effective March 17,
        2004, as Chairman of the Board and Chief Executive Officer of BioCryst,
        and Employee hereby accepts such employment. In addition, during the terms
        of this Agreement, BioCryst shall use its best efforts to provide that
        the Employee shall be elected as a member of the Board of Directors of
        BioCryst each year. BioCryst acknowledges and agrees that after March
        17, 2004, Employee may also hold positions at the University of Alabama
        at Birmingham as Professor Emeritus of Biochemistry, Adjunct Senior Scientist
        in the Comprehensive Cancer Center, Adjunct Senior Scientist in the Center
        for Macromolecular Crystallography, and such other appointments that might
        be offered to the Employee from time to time, and the Employee will be
        permitted to devote up to ten percent (10%) of his time to such activities
        and to research and other activities at the University of Alabama at Birmingham,
        if the Employee desires to participate in such activities. Otherwise,
        after March 17, 2004, the Employee shall devote his full business time
        and energies to BioCryst. Except as provided in this paragraph 1,
        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 March 17, 2004, and shall terminate on March 17, 2007,
        unless earlier terminated in accordance with the provisions of paragraph 3
        hereof. 



2.            Basic
Full-Time Compensation and Benefits.  



      (a)              As
        basic yearly compensation for services rendered under this Agreement for
        services rendered under paragraph 1 of this Agreement, Employee shall
        be entitled to receive from BioCryst, for the term of his full-time employment
        under this Agreement, an aggregate salary of $400,000.00 per year which
        remuneration shall be payable in equal monthly installments of $33,333.33
        on the first business day of each month during the term of this Agreement,
        beginning on April 1, 2004. This salary will be reviewed annually by 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 entitled to receive such other benefits and perquisites provided to
        other executive officers of BioCryst which benefits may include, without
        limitation, reasonable vacation, sick leave, medical benefits, life insurance,
        and participation in profit sharing or retirement plans.






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      (c)              In
        addition to the compensation set forth in paragraphs 2(a) and (b) 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.            Stock
              Options.  



      (a)              BioCryst
        hereby agrees that it will grant a stock option to the Employee on or
        before December 31 of each year during the term of this Agreement, beginning
        with the year 2004, to purchase at least 25,000 shares of Common Stock
        of BioCryst, par value $0.01 per share (the “Common Stock”),
        from the authorized and unissued stock or treasury stock of BioCryst,
        based on the performance of the Employee. The Board of Directors of BioCryst
        shall determine, in its sole discretion, based upon the performance of
        the Employee and the results of operations of BioCryst for the immediately
        preceding twelve (12) months, the number of shares which may be purchased
        pursuant to each such option, provided the number of shares shall not
        in any case be less than 25,000. In addition, BioCryst shall also grant
        to the Employee an option to purchase 100,000 shares of BioCryst Common
        Stock upon the occurrence of each of the following:

       






      	
            (i)


          	
            submission
              by BioCryst to the United States Food and Drug Administration (the
              “FDA”) of any new drug application;

          



       

      	
            (ii)


          	
            submission
              by any licensee of BioCryst to the FDA of any new drug application
              utilizing a product or process licensed by the licensee from BioCryst;


          



       

      	
            (iii)


          	
            final
              approval of each such new drug application of either BioCryst or
              such licensee by the FDA.

          




	
       

      The
        exercise price per share for each share of BioCryst Common Stock subject
        to each such option shall be the fair market value thereof on the date
        such option is granted.

       

      (b)             The
        parties intend for the options granted pursuant to this Agreement (the
        “Options”) to qualify as ”incentive stock options,”
        as that term is defined in Section 422 of the Internal Revenue Code of
        1986, as amended (“Section 422”). The parties understand that the
        portion of any Option, together with the portion of any other incentive
        stock option granted by BioCryst and its parent and subsidiary corporations,
        if any, which may become exercisable in any year in excess of an aggregate
        of $100,000 fair market value, determined as of the date such Option or
        other option, as the case may be, was granted, may not be treated as an
        incentive stock option under Section 422. The Options may be exercised
        and the Common Stock may be purchased by the Employee as a result of such
        exercise only within the periods and to the extent hereinafter set forth.

       

      (c)              Each
        Option shall be 25% exercisable one year after the date it was granted,
        and the remaining seventy-five percent (75%) shall vest and become exercisable
        at the rate of 1/48th
        per month, commencing with the thirteenth (13th) month after the date
        such Option was granted, and continuing to vest for the succeeding months
        until fully vested and exercisable. Notwithstanding the foregoing, in
        the event of a Change in Control or Structure, as defined below, or as
        set forth in subparagraphs (d) or (e) below, the entire amount of each
        Option shall become immediately exercisable.

       

      (d)             If
        the Employee suffers a period of permanent disability, as defined in paragraph
        4(b) below, the entire amount of each Option may be exercised at any time
        after termination for such disability and before the earlier of twenty-four
        (24) months or the expiration date of the Option.

       

      (e)              In
        the event of the death of the Employee, the executor or administrator
        of the estate of the Employee, or other reliable transferee, shall have
        the right to exercise each Option, in its entirety, within the earlier
        of twenty-four (24) months after the Employee’s death or before the
        original expiration of the Option. Except as provided in this subparagraph
        (e), the Employee shall not have the right to transfer any Option.





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      (f)              Subject
        to paragraphs 3(c), (d), and (e) above, each Option may, in the Employee’s
        sole discretion, be exercised in full at one time as to the total number
        of shares of Common Stock then exercisable, or in part from time to time
        as to a specific number of shares of Common Stock then exercisable. A
        partial exercise of an Option will not affect the exercisability of the
        remainder of the Option.


       

      (g)             In
        no event shall the period for exercising an Option exceed ten (10) years
        from the date such Option is granted. 


       

      (h)             For purposes               of
this Agreement, the term “Change of Control or Structure”               shall
mean: 








       

      	
            (i)


          	
            The acquisition
              by any person, entity or ”group,” within the meaning of Section
              13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the
              “Exchange Act”) of beneficial ownership (within the meaning of Rule
              13d-3 promulgated under the Exchange Act) of more than fifty percent
              (50%) of the then outstanding shares of Common Stock at the time
              of such event or the combined voting power of BioCryst’s then outstanding
              voting securities generally entitled to vote in the election of
              directors, or


          



       

      	
            (ii)



          	
            any merger,
              consolidation or business combination of BioCryst with or into any
              other entity, or

          




       

      	
            (iii)

          	
            any transaction
              effected by a sale of substantially all the assets of BioCryst.

          




	




      (i)              In
        the event the employment of the Employee is terminated for any reason
        other than as set forth in subparagraph (d) or (e) above, the Employee
        may, within three (3) months following the date of such termination, exercise
        each Option to the full extent that they were exercisable immediately
        prior to the date of such termination, subject, however, to the limitation
        set forth in subparagraph (g) above.

       

      (j)              All
        numbers of shares set forth above or subject to any Option and all option
        prices, shall be subject to appropriate anti-dilution adjustment to take
        account of stock splits, stock dividends, merger, consolidation, reclassification
        or the like subsequent to the date hereof.


       

      4.              Termination.
        Notwithstanding the provisions of paragraph 1 hereof, the employment of
        the Employee under this Agreement may be terminated in the following circumstances:


       

      (a)              BioCryst
        may terminate the employment of Employee hereunder immediately for “Cause”
        and without payment. “Cause” for termination of Employee’s employment
        hereunder shall exist if Employee








       


      	
            (i)


          	
            

shall
              confess to committing or shall be convicted of any felony or any
              crime involving moral turpitude, or
          






      	
            (ii)


          	
            
shall
              have engaged in gross and willful misconduct which is materially
              injurious to the business of BioCryst.
          




	

       

      (b)             BioCryst
        may terminate the employment of the Employee hereunder upon thirty (30)
        days written notice if the Employee shall have suffered a period of permanent
        disability, which shall for purposes of this Agreement be defined as 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.



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      Upon
        such termination of employment, all rights of Employee to receive any
        future payments under paragraph 2 above shall cease.






5.            Non-Competition.
  



      (a)              Non-Competition
        Agreement. The Employee agrees that for one (1)
        year following the termination of this Employment Agreement by reason
        of the voluntary termination by the Employee, without cause on the part
        of BioCryst, the Employee shall not become the Chief Executive Officer
        or become a key executive of another for-profit business enterprise whose
        activities are at such time directly competitive with BioCryst.

       

      (b)             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.



6.            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.




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      (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.

       

      (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 March 17, 2004.


       


      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.
                           
                                   
           
          
COMPENSATION
              COMMITTEE 









      	
            

          



	

      By:
        /s/ William W. Featheringill






      	
            William
              W. Featheringill

          




	
      
               Chairman

       

       

      By:
        /s/Edwin A. Gee

      
               Edwin A. Gee

       

       

      By:
        /s/William M. Spencer, III

      
               William M. Spencer, III

       

      Address:

       






      	
            2190
              Parkway Lake Drive

          
	
            Birmingham,
              Alabama 35244

          




	
       

      AGREED
        AND ACCEPTED, as of this 17th day of March, 2004.

       

       

      /s/Charles
        E. Bugg

      Charles
        E. Bugg








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