Document:

Filed by Bowne Pure Compliance

Exhibit
10.26

BIOCRYST
PHARMACEUTICALS, INC.

2425 KILDAIRE FARM ROAD, SUITE
106 
CARY, NC 27518

919-859-7908 919-859-1314 FAX

2190 PARKWAY LAKE DRIVE

BIRMINGHAM. AL 35244

205-444-4648 205-444-4640 FAX

www.biocryst.com

May 21, 2008

Mr. David McCullough

101 Salford Ct.

Cary, NC 27512

Dear David,

I would like to present you with this retention bonus program in recognition of the outstanding and
valuable contributions you have made to BioCryst Pharmaceuticals and will continue to make in the
future. The Compensation Committee has reviewed this program and has approved offering it to you.
The retention bonus will be extended and paid to you as long as you remain an active employee with
the company through December 31, 2009.

You will be provided with the following retention bonus;

	 	•	 	80% of your 4/1/08 annual base salary, plus;
	 
	 	•	 	The equivalent of 20% of your 4/1/08 annual base salary in Restricted Stock
Awards (14,439 shares common stock).

As a section 16 Officer, extending this retention bonus to you will be viewed as material and will
require an 8-k disclosure. In the event of a Change of Control, prior to December 31, 2009, you
will be eligible to receive the benefits as noted above.

David, on
a separate matter, we will amend your current Employment Agreement,
and remove those
sentences within section 4b which references your severance payments being terminated as of the
date that you commence employment with another employer. We will amend and resign your employment
contract to reflect these changes.

Our future success as a company is directly related to your important contributions and ongoing
leadership. Once again, thank you for your continued support and help in making BioCryst a
financial success.

Sincerely,

	 	 	 
	/s/ Jon Stonehouse
 

Jon Stonehouse

	 	 
	CEO and President 
	 	 
	BioCryst Pharmaceuticals, Inc.Filed by Bowne Pure Compliance

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.

 

 

 

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.

 

 

 

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.

 

 

 

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.

 

 

 

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.

 

 

 

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.

 

 

 

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.

 

 

 

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

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