February 14, 2007 Jon Stonehouse 7 Pine Top Place Durham, NC 27705 Dear Mr. Stonehouse:
EXHIBIT 10.12
February 14, 0000
Xxx Xxxxxxxxxx
0 Xxxx Xxx Xxxxx
Xxxxxx, XX 00000
0 Xxxx Xxx Xxxxx
Xxxxxx, XX 00000
Dear Xx. Xxxxxxxxxx:
This amended and restated letter agreement (the “Agreement”) will serve to confirm our
agreement with respect to the terms and conditions of your employment with BioCryst
Pharmaceuticals, Inc. (“BioCryst” or the “Company”). As you know, this Agreement is identical in
all respects to the agreement originally executed on January 5, 2007, except that it reflects the
fact that all of the initial equity awards under Section 3 were issued under the BioCryst
Pharmaceuticals, Inc. Stock Incentive Plan.
1. Term of Employment. Subject to the terms and conditions of this Agreement, BioCryst hereby
employs Xxx Xxxxxxxxxx (the “Employee”), effective January 5, 2007, as Chief Executive Officer of
BioCryst, and Employee hereby accepts such employment. During the term 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 (the “Board”). 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. Employee represents that he currently serves
on the Board of Directors of River West Health Care, LLC (a start-up company the business of which
is not competitive with that of the Company) as well as on an advisory council at Duke University,
and that neither activity will interfere materially with his duties as contemplated hereunder.
BioCryst hereby acknowledges and approves such activities. BioCryst further agrees and
acknowledges that any compensation which the Employee receives from participation in any 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 the effective date set forth above and shall continue for a period of one year,
subject to earlier termination as provided herein; provided, however that the term shall be
automatically extended by one additional year on each anniversary of the effective date of this
Agreement, unless one party to this Agreement provides written notice of non-renewal to the other
party at least 30 days prior to the date of such automatic extension.
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 $33,333 per month ($400,000 per annum)
payable in arrears on the first business day of each month during the term of this
Agreement, beginning on February 1, 2007 for the month of January 2007. 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
eligible to earn a cash bonus of up to $300,000, payable as soon as reasonably practicable
in calendar year 2008, based on the Company’s achievement of performance related goals
proposed by management and approved by the Board for the Company’s fiscal year ending
December 31, 2007. The bonus actually earned, if any, shall be based on a target amount of
$200,000 for achievement of the performance goals, and shall be pro-rated or increased, as
applicable, based on the degree to which the performance goals have or have not been
achieved or have been exceeded, subject to a minimum level of achievement proposed by
management and approved by the Board. The amount of the bonus earned in accordance with the
achievement of the performance goals, as described above, shall be prorated according to the
percentage of the calendar year that Employee is employed by the Company. The Company shall
provide Employee with similar annual bonus opportunities for future fiscal years during the
term of this Agreement, in amounts that are commensurate with the performance of the Company
and of Employee.
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(c) In addition to the basic compensation set forth in (a) and (b) above, Employee
shall be entitled to receive benefits and perquisites at least as favorable as those
provided to other executive officers of BioCryst, which benefits shall include, without
limitation, reasonable vacation, sick leave, payment of fees for Employee’s participation in
the advisory council at Duke University, medical benefits, $1,000,000 of life insurance
during the term of Employee’s employment, and participation in profit sharing or retirement
plans. Notwithstanding the foregoing, the Company’s obligation to provide $1,000,000 of
life insurance for Employee shall be subject to Employee’s insurability at rates customary
for an individual of Employee’s age who is in average physical condition. In addition, the
Company shall reimburse Employee for his reasonable attorneys fees incurred in connection
with the negotiation of this Agreement.
(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, on the effective date hereof, grant to Employee an option to
purchase 450,000 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. The
option shall vest and become exercisable 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. The option will be an
“incentive stock option” to the maximum extent allowed by the tax code.
(b) The Company shall grant to Employee 50,000 shares of its Common Stock, which shall
vest in two equal installments as follows: the first installment shall vest two years after
the Employee’s start date; the second installment shall vest four years after the Employee’s
start date. Employee understands and acknowledges that prior to vesting, the shares may not
be transferred and will be subject to forfeiture.
(c) All awards will be issued under and shall be subject to the terms of the BioCryst
Pharmaceuticals, Inc. Stock Incentive Plan and specific award agreements between the
Employee and the Company, which award agreements shall provide that Employee be entitled to
exercise any vested incentive stock option or any non qualified stock option for a period of
two years subsequent to the termination or expiration of Employee’s employment with the
Company. All shares issuable pursuant to the awards in this Section 3 have been registered
on Form S-8.
4. Termination.
(a) If Employee’s employment is terminated (i) as a result of the Employee’s
resignation or non-renewal of the term, (ii) as a result of the Employee’s death, or (iii)
by the Company for Cause, 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; provided, however, that in the event
Employee’s employment is terminated as a result of the Employee’s death, and the Company has
failed to procure and maintain $1,000,000 in life insurance on the life of Employee in
violation of its obligation pursuant to paragraph 3(c), the Company shall pay to the
Employee’s personal representative $1,000,000.
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) a violation of a federal or state law or regulation that materially and
adversely impacts the business of the Company, (ii) conviction or plea of no contest to a
felony under the laws of the United States or any state, (iii) a breach of the terms of any
confidentiality, invention assignment or proprietary information agreement with the Company
or with a former employer that materially and adversely impacts the Company, (iv) fraud or
misappropriation of property belonging to the Company or its affiliates, or (v) willful
misconduct or gross negligence in connection with the performance of Employee’s duties;
provided, however, that no act or failure to act on the part of the Employee
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shall be considered “willful” unless it is done, or omitted to be done, by the Employee
in bad faith or without reasonable belief that the Employee’s action or omission was in the
best interests of the Company.
(b) If Employee’s employment is terminated (i) by the Company without Cause, (ii) upon
non-renewal of the term by the Company, (iii) as a result of a Constructive Termination, or
(iv) by the Company as a result of Disability, the Company 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.
In addition, and subject to the Employee (a) signing and not revoking a release of any
and all claims against the Company, its officers, directors and employees, (b) resigning
from the Board (if applicable) on the date that employment terminates, and (c) returning to
the Company all of its property and confidential information that is in Employee’s
possession, the Employee will receive:
(I) severance in an amount equal to the product of (x) two, except in the event
the effective date of termination occurs within one year of the effective date of
this Agreement, in which case the severance multiplier shall be one, and (y) the sum
of (1) Employee’s annual base salary in effect immediately prior to the effective
date of termination, and (2) Executive’s target bonus in effect for the fiscal year
of termination, which severance amount shall be paid in equal installments over the
regularly scheduled payroll periods of the Company for the two years following the
effective date of termination, and
(II) if Employee elects to continue health insurance coverage under COBRA
following termination of employment, the Company shall pay the monthly premium under
COBRA until the earlier of (1) twelve months following the effective date of
termination, or (2) the date upon which COBRA continuation coverage ceases.
“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.
“Constructive Termination” shall mean a resignation of employment within 30 days of the
occurrence of any of: (i) a reduction in Employee’s responsibilities or any change in the
status or title of Employee with regard to his employment; (ii) a reduction in Employee’s
base salary, unless such reduction occurs prior to a Change in Control (as defined below)
and is made in connection with a fiscal downturn of the Company pursuant to which the base
salaries of all executive officers of the Company are reduced by a comparable percentage; or
(iii) a relocation of Employee’s principal office to a location more than 50 miles from the
location of Employee’s then-current principal office.
(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 Employee’s employment is terminated following the Change in Control, the
provisions of paragraph (a) or (b) above shall apply, as applicable; provided, however, that
in the event the Employee’s employment is terminated pursuant to paragraph (b) above
following a Change in Control and within one year of the effective date of this Agreement,
the severance multiplier in paragraph 4(b)(I) above shall be two as opposed to one.
“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, or (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
13d-3 of the 0000 Xxx) of securities possessing more than fifty percent (50%) of the total
combined voting power of the
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Company’s outstanding securities pursuant to a tender or exchange offer made directly
to the Company’s stockholders.
(d) In the event (i) any payments described in this paragraph 4 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.
5. 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, 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.
(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.
6. Golden Parachute Provisions. If it is determined that any payment or benefit provided by the
Company to or for the benefit of the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, including, by example and not
by way of limitation, acceleration by the Company or otherwise of the date of vesting or payment
under any plan, program, arrangement or agreement of the Company would be subject to the excise tax
imposed by Code section 4999 or any interest or penalties with respect to such excise tax (such
excise tax together with any such interest and penalties, shall be referred to as the “Excise
Tax”), then the Company shall first make a calculation under which such payments or benefits
provided to the Employee are reduced to the extent necessary so that no portion thereof shall be
subject to the Excise Tax (the “4999 Limit”). The Company shall then compare (a) the Employee’s
Net After-Tax Benefit (as defined below) assuming application of the 4999 Limit with (b) the
Employee’s Net After-Tax Benefit without application of the 4999 Limit. The Employee shall be
entitled to the greater of (a) or (b). “Net After-Tax Benefit” shall mean the sum of (i) all
payments that Employee receives or is entitled to receive that are contingent on a change in the
ownership or effective control of the Company or in the ownership of a substantial portion of the
assets of the Company within the meaning of Code section 280G(b)(2), less (ii) the amount of
federal, state, local, employment, and Excise Tax (if any) imposed with respect to such payments.
If the Employee is required to reduce payments to which he is otherwise entitled such that no
portion thereof is subject to the Excise Tax, the Employee shall choose which payments shall be
reduced and the amount of the reduction of each payment.
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
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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.
(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 effective as of January 5, 2007.
(h) Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement. The exchange of
copies of this Agreement and of signature pages by facsimile or other electronic
transmission shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all purposes. Signatures of
the parties transmitted by facsimile or other electronic means shall be deemed to be their
original signatures for all purposes.
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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/ Xxxx X. Xxxxxxxxxx | |||
| Xxxx X. Xxxxxxxxxx, MD | ||||
| Chairman | ||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Xxxxx Xxxxxx, MD, PhD | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxxxxxx | |||
| Xxxxxxx X. Xxxxxxxxxxxxx | ||||
| Address: 0000 Xxxxxxx Xxxx Xxxxx Xxxxxxxxxx, Xxxxxxx 00000 |
||||
AGREED AND ACCEPTED, as of this 14 day of February, 2007.
| /s/ Xxx Xxxxxxxxxx | ||||
| Xxx Xxxxxxxxxx | ||||
Address: |
||||
| 0 Xxxx Xxx Xxxxx Xxxxxx, XX 00000 |
||||
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