UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
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Commission File Number 0-23155
TRIMERIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-1808663
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4727 University Drive
Durham, North Carolina 27707
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (919) 419-6050
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ x ] Yes [ ] No
The number of shares outstanding of the registrant's common stock as of
May 10, 1999 was 10,683,355.
<PAGE>
TRIMERIS, INC.
(A Development Stage Company)
FORM 10-Q
For the Three Months Ended March 31, 1999
<TABLE>
<CAPTION>
INDEX
<S> <C> <C>
PART 1. FINANCIAL INFORMATION Page
- ------------------------------------ ----
Item 1. Financial Statements
--------------------
Balance Sheets as of March 31, 1999 (unaudited) and
December 31, 1998 1
Statements of Operations (unaudited) for the Three Months Ended
March 31, 1999 and 1998 and Period From
Inception (January 7, 1993) Through March 31, 1999 2
Statements of Cash Flows (unaudited) for the Nine Months Ended
March 31, 1999 and 1998 and Period From
Inception (January 7, 1993) Through March 31, 1999 3
Notes to Financial Statements (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations 6
-------------------------
Item 3. Quantitative and Qualitative Disclosures About Market Risk
-----------------------------------------------------------
PART 2. OTHER INFORMATION
- --------------------------------
Item 1. Legal Proceedings 11
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Item 2. Changes in Securities and Use of Proceeds 11
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Item 3. Defaults Upon Senior Securities 11
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders 11
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Item 5. Other Information 11
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Item 6. Exhibits and Reports on Form 8-K 11
--------------------------------
Signature Page 12
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Exhibit Index 13
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</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
TRIMERIS, INC.
(A Development Stage Company)
BALANCE SHEETS
(in thousands, except par value)
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,920 $ 9,831
Short-term investment 3,256 4,151
Accounts receivable 68 46
Prepaid expenses 321 333
----------- ----------
Total current assets 20,565 14,361
Property, furniture and equipment, net 1,598 1,721
----------- ----------
Other assets:
Exclusive license agreement, net 27 27
Patent costs, net 534 541
Equipment deposits 147 147
Other, net 1 1
----------- ----------
Total other assets 709 716
----------- ----------
Total assets $ 22,872 $ 16,798
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,176 $ 387
Current installments of capital lease obligations 471 452
Accrued compensation 829 1,156
Accrued expenses 1,527 1,173
------------- ----------
Total current liabilities 4,003 3,168
Capital lease obligations, less current installments 853 745
----------- ----------
Total liabilities 4,856 3,913
----------- ----------
Commitments and contingencies
Stockholders' equity:
Series A, B, C, and D preferred stock at $.001 par value per share, 10,000
shares authorized, zero shares issued and outstanding at December 31, 1998
and March 31, 1999 (unaudited) -- --
Common Stock at $.001 par value per share, 30,000
shares authorized, 10,637 and 10,683 shares issued
and outstanding at December 31, 1998 and
March 31, 1999 (unaudited) 11 11
Additional paid-in capital 68,406 68,435
Deficit accumulated during the development stage (48,395) (53,762)
Deferred compensation (1,788) (1,605)
Notes receivable from stockholders (218) (194)
------------ -----------
Net stockholders' equity 18,016 12,885
----------- ----------
Total liabilities and stockholders' equity $ 22,872 $ 16,798
============ ==========
See accompanying notes to financial statements.
</TABLE>
1
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TRIMERIS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Cumulative
from Inception
Three Months (January 7, 1993)
Ended March 31, to March 31,
1998 1999 1999
---- ---- ----
Revenue $ 90 $ 81 $ 1,034
--------- --------- -----------
Operating expenses:
Research and development 2,583 3,964 42,715
General and administrative 1,040 1,673 13,701
--------- --------- -----------
Total operating expenses 3,623 5,637 56,416
--------- --------- -----------
Operating loss (3,533) (5,556) (55,382)
---------- ---------- ------------
Other income (expense):
Interest income 584 231 2,692
Interest expense (18) (42) (1,072)
---------- ---------- ------------
Total other income (expense) 566 189 1,620
--------- --------- -----------
Net loss $ (2,967) $ (5,367) $ (53,762)
========== ========== ============
Basic net loss per share $ (0.28) $ (0.50)
========== ===========
Weighted average shares used in per share
computations 10,620 10,777
========= =========
See accompanying notes to financial statements.
2
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TRIMERIS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Cumulative
from Inception
Three Months Ended (January 7, 1993)
March 31, to March 31,
1998 1999 1999
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(2,967) $ (5,367) $(53,762)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 104 183 2,978
Amortization of deferred compensation 150 183 1,098
Other amortization 5 5 232
401(K) plan stock match - - 236
Provision for equipment held for resale - - 61
Stock issued for consulting services - - 5
Stock issued to repay interest on notes to
stockholders - - 195
Debt issued for research and development - - 194
Loss on disposal of property and equipment - - 16
Increase (decrease) in assets:
Accounts receivable and loans to employees (36) 22 (46)
Prepaid expenses (15) (12) (333)
Other assets (26) (5) (153)
Decrease (increase) in liabilities:
Accounts payable (288) (789) 387
Accrued compensation (158) 327 1,156
Accrued expenses (175) (354) 1,083
-------- --------- --------
Net cash used by operating activities (3,406) (5,807) (46,653)
-------- --------- ---------
Cash flows from investing activities:
Purchases of property, furniture and equipment (218) (306) (1,153)
Net sales (purchases) of short-term investments 759 (895) (4,151)
Equipment held for resale - - (61)
Organization costs - - (8)
Patent costs (15) (7) (555)
-------- --------- ---------
Net cash provided (used) by investing activities 526 (1,208) (5,928)
------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of notes payable - - 6,150
Lease costs - - (13)
Principal payments under capital lease obligations (95) (127) (2,365)
Proceeds from issuance of Common Stock - - 31
Proceeds from issuance of Preferred Stock - - 23,896
Proceeds from initial public offering, net - - 34,532
Proceeds from exercise of stock options 1 29 48
Employee stock purchase plan stock issuance - - 255
Repayment of notes receivable from stockholders - 24 74
Stock issuance costs - - (196)
------- -------- ---------
Net cash provided (used) by financing activities (94) (74) 62,412
-------- --------- --------
Net increase (decrease) in cash and cash equivalents (2,974) (7,089) 9,831
Cash and cash equivalents at beginning of period 32,557 16,920 -
------- -------- --------
Cash and cash equivalents at end of period $29,583 $ 9,831 $ 9,831
======= ======== ========
</TABLE>
See accompanying notes to financial statements.
3
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TRIMERIS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
Trimeris, Inc. (the "Company") was incorporated on January 7, 1993 to
discover and develop novel therapeutic agents that block viral infection by
inhibiting viral fusion with host cells. These financial statements have been
prepared in accordance with Statement of Financial Accounting Standards No. 7,
"Accounting and Reporting by Development Stage Enterprises," to recognize the
fact that the Company is devoting substantially all of its efforts to
establishing a new business and planned principal operations have not commenced.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles and applicable
Securities and Exchange Commission regulations for interim financial
information. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission rules and regulations. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of financial position and results of operations have been
made. Operating results for interim periods are not necessarily indicative of
results which may be expected for a full year. The information included in this
Form 10-Q should be read in conjunction with the Risk Factors and Management's
Discussion and Analysis of Financial Condition and Results of Operations
sections and the 1998 financial statements and notes thereto included in the
Company's 1998 Form 10-K filed with the Securities and Exchange Commission on
March 31, 1999.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. BASIC NET LOSS PER SHARE
For periods beginning with the year ended December 31, 1997, the Company
adopted SFAS No. 128, "Earnings Per Share" ("SFAS No. 128"). In accordance with
this statement, primary net loss per common share is replaced with basic loss
per common share which is calculated by dividing net loss by the
weighted-average number of common shares outstanding for the period after
certain adjustments described below. Fully diluted net income per common share
is replaced with diluted net income per common share reflecting the maximum
dilutive effect of common stock issuable upon exercise of stock options, stock
warrants, and conversion of preferred stock. Diluted net loss per common share
is not shown, as common equivalent shares from stock options, and stock
warrants, would have an antidilutive effect. Prior period per share data has
been restated to reflect the adoption of SFAS No. 128. In accordance with
Securities and Exchange Commission Staff Accounting Bulletin No. 83 ("SAB 83"),
all common shares and common equivalent shares issued during the twelve-month
period prior to the initial filing of the registration statement relating to the
Company's initial public offering, even when anti-dilutive, have been included
in the calculation as if they were outstanding for all periods, using the
treasury stock method. The basic net loss per common share gives retroactive
effect to the conversion of all outstanding shares of Preferred Stock into
6,261,615 shares of Common Stock upon the completion of the Company's initial
public offering in October 1997.
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3. STATEMENTS OF CASH FLOWS
Interest of approximately $37,000 and $42,000 was paid during the three
months ended March 31, 1998 and 1999, respectively.
4. INITIAL PUBLIC OFFERING OF STOCK
In October 1997, the Company closed its initial public offering of common
stock at $12 per share. The net proceeds of the offering, including the proceeds
received in connection with the exercise of the Underwriters' over-allotment
option which closed in November 1997, were approximately $34.5 million after
deducting applicable issuance costs and expenses. In connection with the public
offering, all the outstanding preferred stock was converted into 6,261,615
shares of the Company's common stock.
5. STOCK SPLIT
Effective July 11, 1997, the Company declared a one for eight and one-half
reverse stock split for common stockholders. This stock split has been
retroactively applied and all periods presented have been restated.
6. SUBSEQUENT EVENT
The Company filed a registration statement on Form S-3 proposing to sell 2.5
million shares (2.875 million shares if the underwriters' over-allotment is
exercised) of common stock on April 20, 1999.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This discussion of our financial condition and the results of operations
should be read together with the financial statements and notes contained
elsewhere in this Form 10-Q. Certain statements in this section and other
sections are forward-looking. While we believe these statements are accurate,
our business is dependent on many factors, some of which are discussed in the
"Risk Factors" and "Business" sections of our 1998 Form 10-K which should be
read in conjunction with this Form 10-Q. Many of these factors are beyond our
control and any of these and other factors could cause actual results to differ
materially from the forward-looking statements made in this 10-Q. The results of
our previous clinical trials are not necessarily indicative of the results of
future clinical trials. Please carefully read the "Risk Factors" section set
forth below. We undertake no obligation to release publicly the results of any
revisions to the statements contained in this Form 10-Q to reflect events or
circumstances that occur subsequent to the date hereof.
OVERVIEW
We began our operations in January 1993 and are a development stage
company. Accordingly, we have a limited operating history. Since our inception,
substantially all of our resources have been dedicated to:
o the development, patenting, preclinical testing and clinical trials of
T-20,
o the development of a manufacturing process for T-20,
o production of drug material for future clinical trials, and
o research and development and preclinical testing of other potential
product candidates.
We have lost money since inception and, as of March 31, 1999, had an
accumulated deficit of approximately $53.8 million. We have received revenue
only from federal small business innovative research grants, otherwise known as
SBIR grants, and an investigative contract and have not generated any revenue
from product sales or royalties. We may never generate any revenue from product
sales or royalties.
Development of current and future drug candidates will require significant
additional, time-consuming and costly research and development, preclinical
testing and extensive clinical trials prior to submission of any regulatory
application for commercial use. We expect to incur substantial losses for the
foreseeable future and expect losses to increase as our research and
development, preclinical testing, drug production and clinical trial efforts
expand. The amount and timing of our operating expenses will depend on many
factors, including:
o the status of our research and development activities,
o product candidate discovery and development efforts, including
preclinical testing and clinical trials,
o the timing of regulatory actions,
o the costs involved in preparing, filing, prosecuting, maintaining,
protecting and enforcing patent claims and other proprietary rights,
o our ability to establish, internally or through relationships with
third parties, manufacturing, sales, marketing and distribution
capabilities,
o technological and other changes in the competitive landscape,
o changes in our existing research and development relationships and
strategic alliances,
6
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o evaluation of the commercial viability of potential product candidates,
and
o other factors, many of which are outside of our control.
As a result, we believe that period-to-period comparisons of our financial
results in the future are not necessarily meaningful. The past results of
operations and results of previous clinical trials should not be relied on as an
indication of future performance. If we fail to meet the clinical and financial
expectations of securities analysts and investors, it could have a material
adverse effect on the market price of our common stock. Our ability to achieve
profitability will depend, in part, on our own or our collaborative partners'
ability to successfully develop and obtain regulatory approval for T-20 and
other product candidates, and our ability to develop the capacity, either
internally or through relationships with third parties, to manufacture, sell,
market and distribute approved products, if any. We may never generate
significant revenues or achieve profitable operations.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 AND 1999
REVENUE. Total revenue was $90,000 and $81,000 for the three months ended March
31, 1998 and 1999, respectively and was entirely derived from SBIR grants.
RESEARCH AND DEVELOPMENT EXPENSES. Total research and development expenses were
$2.6 million and $4.0 million for the three months ended March 31, 1998 and
1999, respectively. Expenses increased during the three months ended March 31,
1999 because we:
o completed one Phase II clinical trial and initiated another Phase II
clinical trial for T-20,
o completed preclinical studies and filed an NDA for T-1249, and
o continued manufacturing process development and purchase of drug
material from third party manufacturers to supply future clinical
trials.
Total research personnel were 38 and 41 at March 31, 1998 and 1999,
respectively. We expect research and development expenses to increase
substantially in the future due to:
o continued preclinical research and testing of product candidates,
o expanded clinical trials for T-20, T-1249 and other product candidates,
o the manufacture of drug material for these trials, and
o increased number of personnel to support these activities.
7
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GENERAL AND ADMINISTRATIVE EXPENSES. Total general and administrative expenses
were $1.0 million and $1.7 million for the three months ended March 31, 1998 and
1999, respectively. Expenses increased during the three months ended March 31,
1999 because we:
o accrued severance costs for our former Chief Executive Officer,
o initiated and completed market research on the sales potential of T-20,
and
o incurred professional fees in the patent application process.
We expect administrative expenses to increase in the future to support the
expansion of product development activities.
OTHER INCOME (EXPENSE). Other income (expense) consists of interest income and
expense. Total other income was $566,000 and $189,000 for the three months ended
March 31, 1998 and 1999, respectively. The decrease was due to decreased
interest income because of lower cash and investment balances during 1999.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations primarily through the
private placement of equity securities, the issuance of notes to stockholders,
equipment lease financing and an initial public offering in October 1997. Net
cash used by operating activities was $3.4 million and $5.8 million for the
three months ended March 31, 1998 and 1999, respectively. The cash used by
operating activities was used primarily to fund research and development
relating to T-20 and other product candidates. Cash used by financing activities
was $94,000 and $74,000 for the three months ended March 31, 1998 and 1999,
respectively. The cash used by financing activities was primarily payments under
our capital lease obligations.
As of March 31, 1999, we had $14.0 million in cash and cash equivalents and
short-term-investments, compared to $20.2 million as of December 31, 1998. The
decrease was primarily a result of the use of approximately $5.8 million by
operations.
We have experienced negative cash flows from operations since our inception
and do not anticipate generating sufficient positive cash flows to fund our
operations in the foreseeable future. We have expended, and expect to continue
to expend in the future, substantial funds to pursue our product candidate and
compound discovery and development efforts, including:
o expenditures for clinical trials of T-20, T-1249 and other product
candidates,
o research and development and preclinical testing of other product
candidates,
o manufacture of drug material, and
o the development of our proprietary technology platform.
As of March 31, 1999, we had commitments of approximately $4 million to
purchase product candidate materials and fund various clinical studies, and
expect to expend approximately $1 million in capital expenditures during the
remainder of 1999. These expenditures may be financed with capital or operating
leases, debt or working capital. We have filed a registration statement on Form
S-3 proposing to sell 2.5 million shares (2.875 million shares if the
underwriters' over-allotment is exercised) of our common stock in an
underwritten public stock offering. We expect that the proceeds from this
proposed offering, together with the interest earned thereon, will be adequate
to fund our capital requirements through 1999. We believe that substantial
additional funds will be required after 1999. If we do not complete the
offering, we expect that our existing capital resources together with the
interest earned thereon will not be adequate to fund our capital requirements
through 1999.
8
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In the event we do not complete the proposed public offering, we will be
required to delay, scale-back or eliminate certain preclinical testing, clinical
trials and research and development programs. In addition, we will be required
to obtain additional funds, which may be raised through equity or debt
financings. If we raise funds by selling equity, our stockholders' interest may
be diluted. Any debt financings may contain restrictive terms that limit our
operating flexibility. Additionally or alternatively, we may have to attempt to
obtain funds through arrangements with collaborative partners. These partners
may require us to relinquish rights to our technologies or product candidates.
This could have a material adverse effect on our business, financial condition
or results of operations.
YEAR 2000 COMPLIANCE
STATE OF READINESS. We have adopted a Year 2000 compliance plan and formed a
team to identify and resolve any Year 2000 issues that may affect our business.
Our compliance plan has four phases: inventory, assessment, remediation and
testing. We have completed an inventory of all of our computer systems,
computer-related equipment and equipment with embedded processors. We are
currently in the process of assessing those systems. We have completed this
assessment with respect to most of our systems and expect to complete our
assessment of the remaining systems by mid-1999. Although we cannot control
whether and how third parties will address the Year 2000 issue, we also are in
the process of contacting critical vendors and suppliers to assess their ability
to ensure smooth delivery of products without disruptions caused by Year 2000
problems. In the course of our assessment, we have not yet identified any Year
2000 issues that would affect our ability to do business; however, our
assessment is not complete, and there can be no assurance that there are no Year
2000 issues that may affect us. Once we complete the assessment phase, we will
prioritize and implement necessary repairs or replacements to equipment and
software to achieve Year 2000 compliance. We expect to complete this phase by
mid-1999. The final phase will consist of a testing program for all repairs. We
anticipate that all testing will be completed by October 1999.
COSTS. We have not prepared estimates of costs to remediate Year 2000
problems; however, based on currently available information, including the
results of our assessment to date and our replacement schedule for equipment, we
do not believe that the costs associated with Year 2000 compliance will have a
material adverse effect on our business, financial condition and results of
operations.
RISKS. Although we believe that our Year 2000 compliance plan is adequate to
address Year 2000 concerns, we may experience negative consequences as a result
of undetected defects or the non-compliance of third parties with whom we
interact. Furthermore, there may be a delay in, or increased costs associated
with, the implementation of corrections as the Year 2000 compliance plan is
performed, such as unexpected costs of correcting equipment that has not yet
been fully evaluated. If realized, these risks could result in a material
adverse effect on our business, financial condition and results of operations.
We believe that our greatest risk stems from the potential non-compliance of
our suppliers. We depend on a limited number of suppliers for certain materials,
components, services, including electrical service, and equipment necessary to
operate our research effort and our clinical trials. Accordingly, if those
suppliers are unable to process or fill our orders, provide us with services, or
otherwise interact with us because of Year 2000 problems, we could experience
material adverse effects to our business. We are in the process of assessing the
Year 2000 status of our suppliers and are investigating alternative sources of
supply.
CONTINGENCIES. We have not yet developed a contingency plan to address what
would happen in the event we are unable to address the Year 2000 issue. The
contingency plan is expected to be completed after the inquiry of vendors and
customers is completed.
9
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FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION
CLINICAL DEVELOPMENT
The following discussion highlights certain aspects of our on-going and
planned clinical development programs. The results of our previous clinical
trials are not necessarily indicative of the results of future clinical trials.
T-20
PHASE II - T20-205
In March 1999, we initiated a roll-over Phase II trial to continue T-20
therapy for patients who participated in the earlier clinical trials of T-20.
The primary purpose of this trial is to collect data relating to the safety of
long-term administration of T-20. Patients in this trial will add T-20 to their
individualized anti-HIV drug combinations and will remain on therapy for as long
as they demonstrate acceptable safety and antiviral responses. Approximately
two-thirds of the patient population eligible for enrollment has already
enrolled in this study. We expect to have our initial long-term safety data from
this trial in the third quarter of 1999.
PHASE II - T20-204 (PEDIATRIC)
In cooperation with the Division of AIDS of the National Institute of
Allergy and Infectious Diseases, we are planning to commence a clinical trial in
1999 to assess the safety, pharmacokinetics and preliminary antiviral activity
of T-20 in children. We expect to enroll 12 HIV-infected children. We expect to
begin this pediatric trial in the second quarter of 1999 and complete it by
early 2000. We will use the results from this trial to design larger scale
pediatric trials that we expect to commence following culmination of the safety
and pharmacokinetic trial.
PHASE II - T20-206
Based on the results of TRI-003, a Phase II trial is planned for 1999 that
should assess the long-term safety and efficacy of T-20 when used in combination
with other anti-HIV drugs. The trial is designed to run for 48 weeks, with
formal data collection at 16 and 48 weeks. It will be a multi-site, randomized,
controlled comparison of three different doses of T-20 in combination with a
background regimen of a nucleoside RT inhibitor, a protease inhibitor and a
non-nucleoside RT inhibitor. We intend to collect data from up to 68 patients
who complete treatment. We expect to commence the trial in the second quarter of
1999.
PIVOTAL TRIAL
Based on the results of these Phase II trials, we intend to begin a pivotal
trial late in the fourth quarter of 1999 in a larger population of HIV-infected
patients who are either resistant to, or intolerant of, currently-approved
anti-HIV drugs. Historically, pivotal trials of this type involving anti-HIV
drugs have included approximately 300 to 400 patients and have taken
approximately 18 months to complete.
T-1249
We are developing T-1249, our second drug candidate for HIV fusion
inhibition. We have filed an IND for T-1249 with the FDA, and we expect to begin
a Phase I clinical trial in the second quarter of 1999. In the trial, T-1249
will be administered once or twice daily, depending on the patient group, by
subcutaneous injection in up to 60 HIV-infected adults for 14 days.
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RISK FACTORS
Our business is subject to certain risks and uncertainties. The following
discussion highlights some of these risks. If any of the following risks
materialize, our business, financial condition and results of operations could
be materially adversely affected.
WE ARE AN EARLY STAGE COMPANY WITH AN UNCERTAIN FUTURE.
We formed our company and began operations in January 1993. Accordingly, we have
only a limited operating history for you to evaluate our business. There are
many business risks associated with a biopharmaceutical company in the early
stage of development, such as ours. For example, we may not be able to obtain
sufficient financial, personnel and other resources to continue to develop our
product candidates. We also may not be successful in discovering or developing
any product candidates that ultimately achieve regulatory approval or have
commercial viability.
We have not yet generated any revenues from product sales or royalties. We have
never submitted a product candidate for approval by the FDA or any other
regulatory authority for commercialization. We will have to invest significant
additional time and funds in research and development and extensive clinical
trials before we can submit our product candidates for regulatory approval. Our
product candidates may never obtain regulatory approval, and therefore, may
never be commercially available.
WE HAVE NEVER MADE MONEY AND EXPECT OUR LOSSES TO CONTINUE.
We have incurred losses since we began operating. As of March 31, 1999, our
accumulated deficit was approximately $53.8 million. Since inception, we have
spent our funds on our product development efforts, relating primarily to the
development of T-20. We expect that we will incur substantial losses for the
foreseeable future. We also expect our losses to significantly increase as we
expand our research and development, preclinical testing and clinical trial
efforts. We have not yet generated any revenues from product sales or royalties.
We cannot assure you that we will ever be able to generate any such revenues or
royalties or, if we generate any revenues or royalties, that we will ever be
profitable.
WE WILL NEED TO RAISE ADDITIONAL FUNDS IN THE NEAR FUTURE.
Based on our current plan, we anticipate that our existing capital resources,
together with the net proceeds of our proposed public offering and the interest
earned, will be adequate to fund our capital requirements through 1999. We
believe that substantial additional funds will be required after 1999. In the
event this financing is not obtained, we will be required to delay, scale-back
or eliminate certain preclinical testing, clinical trials and research and
development programs.
We may raise these additional funds through equity or debt financings. If we
raise funds by selling equity, our stockholders' interest may be diluted. Any
debt financings may contain restrictive terms that limit our operating
flexibility. Additionally or alternatively, we may have to attempt to obtain
funds through arrangements with collaborative partners. These partners may
require us to relinquish rights to our technologies or product candidates. This
could have a material adverse effect on our business, financial condition and
results of operations.
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OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO FLUCTUATIONS AND YOU SHOULD NOT
RELY ON THEM AS AN INDICATION OF OUR FUTURE RESULTS.
Our operating results are likely to fluctuate over time, due to a number of
factors, many of which are outside of our control. Some of these factors
include:
o the status of our research and development activities,
o the progress of our product candidates through preclinical testing and
clinical trials,
o the timing of regulatory actions,
o our ability to establish manufacturing, sales, marketing and
distribution capabilities, either internally or through relationships
with third parties,
o technological and other changes in the competitive landscape,
o changes in our existing or future research and development
relationships and strategic alliances, and
o the commercial viability of our product candidates.
As a result, we believe that comparing financial results for one period against
another period is not necessarily meaningful, and you should not rely on our
results of operations in prior periods as an indication of our future
performance. Also, if our results of operations for a period deviate from the
levels expected by securities analysts and investors, it could have a material
adverse effect on the market price of our common stock.
WE ARE HEAVILY DEPENDENT ON OUR LEAD PRODUCT CANDIDATE, T-20.
T-20 is our lead product candidate and our only candidate that has been tested
in humans. Our success will depend, to a great degree, on the success of T-20.
In particular, we must be able to:
o establish the safety and efficacy of T-20 in humans,
o obtain regulatory approvals so that we can commercialize T-20,
o establish relationships for the commercial-scale production of T-20 at
an acceptable cost and with the appropriate quality, and
o successfully market T-20 and achieve acceptance of T-20 by the medical
community, including health care providers and third-party payors.
We may rely on our collaborative partners in connection with many of these
matters. We may not be able to control the amount or timing of resources that
our partners may devote to these matters. If we or our collaborative partners
fail to successfully develop and commercialize T-20, our business, financial
condition and results of operations will be materially and adversely affected.
WE FACE MANY UNCERTAINTIES RELATING TO OUR HUMAN CLINICAL TRIAL RESULTS AND
CLINICAL TRIAL STRATEGY.
In order to obtain the regulatory approvals that we need to sell commercially
any of our product candidates, we must demonstrate that each product candidate
is safe and effective for use in humans for each target indication. We attempt
to demonstrate this through preclinical testing and clinical trials for each
product candidate. This is a very complex and lengthy process. To date, we have
conducted initial preclinical testing of some of our product candidates and a
Phase I/II clinical trial of T-20 that enrolled 16 patients. We have also
recently completed a Phase II clinical trial of T-20 involving 78 patients.
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Because these clinical trials have been limited to a relatively small number of
patients, we cannot assure you that the results of these early clinical trials
will support further clinical trials of T-20. We may not be able to demonstrate
that potential product candidates that appeared promising in preclinical testing
and early clinical trials will be safe or effective in advanced clinical trials
that involve larger numbers of patients. We also cannot assure you that the
results of the clinical trials we have conducted and still intend to conduct
will support our applications for regulatory approval. As a result, our product
development programs may be curtailed, redirected or eliminated at any time.
We may redesign, delay or cancel our preclinical testing and clinical trials,
for some or all of the following reasons:
o unanticipated, adverse or ambiguous results from our preclinical
testing or clinical trials,
o undesirable side effects which delay or extend the trials,
o our inability to locate, recruit and qualify a sufficient number of
patients for our trials,
o difficulties in manufacturing sufficient quantities of the particular
product candidate or any other components needed for our preclinical
testing or clinical trials,
o regulatory delays or other regulatory actions,
o change in the focus of our development efforts, and
o reevaluation of our clinical development strategy.
Accordingly, our clinical trials may not commence or proceed as anticipated.
This would have a material adverse effect on our business, financial condition
and results of operations.
HIV MAY DEVELOP RESISTANCE TO OUR DRUG CANDIDATES.
HIV is prone to genetic mutations. These mutations have produced strains of HIV
that are resistant to currently-approved therapeutics. The HIV virus may develop
similar resistance to our viral fusion inhibitor therapeutics, including T-20
and T-1249. This could have a material adverse effect on our business, financial
condition and results of operations.
WE HAVE NO EXPERIENCE MANUFACTURING PHARMACEUTICAL PRODUCTS.
The manufacture of pharmaceutical products requires significant expertise and
capital investment. We have no experience in manufacturing pharmaceuticals, no
commercial manufacturing capacity and only have limited experience in
manufacturing process development. As a result, we have elected to work with
third-party contract manufacturers to supply quantities of T-20 to be used in
currently planned clinical trials. We expect to rely on third-party
manufacturers throughout the clinical and initial commercialization phases of
T-20 development. We may not be able to maintain relationships with these
third-party manufacturers. Our dependence on third parties for the manufacture
of products and product candidates could have a material adverse effect on our
business, financial condition and results of operations.
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WE FACE RISKS ASSOCIATED WITH MANUFACTURING T-20 AND T-1249.
Peptide-based therapeutics are difficult and expensive to manufacture. We, and
our third-party manufacturers, are currently using a novel method to manufacture
T-20. This chemical methodology is inherently complex. We may not be able to
manufacture T-20 or T-1249 on a cost-effective basis or develop an alternative,
more efficient manufacturing method for T-20, T-1249 or any of our other peptide
product candidates. In addition, commercial production of T-20 will require raw
materials in amounts substantially greater than those being used in the current
manufacturing campaigns. We may not be able to obtain these materials in
sufficient quantities or on a cost-effective basis to support the commercial
manufacture of T-20. If we are unable to manufacture T-20 or T-1249 on a
cost-effective basis or are unable to obtain the necessary quantities of raw
materials, our business, financial condition and results of operations will be
materially and adversely affected.
OUR BUSINESS IS BASED ON NOVEL TECHNOLOGY AND IS HIGHLY RISKY AND UNCERTAIN.
Our product development programs are based on novel technology. Our technology
platform is designed to discover product candidates which treat viral infection
by inhibiting viral fusion, a process which prevents the virus from fusing to
the cell, thereby preventing the virus from entering the cell and replicating.
We are not aware of any other approved antiviral pharmaceutical products that
target the inhibition of viral fusion. Accordingly, developing products that use
this novel approach is highly risky and uncertain. Our products could:
o experience unanticipated developments or clinical or regulatory delays,
o produce unexpected adverse side effects, or
o provide inadequate therapeutic effectiveness.
Any of these could slow or suspend our product development efforts. If any of
these unanticipated results occurs, it could have a material adverse effect on
our business, financial condition and results of operations.
We may not be able to use our novel technology platform to discover and
successfully develop any commercially viable products. We may not be able to
complete our research or product development efforts for any particular product
candidate, or develop any product candidates that will prove to be safe and
effective. We may not be able to obtain the required regulatory approvals for
any products. Our development programs are subject to the risks inherent in the
development of new products using new technologies and approaches. We may
encounter unforeseen problems with these technologies or applications and
technological challenges in our research and development programs that we may
not be able to resolve.
WE ARE DEPENDENT ON THIRD-PARTY CONTRACT RESEARCH ORGANIZATIONS.
We have engaged, and intend to continue to engage, third-party contract research
organizations to perform some functions for us related to the development of our
product candidates. We typically design our clinical trials, but rely on these
contract research organizations to actually conduct the clinical trials. The
failure by the contract research organizations to perform our clinical trials
satisfactorily or their breach of their obligations to us could delay or prevent
the commercialization of our product candidates. This would have a material
adverse effect on our business, financial condition and results of operations.
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Because we rely on third-party contract research organizations, our preclinical
testing or clinical trials may not begin or be completed on the dates we
estimate for them. Any delays in our testing and trials could delay regulatory
approval for or commercialization of our product candidates. These delays could:
o increase our operating expenses,
o cause us to need additional capital,
o divert management's time and attention, and
o create adverse market perception about us and our product candidates.
WE HAVE NO SALES, MARKETING OR DISTRIBUTION CAPABILITIES.
We have no experience in sales, marketing or distribution of pharmaceuticals and
currently have no personnel employed in any of these capacities. We may develop
these capabilities in certain areas in the future. We may rely on marketing
partners or other arrangements with third parties which have established
distribution systems and direct sales forces for the sales, marketing and
distribution of products. In the event that we are unable to reach agreement
with one or more marketing partners we may be required to develop internal
sales, marketing and distribution capabilities. We may not be able to establish
cost-effective sales, marketing or distribution capabilities or make
arrangements with third parties to perform these activities on acceptable terms,
if at all. This would have a material adverse effect on our business, financial
condition and results of operations.
If we establish sales, marketing or distribution arrangements with other
parties, they may have significant control over important aspects of the
commercialization of our products including:
o market identification,
o marketing methods,
o pricing,
o composition of sales force, and
o promotional activities.
We may not be able to control the amount or timing of resources that any third
party may devote to our products.
OUR STOCK PRICE IS HIGHLY VOLATILE.
Our stock price has fluctuated substantially since our initial public offering,
which was completed in October 1997. The market price of our common stock, like
that of the securities of many other biotechnology and pharmaceutical companies,
is likely to remain highly volatile.
Furthermore, the stock market has from time to time experienced extreme price
and volume fluctuations that may be unrelated to the operating performance of
particular companies. In addition, in the past, class action lawsuits have often
been instituted against biotechnology and pharmaceutical companies following
periods of volatility in the market price of these companies' stock. If
litigation were instituted against us on this basis, it could result in
substantial costs and would divert management's attention and resources. This
would have a material adverse effect on our business, financial condition and
results of operations.
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WE DEPEND ON COLLABORATIONS AND LICENSES WITH OTHERS.
We have entered into license and other agreements and may enter into additional
agreements with partners or collaborators to assist us in:
o seeking regulatory approval for our product candidates, and
o developing, manufacturing and commercializing some of our product
candidates.
Accordingly, our success will depend, in part, on our partners' success
in:
o performing preclinical testing and clinical trials,
o obtaining the requisite regulatory approvals,
o scaling up manufacturing,
o successfully commercializing the product candidates we license to them,
and
o otherwise performing their obligations.
We may not be able to maintain our existing collaborative arrangements or enter
into arrangements in the future on terms that are acceptable to us. Moreover,
our partners may not perform their obligations under our agreements with them
and may choose to compete with us by seeking alternative means of developing
therapeutics for the diseases we have targeted. In addition, we may not be able
to:
o obtain proprietary rights, or licenses under the proprietary rights which
belong to others, for any technology or product candidates developed
through these arrangements, or
o protect the confidentiality or prevent the disclosure of any proprietary
rights and information developed in our collaborative arrangements.
We currently have an agreement with Duke University pursuant to which we have
received an exclusive, worldwide, royalty-free license to certain discoveries
and inventions, including patent rights, in the field of antiviral therapeutics
that have been developed by certain researchers at Duke University. The license
for the Duke inventions, including T-20, terminates upon the last-to-expire
patent covering such inventions. Duke University may terminate the agreement if
we fail to perform our obligations under the agreement, which include pursuing
the development of the technologies licensed to us, or if we engage in fraud,
willful misconduct or illegal conduct. If Duke University were to terminate the
agreement, we would lose our license granted under that agreement. This would
have a material and adverse effect on our business, financial condition and
results of operations.
The Duke agreement also provides that our license includes certain rights to
discoveries and inventions developed before February 2000. We cannot assure you
that we will be able to amend the Duke agreement to obtain discoveries and
inventions made beyond February 2000. This could have a material and adverse
effect on our business, financial condition and results of operations. The
licenses that have already been granted to us under the agreement, including the
license for T-20, will not be affected by our inability to amend the Duke
agreement.
In the future, we may find that we need additional licenses from these or other
parties to effectively develop potential product candidates. We may not be able
to maintain our existing license agreements or obtain additional licenses on
acceptable terms.
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THERE IS UNCERTAINTY RELATING TO THIRD-PARTY REIMBURSEMENT AND HEALTH CARE
REFORM MEASURES WHICH COULD LIMIT THE AMOUNT WE WILL BE ABLE TO CHARGE FOR OUR
PRODUCTS.
In the United States and elsewhere, sales of prescription drugs are dependent,
in part, on the consumer's ability to be reimbursed for the cost of the drugs by
third-party payors, such as government agencies and private insurance plans.
Third-party payors are increasingly challenging the prices charged for medical
products and services in an effort to promote cost containment measures and
alternative health care delivery systems. As a result, third-party payor
reimbursements may not be available or may not be available at a level that will
allow us or our potential collaborative partners to sell our products on a
competitive basis.
Economic, political and regulatory influences, including the efforts of
governments and third-party payors to contain or reduce the cost of health care
through various means, will continue to affect the business and financial
condition of pharmaceutical companies. A number of legislative and regulatory
proposals aimed at changing the health care system have been proposed in recent
years. Because of the high cost of the treatment of HIV, many state legislatures
are reassessing reimbursement policies for this therapy. In addition, an
increasing emphasis in the United States to reduce the overall costs of health
care through managed care has and will continue to increase the pressure on
pharmaceutical pricing. We cannot predict whether legislative or regulatory
proposals will be adopted or the effect that those proposals or managed care
efforts may have. However, there is a risk that the announcement and/or adoption
of these types of proposals or efforts could have a material adverse effect on
our business, financial condition and results of operations.
THERE IS UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS.
Our success will depend, in part, on our ability and the ability of our
licensors to obtain and to keep protection for our products and technologies
under the patent laws of the United States and other countries, so that we can
prevent others from using our inventions. Our success also will depend on our
ability to prevent others from using our trade secrets. In addition, we must
operate in a way that does not violate the patent, trade secret, or other
intellectual property rights of other parties.
The pharmaceutical and biotechnology industries place considerable importance on
obtaining and maintaining patent and trade secret protection for new
technologies, products and processes. We have obtained rights to certain patents
and patent applications and may, in the future, seek rights from third parties
to additional patents and patent applications. For further information regarding
licenses we have obtained from third parties, see "Business -- Licensing and
Collaborative Agreements."
The standards used by the U.S. Patent and Trademark Office and the patent
offices of other countries to grant patents may change. Consequently, we cannot
be certain as to the type and extent of patent claims that may be issued to us
in the future.
The standards which courts use to interpret patents may change, particularly as
new technologies develop. Consequently, we cannot be certain as to how much
protection, if any, will be given to patents owned or licensed by us, if they
are challenged in court. If we choose to go to court to stop someone else from
using the inventions claimed in these patents, that individual or company has
the right to ask the court to rule that the patents are invalid and should not
be enforced against them. Such lawsuits are expensive and will consume time and
other resources, even if we are successful in stopping the violation of the
patents. In addition, there is a risk that the court will decide that some or
all of the claims of these patents are not valid and that we do not have the
right to stop the other party from using the inventions. There is also a risk
that, even if the validity of the patents is upheld, the court will refuse to
stop the other party on the grounds that its activities are not covered by the
patent claims.
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In addition, a third party may claim that we are using inventions covered by
their patents and may go to court to stop us from engaging in our normal
operations and activities, such as research and development and the manufacture
and sale of products. Such lawsuits are expensive and will consume time and
other resources. There is a risk that the court will decide that we are
violating the third party's patent and will order us to pay the other party
damages for having violated their patent. There is also a risk that the court
will order us to stop the activities covered by the patent. In this case, we may
attempt to obtain a license from the third party so that we may continue to use
the invention. However, we cannot assure you that if this occurs we would be
able to obtain the licenses we need or that we could negotiate the licenses on
terms acceptable to us, or at all.
Another risk we face in this area is that the laws of certain countries may not
protect our proprietary rights to the same extent as United States law.
We also rely in our business on trade secrets, know-how and other proprietary
information. We seek to protect this information, in part, through the use of
confidentiality agreements with employees, consultants, advisors and others.
Nonetheless, we cannot assure you that those agreements will provide adequate
protection for our trade secrets, know-how or other proprietary information and
prevent their unauthorized use or disclosure. There is also the risk that our
employees, consultants, advisors or others will not maintain the confidentiality
of such trade secrets or proprietary information, or that this information may
become known in some other way or be independently developed by our competitors.
The occurrence of these risks could have a material adverse effect on our
business, financial condition and results of operations.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION; OUR PRODUCTS MAY NOT RECEIVE
REGULATORY APPROVAL.
Human pharmaceutical products must undergo lengthy and rigorous preclinical
testing and clinical trials and other extensive, costly and time-consuming
procedures mandated by the FDA and foreign regulatory authorities. To have a
product candidate approved, we must establish that the product candidate is safe
and effective for each target indication. The FDA must confirm that we and our
clinical testing and manufacturing partners maintained good laboratory, clinical
and manufacturing practices. The regulatory approval process typically takes a
number of years, depending on the type, complexity and novelty of the
pharmaceutical product. Because of the considerable time and expense required,
this process gives larger companies with greater financial resources a
competitive advantage over us.
To date, none of our product candidates has been submitted for approval by the
FDA or any other regulatory authority for commercialization. Our products may
never be approved by the FDA or any other regulatory authority. T-20 has
received fast track designation from the FDA for the treatment of HIV-infected
individuals. Fast track designation is granted to products that may provide a
significant improvement in the safety or effectiveness of the treatment for a
serious or life-threatening disease, and this designation is intended to
expedite the review of these drugs. However, fast track designation does not, in
any way, mean that T-20 will be approved for commercialization by the FDA in the
future.
Our estimates of future regulatory submission dates may prove to be inaccurate.
Our regulatory submissions can be delayed or we may cancel plans to submit
proposed products for a number of reasons, including:
o unanticipated preclinical testing or clinical trial reports,
o changes in regulations, or the adoption of new regulations,
o unanticipated enforcement of existing regulations,
o unexpected technological developments, and
o developments by our competitors.
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Consequently, we cannot assure you that our anticipated submissions will be made
on their target dates, or at all. Delays in these submissions would have a
material adverse effect on our business, financial condition and results of
operations.
A number of federal, state and local laws regulate safe working conditions,
laboratory and manufacturing practices, the experimental use of animals and the
use and disposal of hazardous or potentially hazardous substances, including
radioactive compounds and infectious disease agents. We must comply with these
laws. We use some of these hazardous substances in our product development
programs. It is expensive and time-consuming to comply with these laws. If we
fail to comply, our business, financial condition and results of operations
could be materially and adversely affected.
WE FACE INTENSE COMPETITION.
We are engaged in segments of the biopharmaceutical industry, including the
treatment of HIV, that are intensely competitive and change rapidly. We expect
that new developments in the areas in which we are conducting our research and
development will continue at a rapid pace in both industry and academia.
If we successfully develop our product candidates and gain approval for those
products, they will compete with numerous existing therapies. For example, at
least 16 drugs are currently approved for the treatment of HIV. We also believe
that a significant number of drugs are currently under development and will
become available in the future for the treatment of HIV. We expect to face
intense and increasing competition in the future as these new products enter the
market and advanced technologies become available. Even if we are able to
successfully develop T-20 or T-1249 and either product candidate receives
regulatory approval, we cannot assure you that existing or new products for the
treatment of HIV developed by our competitors will not be more effective, less
expensive or more effectively marketed and sold, than T-20, T-1249 or any other
therapeutic for HIV that we may develop.
Many of our competitors have significantly greater financial, technical, human
and other resources than we do. Smaller companies may also prove to be
significant competitors, particularly through collaborative arrangements with
large pharmaceutical and biotechnology companies. Furthermore, academic
institutions, governmental agencies and other public and private research
organizations are becoming increasingly aware of the value of their inventions
and are more actively seeking to commercialize the technology they have
developed.
Several factors will help determine whether we will be able to compete
successfully in our market, including the following:
o the safety and effectiveness of our products,
o the speed with which we can gain regulatory approval for our products
and the scope of those approvals,
o our ability to manufacture, sell, market and distribute our products,
or to find someone else to handle these functions for us in a timely
and cost-efficient manner,
o the availability of reimbursement coverage for our products,
o our ability to offer our products at a competitive price, and
o the strength of our patents and the speed with which we can obtain
patents on our products and technologies.
We may not be able to effectively compete with our competitors in some or all of
these areas. This could have a material adverse effect on our business,
financial condition and results of operations.
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WE USE HAZARDOUS MATERIALS.
We use hazardous materials, chemicals, viruses and various radioactive compounds
in our product development programs. We believe that our handling and disposal
of these materials comply with the standards prescribed by state and federal
regulations, but we cannot completely eliminate the risk of accidental
contamination or injury from these materials. If there were such an accident or
injury, we could be held liable for any damages or penalized with fines. The
amount of the liability and fines could exceed our resources. Additionally, if
we develop internal manufacturing capability, we may incur substantial
additional costs to comply with environmental regulations.
WE ARE EXPOSED TO PRODUCT LIABILITY RISKS.
Our business exposes us to potential product liability risks that are inherent
in the testing, manufacturing and marketing of pharmaceutical products. We
cannot assure you that product liability claims will not be asserted against us.
In addition, the use in our clinical trials of pharmaceutical products that our
potential collaborators may develop and the subsequent sale of these products by
us or our potential collaborators may cause us to bear a portion of product
liability risks. A successful product liability claim or series of claims
brought against us could have a material adverse effect on our business,
financial condition and results of operations.
We do not currently have any product liability insurance relating to clinical
trials or any products or compounds we have or may develop. We cannot assure you
that we will be able to obtain or maintain adequate product liability insurance
on acceptable terms, if at all, or that such insurance will provide adequate
coverage against our potential liabilities. Furthermore, our collaborators or
licensees may not be willing to indemnify us against these types of liabilities
and may not themselves be sufficiently insured or have a net worth sufficient to
satisfy any product liability claims. Claims or losses in excess of any product
liability insurance coverage that may be obtained by us could have a material
adverse effect on our business, financial condition and results of operations.
WE DEPEND UPON CERTAIN KEY PERSONNEL AND FACE RISKS RELATING TO OUR ABILITY TO
ATTRACT AND RETAIN KEY PERSONNEL.
We depend on members of our senior management and scientific staff, including
Dr. Dani P. Bolognesi, our Chief Executive Officer and Chief Scientific Officer.
Dr. Bolognesi has limited experience acting as an executive officer at a company
such as ours, and has held this position at Trimeris only since March 1999.
The future recruitment and retention of management personnel and qualified
scientific personnel is also critical to our success. We cannot be certain that
we will attract and retain qualified personnel on acceptable terms given the
competition among biotechnology, pharmaceutical and health care companies,
universities and non-profit research institutions for experienced management
personnel and scientists. In addition, we rely on scientific advisors and other
consultants to assist us in formulating our research and development strategy.
These consultants are employed by other parties and may have commitments to, or
advisory or consulting agreements with, other entities, which may limit their
availability to us.
WE MAY BE ADVERSELY AFFECTED BY YEAR 2000 ISSUES.
Beginning on January 1, 2000, some computer systems and software will produce
erroneous results or fail unless they have been modified or upgraded to process
date information correctly. We have adopted a
Year 2000 compliance plan and formed a team to identify and resolve any Year
2000 issues that may affect our business. The plan includes identifying all
critical applications, including those of vendors and suppliers, assessing their
compliance with Year 2000 issues, and developing contingency plans for any
non-compliant critical applications.
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We expect to complete our review and assessment of all critical systems and
applications by mid-1999. To date, we have not identified any critical
applications or vendors that are Year 2000 non-compliant. Our most significant
Year 2000 risk is that the systems of other parties on which we rely,
specifically our key suppliers, will not be compliant on a timely basis. This
could result in a disruption in our business or cause us to incur significant
expenses to remedy any problems. In addition, we may encounter some unexpected
costs or encounter delays during the completion of our Year 2000 plan. These
costs or delays could have a material adverse effect on our business, financial
condition and results of operations.
FUTURE SALES OF COMMON STOCK BY OUR EXISTING STOCKHOLDERS COULD ADVERSELY AFFECT
OUR STOCK PRICE.
The market price of our common stock could decline as a result of sales by our
existing stockholders of shares of common stock in the market after this
offering, or the perception that these sales could occur. These sales also might
make it more difficult for us to sell equity securities in the future at a time
and at a price that we deem appropriate.
WE HAVE IMPLEMENTED CERTAIN ANTI-TAKEOVER PROVISIONS.
Certain provisions of our Certificate of Incorporation and Bylaws and Delaware
law could make it more difficult for a third party to acquire us, even if the
acquisition would be beneficial to our stockholders.
OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN OUR
FORWARD-LOOKING STATEMENTS.
This 10-Q contains forward-looking statements based on our current expectations,
assumptions, estimates and projections about our business and industry. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of various factors, including all the
risks and uncertainties discussed above and elsewhere in this 10-Q. We do not
undertake to update publicly any forward-looking statements for any reason, even
if new information becomes available or other events occur in the future.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk is primarily in our investment portfolio. We do
not use derivative financial instruments for speculative or trading purposes. We
have an investment policy that sets minimum credit quality standards for our
investments. The policy also limits the amount of money we can invest in any one
issue, issuer or type of instrument. We have not experienced any material loss
in our investment portfolio.
The table below presents the carrying value, which is approximately equal
to fair market value, and related weighted-average interest rates for our
investment portfolio at March 31, 1999. All of our investments mature in
eighteen months or less.
Carrying Average
Amount Interest
(thousands) Rate
---------- ---------
Cash equivalents - fixed rate $ 9,730 5.38 %
Short-term investments - fixed rate 4,151 6.35 %
Overnight cash investments - fixed rate 303 4.49 %
----------- ----------
Total investment securities $ 14,184 5.64 %
======== ==========
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Use of Proceeds:
The following information updates and supplements the
information regarding use of proceeds originally filed in our
Form 10-Q for the quarter ended September 30, 1997, as amended
to date. Through March 31, 1999, we have expended
approximately $20,550,000 of the total net proceeds from our
initial public offering of $34,532,000 for working capital.
The unused proceeds of $13,982,000 are invested in temporary
investments, primarily short-term corporate debt securities.
All proceeds used or invested were direct or indirect payments
to others or payments to directors and officers in the
ordinary course of business.. This use of proceeds does not
represent a material change in the use of proceeds described
in our prospectus filed as a part of the registration
statement for our initial public offering.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits filed as part of this Quarterly Report on Form 10-Q
are listed on the Exhibit Index immediately preceding such
exhibits and such list is incorporated herein by reference.
(b) Reports on Form 8-K
We filed a report on Form 8-K on March 15, 1999 under Item 5
describing certain changes in management. On March 12, 1999, Dr.
Dani P. Bolognesi was appointed Chief Executive Officer and Chief
Scientific Officer, and Matthew A. Megaro was appointed President
and remains Chief Financial Officer.
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We filed a report on Form 8-K on March 26, 1999 under Item 5
describing certain changes in our Board of Directors. Jeffrey M.
Lipton was named Vice Chairman of our Board of Directors and will
assume the chairmanship of our Board at the Annual Meeting of
Stockholders on June 23, 1999. Dr. Jesse I. Treu, our current
Chairman of the Board, will be stepping down from the
Chairmanship, but will seek re-election to the Board at the Annual
Meeting of Stockholders on June 23, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Trimeris, Inc.
(Registrant)
May 14, 1999 By: /s/ DANI P. BOLOGNESI
- ------------ ---------------------------
Dani P. Bolognesi
Chief Executive Officer,
and Chief Scientific Officer
May 14, 1999 By: /s/ MATTHEW A. MEGARO
- ------------ ---------------------------
Matthew A. Megaro
President,
Chief Financial Officer,
and Secretary (Principal Accounting
and Financial Officer)
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EXHIBIT INDEX
Number Description
- ------ -----------
10.1 Employment Termination and General
Release Agreement between Trimeris and M. Ross
Johnson dated April 13, 1999
10.2 Chief Executive Employment Agreement
between Trimeris and Dani P. Bolognesi dated
April 21, 1999
11.1 Computations of Basic Loss Per Share
27.1 Financial Data Schedule
25
EXHIBIT 10.1
EMPLOYMENT TERMINATION AND GENERAL RELEASE AGREEMENT
THIS EMPLOYMENT TERMINATION AND GENERAL RELEASE AGREEMENT ("Agreement")
is made and entered into by and between M. Ross Johnson, Ph.D. ("Johnson" or
"Employee") and Trimeris, Inc., a Delaware corporation ("the Company");
W I T N E S S E T H:
WHEREAS, Johnson has decided voluntarily to resign from employment with
the Company and to resign from membership on the Company's Board of Directors;
and
WHEREAS, the Company and Johnson have agreed that Johnson's employment
with the Company shall terminate, effective as of the close of business on March
12, 1999, and that his membership on the Company's Board of Directors shall
terminate effective as of the close of business on the same date; and
WHEREAS, Johnson and the Company now desire to memorialize, by the
execution of this Agreement, their understanding with respect to all matters
relating to Johnson's termination of employment and resignation from the Board
of Directors;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained herein, as well as the payment of the monies and other benefits to
Johnson as hereinafter recited, the receipt and sufficiency of which are hereby
acknowledged by Johnson, it is agreed as follows:
TERMINATION DATE. Employee's tenure as an employee and as a member of
the Board of Directors of the Company shall cease as of the close of business on
March 12, 1999 (the "Termination Date").
SEVERANCE BENEFITS. In return for Employee's execution of and adherence to this
Agreement, including the releases that form a material part of this Agreement,
and provided Employee does not revoke this Agreement by written notice to the
Company or its representative pursuant to paragraph 11(g) below, the Company
shall provide Employee with certain benefits, including benefits to which he
would not otherwise be entitled:
SALARY CONTINUATION. The Company shall pay Johnson his regular salary in effect
as of his Termination Date, for the period March 13, 1999 through March 12, 2000
(the "Salary Continuation Period"), in the total amount of Two Hundred Seventy
One Thousand, Seven Hundred and Four Dollars ($271,704.00). Payments shall be
made on the Company's regular paydays, and shall be subject to usual and
customary deductions required by law and Company policy. In the event of
Johnson's death before the end of the Salary Continuation Period, any remaining
payments due under this paragraph shall be paid to Johnson's estate.
BONUS COMPENSATION. Johnson shall be paid a bonus for fiscal year 1998 in the
amount of Sixty-Five Thousand Dollars ($65,000.00). This bonus payment shall be
paid in a lump sum within thirty (30) days following April 30, 1999, and shall
be subject to the usual and customary deductions required by law and Company
policy. In the event of Johnson's death before the end of the Salary
Continuation Period, any remaining payments due under this paragraph shall be
paid to Johnson's estate.
<PAGE>
GROUP HEALTH PLAN. Johnson shall be entitled to elect for himself and any of his
dependents who are currently covered under the terms and conditions of the
Company's group health plan "continuation coverage" (including dental coverage)
as provided under Section 4980B of the Internal Revenue Code of 1986, as amended
("COBRA"). To the extent that Johnson elects continuation coverage under COBRA,
the Company will reimburse him for the cost of such continuation coverage for
himself and his covered dependents during the Salary Continuation Period. Such
reimbursements shall be treated as additional salary continuation and shall be
subject to usual and customary deductions required by law and Company policy.
After the Salary Continuation Period, Johnson shall bear the full cost of such
continuation coverage. In the event of Johnson's death before the end of the
Salary Continuation Period, and to the extent Johnson's surviving dependents
retain continuation coverage under COBRA after his death, the Company will
reimburse them for the cost through the end of the Salary Continuation Period.
VACATION. Within thirty (30) days following the execution of this Agreement, the
Company shall pay Johnson (or his estate in the event of his death) for the
seventeen (17) vacation days accrued but unused by Johnson through the
Termination Date.
LIFE AND DISABILITY INSURANCE. Subject to any limitations imposed by applicable
laws or by the underwriters of any group or individual life or disability
insurance policies maintained by the Company, the Company shall continue its
coverage of Johnson under such group or individual life and disability insurance
policies through the Salary Continuation Period, and the Company shall bear a
portion of the cost of such coverage in accordance with the Company's policies
in effect as of the Termination Date. If the Company is unable to continue such
coverage, the Company shall pay to Johnson an amount sufficient on an after-tax
basis to obtain such coverage (less any amount he would have otherwise been
required to contribute to the cost of Company-provided coverage) through the end
of the Salary Continuation Period. Such benefits or payments shall be treated as
additional salary continuation and shall be subject to usual and customary
deductions required by law and Company policy.
ADDITIONAL CONSIDERATION. As additional consideration for the releases
hereunder, the Company shall pay Johnson (or his estate in the event of his
death) One Thousand Dollars ($1,000.00) in a single lump sum payment within
thirty (30) days following his execution of this Agreement. Such payment shall
be treated as additional salary continuation and shall be subject to usual and
customary deductions required by law and Company policy. Johnson acknowledges
and agrees that he would not otherwise be entitled to this payment.
ATTORNEY'S FEES. The Company shall reimburse Johnson for the reasonable
attorney's fees actually incurred by him in connection with the negotiation of
the terms and provisions of this Agreement, provided Johnson or his attorney
provides the Company with the attorney's invoice for such fees, which invoice
shall include an itemized statement of the fees charged. The Company shall
reimburse Johnson for such fees within thirty (30) days following the Company's
receipt of the attorney's invoice.
STOCK OPTIONS. Effective on April 3, 1998, the Company granted to Johnson
certain stock options as evidenced by that certain Trimeris, Inc. Incentive
Stock Option Agreement executed by the Company and Johnson (the "Option
Agreement"). As of the Termination Date, Johnson had a vested right to exercise
options to purchase certain shares of the Company's common
2
<PAGE>
stock. Johnson and the Company agree that paragraph 4(a) of the Option Agreement
is hereby amended to provide, effective March 12, 1999, that the vesting
schedule shall be accelerated by twenty-four (24) months. Accordingly, Johnson
and the Company agree and acknowledge that Johnson shall have the vested right
under the Option Agreement, as so amended, to exercise options to purchase up to
98,438 shares of the Company's common stock. Such right shall remain exercisable
in accordance with and subject to the terms and provisions of the Option
Agreement (including but not limited to terms relating early expiration
following termination of employment).
EMPLOYEE NOTES. As of March 31, 1999, Johnson is indebted to the Company under
three (3) separate promissory notes dated May 2, 1997, June 2, 1997 and June 11,
1997 (the "Notes"). Each of the Notes is due and payable in full on the second
anniversary of its issuance. As of March 31, 1999, the aggregate principal and
accrued interest due on the Notes is Eighty Thousand One Hundred Forty-nine
Dollars and Twenty-six Cents ($80,149.26). The Notes shall continue to bear
interest in accordance with their respective terms, and shall be payable as
stated therein. In the event Johnson does not make any required payments on the
respective due dates thereof, the Company reserves the right in its discretion
to apply any amounts otherwise payable to Johnson under Section 2 of this
Agreement to the repayment of the Notes.
REPURCHASE OF RESTRICTED STOCK. Johnson is a party to Stock Restriction
Agreements with the Company dated May 2, 1997, June 2, 1997 and June 11, 1997
(collectively, the "Stock Restriction Agreements"). In connection with the
provisions of paragraphs 2 and 3 of each of the Stock Restriction Agreements,
the Company hereby waives its right to exercise its Purchase Options with
respect to all unvested shares of the Company's common stock previously
purchased by Johnson under such Stock Restriction Agreements. All shares of
common stock previously purchased by Johnson under the Stock Restriction
Agreements (the "Restricted Shares") are, therefore, fully vested in Johnson
(subject to the Company's rights under Stock Pledge Agreements between Johnson
and the Company dated May 2, 1997, June 2, 1997 and June 11, 1997 (collectively,
the "Stock Pledge Agreements")). Upon full payment of the Notes referenced in
Section 4, above, all of the Restricted Shares shall be released from the
applicable Stock Pledge Agreements in accordance with the respective terms of
such Stock Pledge Agreements, and any certificates in the Company's custody
shall be delivered to Johnson, and shall bear applicable legends designating the
shares as restricted. As transfer restrictions imposed by applicable securities
laws (including but not limited to restrictions under Rule 144) lapse, the
Company will cooperate with Johnson in removing the related restrictive legends
appearing on certificates for the Restricted Shares.
LIMITATIONS ON RELEASES. Johnson has accrued as of the Termination Date certain
vested rights to benefits under one or more employee pension benefit plans (as
defined in the Employee Retirement Income Security Act of 1974, as amended)
maintained by the Company. Johnson shall be entitled to receive his vested
accrued benefits under such employee pension benefit plans in accordance with
their respective terms. The releases contained in this document do not waive or
otherwise affect Johnson's rights to such vested accrued benefits. Similarly,
the Company has certain rights under the Inventions Agreement, the Notes, the
Stock Restriction Agreements, the Stock Pledge Agreements and the Option
Agreement, as modified by the provisions of Sections 3, 4 and 5 above (the
"Johnson Agreements"). The releases contained in this document do not
3
<PAGE>
waive or otherwise affect (except as specified in Sections 3, 4 and 5 above) the
Company's rights under the Johnson Agreements.
RELEASE OF CLAIMS.
RELEASE OF CLAIMS BY JOHNSON. In consideration of the mutual promises herein,
Employee, on behalf of himself and his heirs and assigns, hereby irrevocably and
unconditionally releases and forever discharges, individually and collectively,
the Company, its affiliated companies, and each of their respective officers,
directors, employees, shareholders, representatives, parent companies,
subsidiaries, predecessors, successors, assigns, attorneys and all persons
acting by, through or in concert with them (hereinafter "Trimeris"), of and from
any and all charges, claims, complaints, demands, liabilities, causes of action,
losses, costs or expenses of any kind whatsoever (including related attorneys'
fees and costs), known or unknown, suspected or unsuspected, that Employee may
now have or has ever had against Trimeris by reason of any act, omission,
transaction, or event occurring up to and including the date of the signing of
this Agreement.
This waiver, release and discharge includes without limitation,
claims related to any wrongful or unlawful discharge, discipline
or retaliation, any contract of employment, whether express or
implied, any promotions or demotions, compensation including
commissions, short term or long term incentives, the Company's
benefit plan(s) and the management thereof, defamation, slander,
libel, invasion of privacy, misrepresentation, fraud, infliction
of emotional distress, stress, breach of any covenant of good
faith and fair dealing, and any other claims relating to the
Employee's employment with the Company and the termination
thereof. This waiver, release and discharge further applies but
is not limited to any claims based on Title VII of the Civil
Rights Act of 1964, the Post Civil War Civil Rights Act (41
U.S.C. ss. 1981 - 88), the Civil Rights Act of 1991, the Equal
Pay Act, the Age Discrimination in Employment Act, the Older
Workers' Benefit Protection Act, the Rehabilitation Act of 1973,
the Americans with Disabilities Act, the Vietnam Era Veterans'
Readjustment Act, the Fair Labor Standards Act, the Workers
Adjustment and Retraining Notification Act, Executive Order
11246, the Employee Retirement Income Security Act of 1974, the
Family and Medical Leave Act (all as they may be amended), and
any other applicable federal, state or local laws, ordinances and
regulations including those relating to discrimination to the
extent permitted by law. Employee expressly waives all claims,
including those which he does not know or suspect to exist in his
favor as of the date of this Agreement against Trimeris. As used
herein, the parties understand the word "claims" to include all
actions, claims, and grievances, whether actual or potential,
known or unknown, and specifically but not exclusively including
all claims against Trimeris of the type referenced in this
Section 7(a) or otherwise arising from Employee's employment with
the Company, the termination thereof or any other conduct or
negotiations occurring on or prior to the date Employee signs
this Agreement. All such claims are forever barred by this
Agreement whether they arise in contract or tort or under a
statute or any other law. The final release of all claims by
Employee against Trimeris constitutes a material part of the
consideration flowing from
4
<PAGE>
Employee to Trimeris under this Agreement, and each of the
individuals and entities included within the term "Trimeris" is
an intended beneficiary of this consideration.
RELEASE OF CLAIMS BY THE COMPANY. In consideration of the mutual promises
herein, the Company, on behalf of itself, its affiliated companies, and each of
their respective officers, directors, employees, shareholders, representatives,
parent companies, subsidiaries, predecessors, successors, assigns, attorneys and
all persons acting by, through or in concert with them, hereby irrevocably and
unconditionally releases and forever discharges Johnson, his heirs, agents,
personal representatives and assigns, of and from any and all charges, claims,
complaints, demands, liabilities, causes of action, losses, costs or expenses of
any kind whatsoever (including related attorneys' fees and costs), known or
unknown, suspected or unsuspected, that the Company may now have or has ever had
against Johnson by reason of any act, omission, transaction, or event occurring
up to and including the date of the signing of this Agreement (the "Company
Claims"), except for Excepted Company Claims as defined below. For purposes of
this Section 7(b), "Excepted Company Claims" means, and the waiver provisions of
this Section 7(b) shall not apply to, (1) charges, claims, complaints, demands,
liabilities, causes of action, losses, costs or expenses based on or in
connection with any action taken by Johnson constituting fraud, or (2) charges,
claims, complaints, demands, liabilities, causes of action, losses, costs or
expenses based on or in connection with any action taken by Johnson, if any,
without the approval of the Company's Board of Directors to the extent approval
of the action would have been required under the Company's Bylaws, if:
Such action was material to the business or the financial position of the
Company;
Such action was not or has not been otherwise ratified at any time by the
Company's Board of Directors;
Such action was deliberately taken by Johnson with the knowledge that prior
approval of the Board of Directors was required for such action; and
Such action is specifically set forth in writing by the Board of Directors of
the Company and written notice of the details of the same is delivered to
Johnson within six (6) months after the date of this Agreement, at the following
address: 53524 Bickett, Chapel Hill, NC 27514, with a copy to: Robert H.
Merritt, Jr., Merritt, Wooten & Janvier, P.A., P.O. Box 3007, Raleigh, NC 27602.
Excepted Company Claims shall not include any charges, claims,
complaints, demands, liabilities, causes of action, losses, costs
or expenses about which any current member of the Company's
Executive Management, as defined below, or Board of Directors has
or had actual knowledge as of the date of this Agreement. Except
as set forth in Section 7(b)(2)(iv) above, nothing herein is
intended to or shall toll, extend, waive, amend or otherwise
affect any statute or period of limitation or repose with respect
to any Excepted Company Claims. For purposes of this Section
7(b), the term "Executive Management" shall include the following
officers of the Company: Chief Executive Officer, Chief
Scientific Officer, President, Chief Operating Officer, Chief
Financial Officer, Secretary, and Assistant Secretary.
5
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Except as specifically provided above with respect to the
Excepted Company Claims, this waiver, release and discharge
includes without limitation claims related to any act as an
officer, director or employee of the Company and/or the
management thereof, including defamation, slander, libel,
invasion of privacy, misrepresentation, infliction of emotional
distress, stress, breach of any covenant of good faith and fair
dealing, and any other claims relating to Johnson's employment as
an officer or director of the Company and the termination
thereof. The Company expressly waives all Company Claims (other
than the Excepted Company Claims), including those which it does
not know or suspect to exist in its favor as of the date of this
Agreement. As used herein, the parties understand the word
"claims" to include all actions, claims, and grievances, whether
actual or potential, known or unknown, and specifically but not
exclusively including all claims against Johnson of the type
referenced in this Section 7(b), or otherwise arising from
Johnson's employment with the Company, the termination thereof or
any other conduct or negotiations occurring on or prior to the
date Johnson signs this Agreement, provided that the waiver,
release and discharge of "claims" under this Section 7(b) shall
not apply to the Excepted Company Claims as set forth herein. All
Company Claims, except for the Excepted Company Claims, are
forever barred by this Agreement whether they arise in contract
or tort or under a statute or any other law. The final release of
claims by the Company against Johnson constitutes a material part
of the consideration flowing from the Company to Johnson under
this Agreement, and each of the individuals and entities
referenced in this Section 7(b) are intended beneficiaries of
this consideration.
CONFIDENTIAL TERMS. Employee and the Company agree that each will keep the
contents of this Agreement (including its existence and the terms and provisions
thereof) and the negotiations leading to it completely confidential, that
neither will hereafter publish or disclose any information concerning such
matters to anyone, and that each shall take every reasonable precaution to
prevent the direct or indirect disclosure of such information to third parties,
provided that the foregoing provisions shall not be construed to prevent
Employee from disclosing such matters to his family, accountant and/or any
attorney consulted by him or to prevent the Company from disclosing such matters
to its accountants and attorneys, and provided further that Employee may also
make such disclosures as are finally compelled by law provided Employee gives
the Company immediate notice of such legal process in order that the Company
shall have the opportunity to object to the disclosure of such information.
Notwithstanding the foregoing, the Company shall have the right to make any and
all disclosures as it determines to be necessary to comply with any judicial
order or the requirements of any law (including, without limitation, any
requirement to disclose the terms of this Agreement or to include this Agreement
in any filing with the Securities and Exchange Commission), and any such
disclosures shall not have the effect of terminating or waiving the continuing
confidentiality obligations of the parties hereunder.
PRESERVATION OF COMPANY CONFIDENTIAL INFORMATION. Employee shall not use for
himself, publish or disclose to any third party any confidential or proprietary
information concerning Trimeris or its business which was acquired or learned
during the course of Employee's employment with the Company. By way of example
and not limitation, such information includes management organization, salary
structures, financial results and conditions, product
6
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quality, product pricing, transfer pricing, production capacity, customer and
vendor lists, pricing, contacts and preferences, customer product
configurations, marketing and sales strategies and plans, inventions, research
and product development, trade secrets, patents, severance agreements with other
employees, MIS and telecommunications codes, and other business activities,
strategies and plans. Employee acknowledges, ratifies and reaffirms without
limitation all of the terms and conditions stated in that certain Proprietary
Information and Inventions Agreement between Employee and the Company and dated
January 19, 1995 (the "Inventions Agreement"), including but not limited to the
Statement Regarding Proprietary Information and Inventions Agreement executed by
Employee and dated January 10, 1995.
AGREEMENT NOT TO COMPETE. Johnson agrees that for a period of two (2) years
following the Termination Date, Johnson shall not, directly or indirectly,
acting alone or as a member of a partnership or as an officer, director,
stockholder, employee, consultant or representative of any company or other
business entity, (i) engage in any business activity anywhere in the world
involving viral membrane fusion or peptide manufacturing, or (ii) request any
present or future customers or suppliers of the Company to curtail or cancel
their business with the Company. Johnson further agrees that for a period of two
(2) years following the Termination Date, Johnson will not induce or attempt to
induce, directly or indirectly, any employees or consultants of the Company to
terminate his or her employment or association with the Company or any
successors or affiliates. The foregoing shall apply during the aforesaid two (2)
year period whether Johnson is contacted directly by such employee or consultant
or otherwise.
EMPLOYEE ACKNOWLEDGEMENTS. Employee understands and agrees that Employee:
Has carefully read and fully understands all of the provisions of this
Agreement;
Has been offered a full twenty-one (21) days from receipt of this Agreement to
consider its terms, and having had adequate opportunity to consider the terms of
the Agreement and consult with advisors of his choice, has elected to waive the
21 day period and sign the Agreement as of the date hereof;
Is, through this Agreement, releasing Trimeris from any and all claims Employee
may have against Trimeris, including but not limited to claims under the Age
Discrimination in Employment Act, as amended;
Knowingly and voluntarily agrees to all of the terms set forth in this
Agreement;
Knowingly and voluntarily intends to be legally bound by the same;
Was advised and is hereby advised in writing to consider the terms of this
Agreement and to consult with an attorney of Employee's choice prior to
executing this Agreement; and
Has a full seven (7) days following his execution of this Agreement to revoke
this Agreement and has been and hereby is advised in writing that this Agreement
shall not become effective or enforceable until the revocation period has
expired. Revocation must occur by hand delivery of a letter of revocation to
Mathew A. Megaro at Trimeris, Inc., 4727 University Drive, Durham, NC 27707, on
or before the end of the business day on April 20th, 1999.
7
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Will not retain any materials, supplies, equipment, originals or copies of any
Trimeris or other business records, documents, or data.
INJUNCTIVE RELIEF. Each of the parties acknowledges and recognizes that a
violation of this Agreement and its covenants will cause irreparable damage to
the other party and that the other party will have no adequate remedy at law for
such violation. Accordingly, each of the parties agrees that the other party
will be entitled, as a matter of right, to an injunction from any court of
competent jurisdiction restraining any further violation of the Agreement. This
right to injunctive relief will be cumulative and in addition to whatever
remedies the parties may otherwise have at law.
LEGAL PROCEEDINGS; AGREEMENT AS A DEFENSE. This Agreement may be plead as a full
and complete defense to, and may be used as the basis for an injunction against,
any action, suit, or other proceeding which may be instituted, prosecuted or
attempted in breach of this Agreement, except for an action based on a breach of
this Agreement. If, contrary to this Agreement, Johnson files a lawsuit or other
legal proceeding against Trimeris, the Company shall have the option, in its
sole discretion, either to raise this Agreement as a defense, or to rescind this
Agreement in which case Johnson shall refund to the Company all amounts paid to
him pursuant to Section 2 hereunder and no further payments shall be due to
Johnson under Section 2. If the Company files a lawsuit or other legal
proceeding against Johnson with respect to a Company Claim other than an
Excepted Company Claim, Johnson shall have the option, in its sole discretion,
either to raise this Agreement as a defense, or to rescind this Agreement in
which case no further benefits shall be due to Johnson under Section 2.
Notwithstanding the foregoing, nothing in this Agreement shall be construed to
prevent either party from pursuing claims against the other for breach of this
Agreement and from recovering appropriate legal or equitable relief in
connection with such claims.
GOVERNING LAW. This Agreement shall be governed by the laws of the State of
North Carolina. This Agreement shall be interpreted in accordance with the plain
meaning of its terms and not strictly for or against any of the parties hereto.
NO OTHER BENEFITS. Johnson acknowledges that, except as set forth herein, he is
not entitled to any compensation, monies or benefits from the Company, including
but not limited to compensation for accrued vacation, bonuses, commissions,
expenses or other forms of compensation or benefits. Except as set forth herein,
Johnson hereby waives all rights to any payments other than for outstanding bona
fide business expenses incurred by Johnson on behalf of the Company prior to
March 12, 1999.
ENTIRE AGREEMENT. This Agreement represents and contains the entire agreement
and understanding between Johnson and the Company with respect to its subject
matter, and it supersedes any and all prior oral and written agreements and
understandings, and no representation, warranty, condition, understanding, or
agreement of any kind with respect to the subject matter of this Agreement will
be relied upon by Johnson or the Company unless specifically incorporated in
this Agreement; provided, however, that the Option Agreement, Stock Restriction
Agreements, the Notes, and the Inventions Agreement, will each remain in full
force and effect, except to the extent expressly modified or amended hereunder.
Further, this
8
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Agreement is intended to be a binding contract between the parties and shall not
be modified, except by writing signed by both parties.
TAX WITHHOLDING. Certain payments made under this Agreement may be subject to
required income and other tax withholdings. Johnson will be responsible for any
taxes which may be due as a result of any payments made by the Company or
benefits otherwise provided as described above, and Johnson agrees to indemnify
and hold the Company harmless from any claim and expense that the Company may
incur as a result of any failure by Johnson to pay any such taxes.
NO ADMISSIONS. Johnson and the Company acknowledge and agree that the payments,
releases and other consideration described in this Agreement are offered and
exchanged in good faith and will not, for any purpose, be considered as
admissions of liability on the part of either party, which liability is
expressly denied, and no past or present wrongdoing on the part of either party
is implied by such payments, releases or other consideration under the terms of
this Agreement.
SEVERABILITY. In the event any provision of this Agreement is determined by a
court or other tribunal to be unenforceable for any reason, the remaining
provisions hereof shall remain in full force and effect and the unenforceable
provision(s) shall be interpreted and rewritten to give effect to the parties'
economic intentions.
ASSIGNMENT OF CLAIMS. Employee warrants to the Company that he has not assigned
any claim or cause of action released herein. The Company warrants to the
Employee that it has not assigned any claim or cause of action released herein.
COUNTERPARTS. This document may be executed in multiple counterparts, each of
which shall be considered an original.
VOLUNTARY AGREEMENT. EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS BEEN ADVISED
THAT THIS AGREEMENT IS A BINDING LEGAL DOCUMENT. EMPLOYEE FURTHER AGREES THAT HE
HAS HAD ADEQUATE TIME AND A REASONABLE OPPORTUNITY TO REVIEW THE PROVISIONS OF
THIS AGREEMENT, HAS BEEN ADVISED TO SEEK LEGAL ADVICE REGARDING ALL ITS ASPECTS,
AND THAT IN EXECUTING THIS AGREEMENT EMPLOYEE HAS ACTED VOLUNTARILY AND HAS NOT
RELIED UPON ANY REPRESENTATION MADE BY THE COMPANY OR ANY OF ITS EMPLOYEES OR
REPRESENTATIVES REGARDING THIS AGREEMENT'S SUBJECT MATTER AND/OR EFFECT.
EMPLOYEE HAS READ AND FULLY UNDERSTANDS THIS AGREEMENT AND VOLUNTARILY AGREES TO
ITS TERMS.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and Johnson has executed this Agreement, all as
of the 13th day of April, 1999.
Employee: Trimeris, Inc.
M. Ross Johnson, Ph.D.
/s/ M. Ross Johnson
- ----------------------- By: /s/ Dani Bolognesi
Title: ------------------------
9
EXHIBIT 10.2
CHIEF EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 21 day of April,
1999, by and between TRIMERIS, INC., a Delaware corporation (the "Company"), and
DANI P. BOLOGNESI ("Executive").
W I T N E S S E T H:
WHEREAS, Executive and the Company deem it to be in their respective
best interests to enter into an agreement providing for the Company's employment
of Executive pursuant to the terms herein stated;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, it is hereby agreed as follows:
1. Effective Date. This Agreement shall be effective as of the
12th day of March, 1999, which date shall be referred to herein as the
"Effective Date".
2. Position and Duties.
(a) The Company hereby employs Executive as its Chief Executive
and Scientific Officer commencing as of the Effective Date for the "Term of
Employment" (as herein defined below). In this capacity, Executive shall devote
his best efforts and his full business time and attention to the performance of
the services customarily incident to such offices and position and to such other
services of a senior executive nature as may be reasonably requested by the
Board of Directors (the "Board") of the Company which may include services for
one or more subsidiaries or affiliates of the Company. Executive shall in his
capacity as an employee and officer of the Company be responsible to and obey
the reasonable and lawful directives of the Board.
(b) Executive shall devote his full time and attention to such
duties, except for sick leave, reasonable vacations, and excused leaves of
absences as more particularly provided herein. Executive shall use his best
efforts during the Term of Employment to protect, encourage, and promote the
interests of the Company.
(c) Notwithstanding paragraph 2(b), and with Company consent,
Executive shall be entitled to sit as a director on one (1) other board of
directors so long as doing so presents no conflict of interest with Executive's
performance of his duties or his positions at the Company.
3. Compensation.
(a) Base Salary. The Company shall pay to Executive during the
Term of Employment a minimum salary at the rate of Two Hundred Eighty Five
Thousand dollars ($285,000.00) per year and agrees that such salary shall be
reviewed at least annually. Such salary shall be subject to discretionary annual
increases as determined by the Board of Directors.
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Such salary shall be payable monthly and in accordance with the Company's normal
payroll procedures. (Executive's annual salary, as set forth above or as it may
be increased from time to time as set forth herein, shall be referred to
hereinafter as "Base Salary"). At no time during the Term of Employment shall
Executive's Base Salary be decreased from the amount of Base Salary then in
effect.
(b) Reimbursement of Lost Income. In consideration of Executive's
(i) forgoing the supplemental income and career enhancement opportunities
normally attendant to a distinguished professorship such as he currently enjoys
at Duke University; and (ii) waiving his right to serve as an outside director
on any corporate board not approved by Company; and (iii) resigning his current
outside consultantships; and (iv) waiving his right, while employed by Company,
to perform any outside consulting work, Company agrees to award Executive in
1999, upon receipt of confirmation of all relevant resignations, a one time
payment of Forty Thousand Dollars ($40,000.00).
(c) Performance Bonus. In addition to the compensation otherwise
payable to Executive pursuant to this Agreement, Executive shall be eligible to
receive an annual bonus up to fifty percent (50%) of his Base Salary ("Bonus")
pursuant to a performance bonus plan (the "Bonus Plan") which may be established
by the Company for its senior executive officers and which shall provide for
bonus compensation to be payable based upon the financial and other performance
of the Company and the Executive.
(d) Long Term Incentive/Stock Options. Upon execution of this
Agreement, the Company shall recommend that the Compensation Committee of the
Board grant Executive options to purchase; (i) two hundred thousand (200,000)
shares of the Company's common stock at a price equal to the fair market value
of the common stock on the date of grant, vesting monthly over a period of four
(4) years beginning March 12, 1999. In addition, during 1999 an additional grant
of options to purchase a minimum of fifty thousand (50,000) shares of the
Company's common stock at a price equal to the fair market value of the common
stock on the date of grant, vesting monthly over a period of four years
beginning on the date of grant will be made to Executive. All options will be
subject to the terms and conditions of the Trimeris, Inc. Amended and Restated
Stock Incentive Plan. In the event of any termination of Executive's employment,
no additional options shall vest but stock options previously vested shall not
be forfeited by Executive.
4. Benefits During the Term of Employment:
(a) Executive shall be eligible to participate in any life,
health and long-term disability insurance programs, pension and retirement
programs, stock option and other incentive compensation programs, and other
fringe benefit programs made available to senior executive employees of the
Company from time to time, and Executive shall be entitled to receive such other
fringe benefits as may be granted to him from time to time by the Company's
Board of Directors.
(b) Executive shall be allowed four (4) weeks of vacation with
pay and leaves of absence with pay on the same basis as other senior executive
employees of the Company.
(c) The Company shall reimburse Executive for reasonable business
expenses incurred in performing Executive's duties and promoting the business of
the Company, including, but not limited to, reasonable entertainment expenses,
travel and lodging expenses, following presentation of documentation in
accordance with the Company's business expense reimbursement policies.
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(d) Executive shall be added as an additional named insured under
all liability insurance policies now in force or hereafter obtained covering any
officer or director of the Company in his or her capacity as an officer or
director. Company shall indemnify Executive in his capacity as an officer or
director and hold him harmless from any cost, expense or liability arising out
of or relating to any acts or decisions made by him on behalf of or in the
course of performing services for the Company (to the maximum extent provided by
the Company's Bylaws and applicable law).
5. Term; Termination of Employment. As used herein, the phrase "Term of
Employment" shall mean the period commencing on the Effective Date and ending on
the same date two (2) years later; provided, however, that as of the expiration
date of each of (i) the initial Term of Employment and (ii) if applicable, any
Renewal Period (as defined below), the Term of Employment shall automatically be
extended for a two (2) year period (each a "Renewal Period") unless either the
Company or Executive provides Two (2) months' notice to the contrary.
Notwithstanding the foregoing, the Term of Employment shall expire on the first
to occur of the following:
(a) Termination by the Company. Notwithstanding anything to the
contrary in this Agreement, whether express or implied, the Company may, at any
time, terminate Executive's employment for any reason other than Cause, Death or
Disability by giving Executive at least 60 days' prior written notice of the
effective date of termination. Company may terminate Employee's employment for
Cause, Death or Disability without prior notice, except that Executive may not
be terminated for substantial and willful failure to perform specific and lawful
directives of the Board, as reasonably determined by the Board unless and until
the Board has given him reasonable written notice of its intended actions and
specifically describing the alleged events, activities or omissions giving rise
thereto and with respect to those events, activities or omissions for which a
cure is possible, a reasonable opportunity to cure such breach; and provided
further, however, that for purposes of determining whether Cause is present, no
act or failure to act by Executive shall be considered "willful" if done or
omitted to be done by Executive in good faith and in the reasonable belief that
such act or omission was in the best interest of the Company and/or required by
applicable law. The terms "Cause" and "Disability" shall have the meaning given
them under the Separation and Severance Agreement.
(b) Termination by Executive. In the event that Executive's employment
with the Company is voluntarily terminated by Executive, the Company shall have
no further obligation hereunder from and after the effective date of termination
except as may be provided in the Separation and Severance Agreement and the
Company shall have all other rights and remedies available under this Agreement
or any other agreement and at law or in equity. Executive shall give the Company
at least 30 days' advance written notice of his intention to terminate his
employment hereunder.
(c) Salary and Benefits Upon Termination. In the event of termination of
employment, Executive shall receive all regular Base Salary due up to the date
of termination, and if it has not previously been paid to Executive, Executive
shall be paid any Bonus to which Executive had become entitled under the Bonus
Plan prior to the effective date of such termination and the Company shall have
no further obligation hereunder from and after the effective date of termination
except as may be provided in the Separation and Severance Agreement and the
Company shall have all other rights and remedies available under this Agreement
or any other agreement and at law or in equity. Executive's stock options with
respect to the Company's stock shall be subject to the terms of the Trimeris,
Inc. Amended and Restated Stock Incentive
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Plan or any successor plan, which is a separate agreement. In the event of
termination, Executive's rights to benefits other than severance shall be
governed by the terms of the Company's retirement, insurance and other benefit
plans and programs then in effect in accordance with the terms of such plans.
Executive's right to severance benefits, if any, shall be governed by the terms
of the Separation and Severance Agreement attached hereto as Exhibit B (the
"Severance Agreement"); provided, however, the Executive, as the Chief
Executive, shall be entitled to de novo review of any material violation of this
Severance Agreement, or denial of any claim, or eligibility for any claim
thereunder exclusively as provided in the Resolution of Dispute provisions of
section 12 of this Employment Agreement. The Severance Agreement is incorporated
in this Agreement by reference and is hereby made a part of this Agreement as if
fully set forth herein.
6. Confidential Information, Non-Solicitation and Non-Competition.
(a) During the Term of Employment and at all times thereafter,
Executive shall not, except as may be required to perform his duties hereunder
or as required by applicable law, disclose to others or use, whether directly or
indirectly, any Confidential Information regarding the Company. "Confidential
Information" shall mean information about the Company, its subsidiaries and
affiliates, and their respective clients and customers that is not available to
the general public and that was learned by Executive in the course of his
employment by the Company, including (without limitation) (i) any proprietary
knowledge, trade secrets, ideas, processes, formulas, cell lines, sequences,
developments, designs, assays and techniques, data, formulae, and client and
customer lists and all papers, resumes, records (including computer records),
(ii) information regarding plans for research, development, new products,
marketing and selling, business plans, budgets and unpublished financial
statements, licenses, prices and costs, suppliers and customers (iii)
information regarding the skills and compensation of other employees of Company
and (iv) the documents containing such Confidential Information. Executive
acknowledges that such Confidential Information is specialized, unique in nature
and of great value to the Company, and that such information gives the Company a
competitive advantage. Upon the termination of his employment for any reason
whatsoever, Executive shall promptly deliver to the Company all documents,
slides, computer tapes and disks (and all copies thereof) containing any
Confidential Information.
(b) During the Term of Employment and for two (2) years
thereafter, Executive shall not, directly or indirectly in any manner or
capacity (e.g., as an advisor, principal, agent, partner, officer, director,
shareholder, employee, member of any association or otherwise) engage in, work
for, consult, provide advice or assistance or otherwise participate in any
activity which is competitive with the business of the Company which is
worldwide ("Competing Business" or "Competitor"). Executive further agrees that
during such period he will not assist or encourage any other person in carrying
out any activity that would be prohibited by the foregoing provisions of this
Section 6 if such activity were carried out by Executive and, in particular,
Executive agrees that he will not induce any employee of the Company to carry
out any such activity; provided, however, that the "beneficial ownership" by
Executive, either individually or as a member of a "group," as such terms are
used in Rule 13d of the General Rules and Regulations under the Exchange Act, of
not more than five percent (5%) of the voting stock of any publicly held
corporation shall not be a violation of this Agreement. It is further expressly
agreed that the Company will or would suffer irreparable injury if Executive
were to compete with the Company or any subsidiary or affiliate of the Company
in violation of this
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Agreement and that the Company would by reason of such competition be entitled
to injunctive relief in a court of appropriate jurisdiction.
"Competing Business" is defined as the business of the discovery,
development, testing, manufacturing, and/or marketing therapeutic components for
the treatment of human viral diseases based on a viral fusion protein target and
any other business in which the Company may engage or propose to engage during
the term of this Agreement.
(c) During the Term of Employment and for two (2) years
thereafter, Executive shall not, directly or indirectly, influence or attempt to
influence customers or suppliers of the Company or any of its subsidiaries or
affiliates, to divert their business to any Competitor of the Company.
(d) Executive recognizes that he will possess confidential
information about other employees of the Company relating to their education,
experience, skills, abilities, compensation and benefits, and interpersonal
relationships with customers of the Company. Executive recognizes that the
information he will possess about these other employees is not generally known,
is of substantial value to the Company in developing its business and in
securing and retaining customers, and will be acquired by him because of his
business position with the Company. Executive agrees that, during the Term of
Employment, and for a period of two (2) years thereafter, he will not, directly
or indirectly, solicit or recruit any employee of the Company for the purpose of
being employed by him or by any Competitor of the Company on whose behalf he is
acting as an agent, representative or employee and that he will not at any time
convey any such confidential information or trade secrets about other employees
of the Company to any other person.
(e) Executive agrees and understands that Company has received,
and in the future will receive, from third parties confidential or proprietary
information ("Third Party Information") subject to a duty on Company's part to
maintain the confidentiality of such information and to use it only for certain
limited purposes. During the term of Executive's employment and thereafter,
Executive will hold Third Party Information in the strictest of confidence and
will not disclose (to anyone other than Company personnel who need to know such
information in connection with their work for Company), or use, except in
connection with any work for Company, Third Party Information unless expressly
and specifically authorized to do so prior to any proposed disclosure by an
officer of Company.
(f) Inventions
(i) Assignment. Executive hereby assigns to Company all
his right, title and interest in and to any and all Inventions (and all patent
rights, copyright, trade secret rights and all other rights throughout the world
in connection therewith, whether or not patentable or registerable under
copyright, trademark or similar statutes), together with all goodwill associated
therewith, (all of the foregoing being hereinafter referred to collectively as
"Proprietary Rights"), made, conceived, reduced to practice or learned by
Executive, either alone or jointly with others, during his period of employment
with Company. Inventions assigned under this Section 3 are hereinafter referred
to as "Company Inventions". Executive agrees to assist Company in every
necessary way to obtain or enforce any patents, copyrights or any proprietary
rights relating to Company Inventions and to execute all documents and
applications necessary to vest in Company's full legal title to such Company
Inventions, and Executive agrees to continue this assistance after the
termination of his employment with Company. Furthermore, Executive hereby
designates and appoints Company and its officers and agents as his agents and
attorneys-in-fact to execute and file any certificates, applications or
documents and to do all
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other lawful acts reasonably necessary in the opinion of Company to protect
Company's rights in Company Inventions. Executive expressly acknowledges that
the foregoing power of attorney is coupled with an interest and is therefore
irrevocable and will survive Executive's termination of employment, death or
incompetency.
(ii) Government. Executive also will assign to or as
directed by Company all his right, title and interest in and to any and all
Inventions, full title to which may required to be in the United States by a
contract between Company and the United States or any of its agencies.
(iii) Independent Inventions. Notwithstanding anything in
this Agreement to the contrary, Executive's obligation to assign or offer to
assign Executive's rights in an Invention to Company will not extend or apply to
an Invention that Executive has developed entirely on Executive's own time
without using Company's equipment, supplies, facilities or trade secret
information unless such Invention: (a) relates to Company's business or actual
demonstrably anticipated research or development or (b) results from any work
performed by Executive for Company. Executive will bear the burden of proof in
establishing that the Invention qualifies for exclusion under this Subsection
6f(iii).
(iv) Assignment of Company Inventions: Executive will
assist Company in every proper way to obtain and from time to time enforce
United States and foreign Proprietary Rights related to Company Inventions in
any and all countries. Executive's obligation to assist Company with respect to
Proprietary Rights relating to such Company Inventions will continue beyond the
termination of Executive's employment, but Company will compensate Executive at
a reasonable rate after Executive's termination for the time actually spent by
executive at Company's request on such assistance.
Executive hereby waives and quitclaims to Company all claims, of any
nature whatsoever, which Executive may or may hereafter have for infringement,
including past infringements, of any Proprietary Rights assigned hereunder to
Company.
(v) Obligation to Keep Company Informed: During the period
of Executive's employment, Executive will promptly disclose to Company fully and
in writing, and will hold in trust for the sole right and benefit of Company,
any and all Inventions. In addition, after termination of Executive's
employment, Executive will disclose all patent applications filed by Executive
within a year after termination of such employment.
(vi) Prior Inventions: Inventions, if any, patented or
unpatented, which Executive made prior to Executive's commencement of employment
with Company are excluded from the scope of this Agreement. To preclude any
possible uncertainty, Executive has set forth on the attached Exhibit A, a
complete list of all Inventions that Executive has, alone or jointly with
others, conceived, developed or reduced to practice or caused to be conceived,
developed or reduced to practice prior to the commencement of Executive's
employment with Company, that Executive considers to be Executive's property or
the property of the third parties, and Executive wishes to have excluded from
the scope of this Agreement. If disclosure of any such Invention on Exhibit A
would cause Executive to violate any prior confidentiality agreement with
another party, Executive understands that he is not to list such Inventions in
Exhibit A but that I am to inform Company in writing that all such Inventions
have not been listed for that reason.
(g) If it is determined by a court of competent
jurisdiction in any state that any restriction in this Section 6 is excessive in
duration or scope or is unreasonable or unenforceable under the laws of that
state, it is the intention of the parties that such restriction may be modified
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or amended by the court to render it enforceable to the maximum extent permitted
by the law of that state.
7. Return of Company Documents: In the event Executive leaves the
employment of Company for whatever reason, Executive agrees to deliver to
Company any and all laboratory notebooks, drawings, notes, memoranda,
specifications, devices, software, databases, formulas, molecules, cells and
documents, together with all copies thereof, and any other material containing
or disclosing any Company Inventions, Third Party Information or Confidential
Information of Company. Executive further agrees that any property situated on
Company's premises and owned by Company including disks and other storage media,
filing cabinets or other work areas, is subject to inspection by Company
personnel at any time, with or without notice, for the purpose of protecting
Company's rights and interests in its intellectual property.
8. Taxes. All payments to be made to Executive under this Agreement will
be subject to any applicable withholding of federal, state and local income and
employment taxes.
9. Miscellaneous. This Agreement shall also be subject to the following
miscellaneous considerations:
(a) Executive and the Company each represent and warrant to the
other that he or it has the authorization, power and right to deliver, execute,
and fully perform his or its obligations under this Agreement in accordance with
its terms.
(b) This Agreement (including attached Exhibits A and B) contains
a complete statement of all the arrangements between the parties with respect to
Executive's employment by the Company, this Agreement supersedes all prior and
existing negotiations and agreements between the parties concerning Executive's
employment, and this Agreement can only be changed or modified pursuant to a
written instrument duly executed by each of the parties hereto.
(c) If any provision of this Agreement or any portion thereof is
declared invalid, illegal, or incapable of being enforced by any court of
competent jurisdiction, the remainder of such provisions and all of the
remaining provisions of this Agreement shall continue in full force and effect.
(d) This Agreement shall be governed by and construed in
accordance with the internal, domestic laws of the State of North Carolina.
(e) The Company may assign this Agreement to any direct or
indirect subsidiary or parent of the Company or joint venture in which the
Company has an interest, or any successor (whether by merger, consolidation,
purchase or otherwise) to all or substantially all of the stock, assets or
business of the Company and this Agreement shall be binding upon and inure to
the benefit of such successors and assigns. Except as expressly provided herein,
Executive may not sell, transfer, assign, or pledge any of his rights or
interests pursuant to this Agreement.
(f) Any rights of Executive hereunder shall be in addition to any
rights Executive may otherwise have under benefit plans, agreements, or
arrangements of the Company to which he is a party or in which he is a
participant, including, but not limited to, any Company-sponsored employee
benefit plans. Provisions of this Agreement shall not in any way abrogate
Executive's rights under such other plans, agreements, or arrangements.
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(g) For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the named Executive at the address set forth below under his
signature; provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
(h) Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
(i) Failure to insist upon strict compliance with any of the
terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of, or
failure to insist upon strict compliance with, any right or power hereunder at
any one or more times be deemed a waiver or relinquishment of such right or
power at any other time or times.
(j) This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Legal and Equitable Remedies: Because the Executive's services are
personal and unique, and because the Executive will have access to and become
acquainted with Proprietary and Confidential Information of Company, Company
will have the right to enforce this Agreement and any of its provisions by
injunction, specific performance or other equitable relief in any court of
competent jurisdiction, without prejudice to any other rights and remedies that
Company may have for a breach of this Agreement.
11. Survival of Provisions: The executory provisions of this Agreement
will survive the termination of this Agreement or the assignment of this
Agreement by Company to any successor in interest or other assignee.
12. Resolution of Disputes. Except as otherwise specifically provided in
section 10 of the Chief Executive Separation and Severance Agreement attached
hereto, any dispute or controversy arising under or in connection with this
Agreement and Severance Agreement shall be settled exclusively by arbitration
administered by the American Arbitration Association and conducted before a
panel of three arbitrators in Raleigh, Wake County, North Carolina, all in
accordance with its Commercial Arbitration rules then in effect. The Company and
Executive hereby agree that the arbitrator will not have the authority to award
punitive damages, damages for emotional distress or any other damages that are
not contractual in nature. Judgment shall be final and binding upon the parties
and judgement may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that (a) the Company shall be entitled to seek
a restraining order or injunction in any court of competent jurisdiction to
prevent any violation or the continuation thereof, of the provisions of Section
6 of this Agreement, and Executive consents that such restraining order or
injunction may be granted without the necessity of the Company's posting any
bond except to the extent otherwise required by applicable law; and (b)
notwithstanding anything in the Severance Agreement to the contrary, the
Executive, as Chief Executive, shall be entitled by arbitration to seek de novo
review of any material violation of the
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Severance Agreement in accordance with paragraph 10 of such Severance Agreement
or any denial of a claim or obligation to pay a claim thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EXECUTIVE COMPANY
TRIMERIS, INC.
BY: /s/ Dani Bolognesi BY: /s/ Jesse I. Treu
------------------------- ----------------------------
TITLE: CHIEF EXECUTIVE OFFICER NAME: Jesse I. Treu
--------------------------
TITLE: Chairman of the Board
--------------------------
ADDRESS:_____________________ ADDRESS:_______________________
_____________________ _______________________
_____________________ _______________________
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EXHIBIT A
TO
EMPLOYMENT AGREEMENT
1. The following is a complete list of all inventions or improvements relevant
to the subject matter of my employment by Company, Inc. that have been made or
conceived or first reduced to practice by me alone or jointly with others prior
to my employment by Company, Inc. and therefore should be excluded from the
coverage of this Agreement:
____ Additional sheets attached.
____ No pertinent inventions or improvements.
____ Due to confidentiality agreements with one or more prior employers, I
cannot disclose certain inventions that would otherwise be included on the
above-described list.
2. I propose to bring to my employment the following devices, materials and
documents of a former employer or other person to whom I have an obligation of
confidentiality and that are not generally available to the public. These
materials and documents may be used in my employment pursuant to the express
written authorization of my former employer or such other person (a copy of
which is attached hereto). If no such authorization is in place, I will consult
with Trimeris, Inc. management to determine what steps should be taken to
protect the interests of all parties concerned.:
____ Additional sheets attached.
____ No material.
Date:
EXECUTIVE:
______________________________
__________________
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EXHIBIT B TO CHIEF EXECUTIVE EMPLOYMENT AGREEMENT
CHIEF EXECUTIVE SEPARATION AND SEVERANCE
AGREEMENT
THIS SEPARATION AND SEVERANCE AGREEMENT (the "Severance Agreement") is
made a part of that Employment Agreement (the "Employment Agreement"), entered
into and effective as of the _______ day of ________________, 1999, by and
between DANI P. BOLOGNESI, an individual resident of the State of North Carolina
("Executive"), and TRIMERIS, INC., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive and to provide for
severance benefits under the terms and conditions set forth herein; and
WHEREAS, this Severance Agreement constitutes part of the Employment
Agreement and is incorporated therein by reference and fully set forth therein.
COVENANTS
NOW, THEREFORE, in consideration of the premises, mutual promises
contained herein, and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Certain Definitions. The following terms shall have the meanings set
forth herein.
(a) "Administrator" shall mean the Company. The Company shall also be
the "named fiduciary" hereunder. The Company shall have the
authority to designate one or more of its officers, employees or
directors to act on its behalf in administering this Severance
Agreement.
(b) "Base Salary" shall mean Executive's regular pay at the time of
termination. Base Salary shall not include bonus or incentive
plans, overtime pay, relocation allowances or the value of any
other benefits for which Executive may be eligible.
(c) "Good Reason" shall mean, without the express written consent of
Executive, the occurrence of any of the following events unless
such events are fully corrected within 30 days following written
notification by Executive to the Company that he intends to
terminate his employment hereunder for one of the reasons set
forth below:
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(i) a material breach by the Company of any provision of
this Agreement, including, but not limited to, the assignment to
Executive of any duties inconsistent with Executive's position in
the Company or a material adverse alteration in the nature or
status of Executive's responsibilities;
(ii) the Company's requiring the Executive to be based
anywhere other than the metropolitan area where he currently
works and resides; and
(iii) the occurrence of a "Change in Control" as defined
below.
For purposes of this Agreement a "Change in Control" shall mean an event
as a result of which: (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the voting stock of
the Company; (ii) the Company consolidates with, or merges with or into another
corporation or sells, assigns, conveys, transfers, leases or otherwise disposes
of all or substantially all of its assets to any person, or any corporation
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding voting stock of the Company
is changed into or exchanged for cash, securities or other property, other than
any such transaction where (A) the outstanding voting stock of the Company is
changed into or exchanged for (i) voting stock of the surviving or transferee
corporation or (ii) cash, securities (whether or not including voting stock) or
other property, and (B) the holders of the voting stock of the Company
immediately prior to such transaction own, directly or indirectly, not less than
50% of the voting power of the voting stock of the surviving corporation
immediately after such transaction; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of the Company (together with any new directors whose election by such
Board or whose nomination for election by the stockholders of the Company was
approved by a vote of 66-2/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of the Company then in office; or (iv) the Company is
liquidated or dissolved or adopts a plan of liquidation, provided, however, that
a Change in Control shall not include any going private or leveraged buy-out
transaction which is sponsored by Executive or in which Executive acquires an
equity interest materially in excess of his equity interest in the Company
immediately prior to such transaction (each of the events described in (i),
(ii), (iii) or (iv) above, except as provided otherwise by the preceding clause
being referred to herein as a "Change in Control"). In the event of a sale of
the assets or stock of the Company, the Executive shall have the option of
electing to terminate his employment due to a Change in Control and receive such
severance benefits or electing to remain employed under the terms of this
Agreement, but not both. Executive's right to terminate his employment for Good
Cause due to any "Change in Control" must be exercised within sixty (60) days
after receiving written notice or his receiving actual knowledge of such Good
Cause.
(d) Cause shall mean:
(i) fraud, misappropriation, embezzlement, or other act of
material misconduct against the Company or any of its affiliates;
(ii) substantial and willful failure to perform specific
and lawful directives of the Board;
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(iii) willful and knowing violation of any rules or
regulations of any governmental or regulatory body, which is
materially injurious to the financial condition of the Company;
or
(iv) conviction of or plea of guilty or nolo contendere to
a felony;
(v) a material breach of the terms and conditions of this
Agreement: provided, however, that with regard to subparagraphs
(ii) and (v) above, Executive may not be terminated for Cause
unless and until the Board has given him reasonable written
notice of its intended actions and specifically describing the
alleged events, activities or omissions giving rise thereto and
with respect to those events, activities or omissions for which a
cure is possible, a reasonable opportunity to cure such breach;
and provided further, however, that for purposes of determining
whether any such Cause is present, no act or failure to act by
Executive shall be considered "willful" if done or omitted to be
done by Executive in good faith and in the reasonable belief that
such act or omission was in the best interest of the Company
and/or required by applicable law.
(e) Disability shall mean that as a result of Executive's incapacity due
to physical or mental illness (as determined in good faith by a physician
acceptable to the Company and Executive), Executive shall have been absent from
the full-time performance of his duties with the Company for 120 consecutive
days during any twelve (12) month period or if a physician acceptable to the
Company and Executive advises the Company that it is likely that Executive will
be unable to return to the full-time performance of his duties for 120
consecutive days during the succeeding twelve (12) month period.
2. Responsibility for Benefits. The Company will pay the entire cost of
all benefits provided under this Severance Agreement, solely from its general
assets. The benefits made available by this Severance Agreement are "unfunded,"
and Executive is not required or permitted to make any contribution with respect
to this Severance Agreement.
3. Payment of Benefits. In the event Executive's employment is
terminated (a) by the Company other than for Cause, Disability or Death or (b)
by Executive for Good Reason (as defined herein), Executive shall receive the
following severance benefits upon his satisfaction of the condition in paragraph
4 hereof: (i) his Base Salary during the period commencing on the effective date
of such termination and ending two (2) years later (the "Salary Continuation
Period"), as if Executive were still employed during the Salary Continuation
Period; and (ii) during the Salary Continuation Period, Executive and his spouse
and dependents shall be entitled to continue to be covered by the Company's
group medical, health and accident insurance plan to the extent such coverage
was in effect as of the date of such termination, at the same coverage level and
on the same terms and conditions which applied immediately prior to the date of
Executive's termination of employment; provided, however, that if, as the result
of the termination of Executive's employment, Executive and/or his otherwise
eligible dependents or beneficiaries shall become ineligible for benefits under
such plans, Executive and his spouse and dependents shall be entitled to
continuation coverage pursuant to Section 4980B of the Internal Revenue Code of
1986, as amended, Sections 601-608 of the Employee Retirement Income Security
Act of 1974, as amended, and under any other applicable law, to the extent
required by such laws, and the Company shall reimburse Executive for the cost of
such continuation coverage to the extent such coverage would have been provided
at no cost to Executive prior to his termination, for a period of up to two (2)
years following his termination or, if sooner, until the expiration of
Executive's continuation coverage rights.
22
<PAGE>
4. Conditions to Receipt of Benefits. Upon the occurrence of an event
described in Section 3 above, Executive will be eligible for severance benefits
hereunder only if Executive executes and delivers to the Company a Settlement
Agreement and Release in the form of Exhibit 1 attached hereto and made a part
hereof.
5. Termination Events Not Covered. Notwithstanding anything to the
contrary contained herein, the Company shall not pay Executive severance
benefits under this Severance Agreement if:
(a) Executive dies during the term of his employment;
(b) Executive's employment is terminated for Cause or Disability, as
defined herein;
(c) Executive terminates his employment with Company for a reason other
than Good Reason as defined herein; or
(d) Executive revokes his agreement to release the Company from any and
all claims related to his employment pursuant to the Settlement
Agreement and Release executed in satisfaction of Section 4 hereof.
6. How Severance Benefits Are Paid. The Company will pay severance benefits in
installments through the Company's regular payroll procedure according to
Executive's pay schedule at the time of termination of employment; provided
however, the Administrator shall have the discretion to cause the Company to pay
all severance benefits in a lump sum payment, or to cause the Company to
postpone commencement of benefits until the eighth (8th) day following
Executive's execution of the Settlement Agreement and Release. Executive's
severance benefits shall be subject to mandatory withholding, including federal,
state and local income taxes, as well as FICA and withholding for applicable
insurance premiums.
7. Administration. The Administrator shall have all powers
necessary or helpful to administering this Severance Agreement in all its
details, and shall have full discretionary authority in exercising such powers.
This authority includes, but is not limited to, the power:
(a) To make rules and regulations for the administration
of this Severance Agreement;
(b) To make any finding of fact necessary or appropriate
for any purpose under this Severance Agreement, including, but not limited to,
the determination of eligibility for and the amount of any benefit payable under
this Severance Agreement; and
(c) To interpret the terms and provisions of this
Severance Agreement and to determine any and all questions arising out of this
Severance Agreement or in connection with its administration. This authority
shall include, but is not limited to, the right to remedy or resolve possible
ambiguities, inconsistencies or omissions, by general rule or particular
decision.
23
<PAGE>
(d) The Administrator shall exercise the powers conferred
by this Severance Agreement in its sole and absolute discretion, and all its
acts and determinations will be final and binding upon all interested parties
subject to the de novo review by arbitration as provided in this Severance
Agreement and Employment Agreement.
8. Benefit Claims and Appeal Procedures. Executive has the right to make
a written claim for benefits under this Severance Agreement. If all or part of
Executive's claim for benefits is denied, or if there is a dispute regarding
Executive's rights under this Severance Agreement, the Administrator will notify
Executive in writing of the reasons for the denial of Executive's claim. The
notice will refer to the appropriate provision of this Severance Agreement on
which the denial or decision is based. The notice will also describe how claims
are reviewed and outline the steps for an appeal. Usually, the Administrator
will give Executive written notice of its decision within ninety (90) days of
receipt of the claim. However, the Administrator may in some cases require
additional time to complete its review, due to special circumstances. The
Administrator will notify Executive if additional time is required for review of
the claim. If Executive disagrees with the Administrator's decision, Executive
may appeal and request a review of the case by the Administrator. Executive must
request a review of the claim in writing within sixty (60) days after the
Administrator notifies Executive of its decision. Executive's request must state
why Executive disagrees with the decision, and Executive must include any
information, questions or comments to support his appeal. Executive or his legal
representative may review any documents related to the claim. The Administrator
will review the appeal and notify Executive of its decision within sixty (60)
days after receipt of the appeal; however, the Administrator may in some cases
require additional time to complete its review, due to special circumstances.
The Administrator will notify Executive if additional time is required for
review of the appeal. The Administrator will notify Executive of its final
decision and the reasons for the decision.
9. Additional Information Regarding this Severance Agreement.
(a) This Severance Agreement shall not be amended except by a
written agreement executed by Executive and by an authorized officer of the
Company(other than Executive).
(b) The Employment Agreement and this Severance Agreement
provides the sole and exclusive agreement concerning severance benefits for
Executive in the event of a termination and replaces any and all prior plans,
policies and practices relating to severance pay that may exist now or may have
existed in the past.
(c) To the extent not preempted by ERISA, the Employment
Agreement and this Severance Agreement shall be governed by and construed
according to the laws of the state of North Carolina.
(d) If a provision of this Severance Agreement shall be held
illegal or invalid, the legality or invalidity shall not affect the remaining
provisions of this Severance Agreement, and this Severance Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included.
24
<PAGE>
(e) Executive acknowledges that no representation, promise or
inducement has been made other than as set forth in the Employment Agreement and
this Severance Agreement, and that he does not enter into this Employment
Agreement and Severance Agreement in reliance upon any representation, promise
or inducement not set forth herein and the Employment Agreement. The Employment
Agreement and this Severance Agreement supersedes all prior negotiations and
understandings of any kind with respect to the subject matter and contains all
of the terms and provisions of the agreement between Executive and the Company
with respect to the subject matter hereof. Any representation, promise or
condition, whether written or oral, not specifically incorporated herein, shall
be of no binding effect.
10. Executive's Rights Under ERISA. As a participant under this
Severance Agreement, Executive is entitled to certain rights and protections
under ERISA. Executive may examine all documents relating to the Severance
Agreement without charge. These may include annual financial reports, plan
descriptions and all other official documents filed with the United States
Department of Labor (if any). Executive may obtain copies of documents relating
to this Severance Agreement and certain other information by writing to the
Administrator. The Administrator may impose a reasonable charge for the copies.
In addition to creating rights for the Executive as a participant under this
Severance Agreement, ERISA imposes certain duties on the people who are
responsible for operating this Severance Agreement. These people are called
"fiduciaries." The fiduciaries have a duty to operate the Severance Agreement
prudently and in the interest of the Executive. The Company may not terminate
Executive's employment or otherwise discriminate against Executive in any way to
prevent him from obtaining a severance benefit or exercising rights under ERISA.
Under ERISA, Executive may take the following steps to enforce his rights: (a)
if Executive requests certain materials from the administrator regarding this
Severance Agreement and does not receive them within 30 days, Executive may file
suit in a federal court; in such a case, the court may require the Administrator
to provide the materials and pay Executive up to $100 a day until Executive
receives the materials, unless the materials were not sent due to reasons beyond
the control of the Administrator; (b) if Executive's claim for benefits is
denied or ignored in whole or in part, Executive may file suit in federal court;
(c) if Executive is discriminated against for pursuing a benefit or exercising
ERISA rights, Executive may seek help from the United States Department of Labor
or file suit in a federal court. If Executive files a suit, the court will
decide who should pay court costs and legal fees. If Executive has any questions
about this statement or about ERISA rights, Executive should contact the
Administrator. Executive may also contact the nearest area office of the Pension
and Welfare Benefit Administration, United States Department of Labor.
11. Miscellaneous Information About this Severance Agreement. This
section provides general information about this Severance Agreement required by
the Employee Retirement Income Security Act of 1974 ("ERISA"). Participation in
this Severance Agreement is subject to the execution by the Executive of a
Settlement Agreement and Release with the Company. This Agreement shall not be
construed in any manner to give any Company employee other than the Executive
the right to severance benefits upon termination of employment.
Plan Sponsor: Trimeris, Inc.
Tax ID Number: 56-6017737
25
<PAGE>
Plan Name: Trimeris, Inc. 1999 Chief Executive Employment
Agreement and Separation and Severance Plan
Plan Number: _______
Plan Year: Calendar year
Plan Type: Welfare benefit plan
Effective Date: March 12, 1999
Agent For Service
of Legal Process: Trimeris, Inc.
Attention: Secretary
IN WITNESS WHEREOF, the parties hereto have executed this Severance
Agreement under seal as of the date first set forth above (the individual party
adopting the word "SEAL" as his seal).
COMPANY:
TRIMERIS, INC.
By:_______________________________
Name:
Title:
EXECUTIVE:
____________________________(SEAL)
Name:
Address:
26
<PAGE>
EXHIBIT 1
SETTLEMENT AGREEMENT AND RELEASE
THIS SETTLEMENT AGREEMENT AND RELEASE ("Settlement Agreement") sets out
the complete agreement and understanding between Trimeris, Inc. (the "Company")
and Dani P. Bolognesi ("Executive") regarding the termination of Executive's
employment with the Company.
I. RELEASE AND WAIVER: For and in consideration of the severance payments
described in that certain Separation and Severance Agreement dated as of
____________________________ between the Company and Executive (the "Severance
Agreement"), to be paid beginning no sooner than the eighth day following
execution of this document, Executive hereby releases, waives and forever
discharges the Company, its parent, affiliates and subsidiaries, and all of its
benefit plans, plan administrators, trustees, agents, subsidiaries, affiliates,
employees, officers, shareholders, successors and assigns (hereafter "the
Releasees") from any and all liability, actions, charges, causes of action,
demands, damages, attorneys fees or claims for relief or remuneration of any
kind whatsoever, whether known or unknown at this time, arising out of or in any
way connected with Executive's employment, or the termination of employment,
with the Company. These include, but are not limited to, any claim (including
related attorneys' fees and costs) under the Age Discrimination in Employment
Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act, the Worker's Adjustment and Retraining Notification Act, the Equal Pay Act,
the Post Civil War Civil Rights Act, the Fair Labor Standards Act, the Family
and Medical Leave Act, the North Carolina Wage and Hour Act, the North Carolina
Hazardous Chemicals Right to Know Act, the North Carolina Retaliatory Employment
Discrimination Act, all as amended, or any other federal, state or local law or
ordinance, and any claim for benefits or other claims under the Employee
Retirement Income Security Act of 1974, as amended (except as expressly provided
below). This waiver, release and discharge also includes without limitation, any
wrongful or unlawful discharge claims, discipline or retaliation claims, any
claims relating to any contract of employment, whether express or implied, any
claims related to promotions or demotions, any claims for or relating to
relocation, compensation including commissions, short term or long term
incentives, the Company's Executive benefit plans and the management thereof
(except as expressly provided below), any claims for defamation, slander, libel,
invasion of privacy, misrepresentation, fraud, infliction of emotional distress,
any claims based on stress to the extent permitted by law, any claims for breach
of any covenant of good faith and fair dealing, and any other claims relating to
the Executive's employment with the Company and termination thereof. This
Settlement Agreement does not apply to any claims or rights that may arise under
the Age Discrimination in Employment Act after the date that this Settlement
Agreement is signed.
Executive expressly waives all claims, including those which he/she does
not know or suspect to exist in his/her favor as of the date of this Settlement
Agreement. As used in this Settlement Agreement, the parties understand the word
"claims" to include all actions, claims and grievances, whether actual or
potential, known or unknown, and specifically but not exclusively including all
claims against the Releasees arising from Executive's employment with the
Company, the termination thereof or any other conduct by the Releasees occurring
on or
27
<PAGE>
prior to the date Executive signs this Settlement Agreement. All such claims are
forever barred by this Settlement Agreement whether they arise in contract or
tort or under a statute or any other law.
Executive also understands and agrees that this release extinguishes all
claims, whether known or unknown, foreseen or unforeseen, and expressly waives
any rights or benefits under any law or judicial decision providing that, in
substance, a general release does not extend to claims which a creditor does not
know or suspect to exist in his/her favor at the time of executing the release,
which if known by him must have materially affected his/her settlement with a
debtor. It is expressly understood and agreed by the parties that this
Settlement Agreement is in full accord, satisfaction and discharge of any and
all doubtful and/or disputed claims by Executive against the Releasees, and that
this Settlement Agreement has been signed with the express intent of
extinguishing all claims, obligations, actions or causes of action as herein
described.
The Executive's waiver of claims relating to or arising under the
Employee Retirement Income Security Act of 1974, as amended, or the Company's
401(K) PLAN, shall not be construed as a waiver of the Executive's right to
receive his/her vested benefits under such plan, if any, in accordance with the
terms and provisions of such plan, or as a waiver of the Executive's right to
reimbursement for covered expenses under and in accordance with the terms and
provisions of the Company's health or dental insurance plans, to the extent such
covered expenses were incurred during a period in which the Executive was
eligible to participate and in fact was participating in such plans.
II. VOLUNTARY AGREEMENT AND OTHER ACKNOWLEDGMENTS: Executive acknowledges that:
I have read this Settlement Agreement, and I understand its legal and binding
effect. I am knowingly and voluntarily executing this Settlement Agreement of my
own free will.
The severance benefits under the Severance Agreement are in addition to and in
excess of benefits to which I am otherwise entitled.
I have had the opportunity to seek, and the Company has expressly advised me to
seek, legal counsel prior to signing this Settlement Agreement.
I have been given at least 45 days from the date I received this form to
consider the severance benefits being offered to me and the terms of this
Settlement Agreement.
At the beginning of that 45 day period, I also received a description of: (1)
the class, unit, or group of individuals covered by the severance and separation
plan (if any), the eligibility factors for this program, and any time limits
applicable to the program; and (2) the job titles and ages of all individuals
being asked to execute this Settlement Agreement in exchange for payment of
severance benefits (if any) and the job titles and ages of all individuals in
the same job classification or organizational unit who are not being asked to
execute this Settlement Agreement.
I understand that in signing this Settlement Agreement, I am releasing the
Releasees from any and all claims I may have against them (except as expressly
provided herein), including but not limited to claims under the Age
Discrimination in Employment Act.
28
<PAGE>
III. REVOCATION OF SETTLEMENT AGREEMENT: I understand that I can change my mind
and revoke my signature on this Settlement Agreement within seven days after
signing it by hand delivering notice of such revocation to the Chairman of the
Compensation Committee of the Company. I understand that if I revoke this
Settlement Agreement, I will not be entitled to any severance benefits under the
Severance Agreement. I understand that, unless properly revoked by me during
this seven-day period, the release and waiver in the first section above will
become effective seven days after I sign the Settlement Agreement.
VII. COMPLETE AGREEMENT: I acknowledge that no representation, promise or
inducement has been made other than as set forth in this Settlement Agreement,
and that I do not enter into this Settlement Agreement in reliance upon any
representation, promise or inducement not set forth herein. This Settlement
Agreement supersedes all prior negotiations and understandings of any kind with
respect to the subject matter and contains all of the terms and provisions of
agreement between the Executive and the Company with respect to the subject
matter hereof. Any representation, promise or condition, whether written or
oral, not specifically incorporated herein, shall be of no binding effect.
VIII. GOVERNING LAW: This Settlement Agreement shall be governed by the Employee
Retirement Income Security Act and, where applicable, the law of the State of
North Carolina.
IX. SEVERABILITY: In the event any provision of this Settlement Agreement shall
be held to be void, voidable, unlawful or, for any reason, unenforceable, the
remaining portions shall remain in full force and effect. The unenforceability
or invalidity of a provision of this Settlement Agreement in one jurisdiction
shall not invalidate or render that provision unenforceable in any other
jurisdiction. If Executive's release and waiver pursuant to Section I of this
Settlement Agreement is found to be unenforceable, however, Executive agrees
that he/she will either sign a valid release and waiver of claims in favor of
the Company and the Releasees or promptly return the severance benefits received
by Executive.
X. BINDING EFFECT: This Settlement Agreement is binding upon, and shall inure to
the benefit of, the parties and their respective heirs, executors,
administrators, successors and assigns.
XI. NO ADMISSIONS: This Settlement Agreement is not intended as, and shall not
be construed, as an admission that the Company and Releasees or any of them have
violated any federal, state or local law, ordinance or regulation, breached any
contract, or committed any wrong whatsoever against Executive.
AGREED AND UNDERSTOOD:
EXECUTIVE:
- ------------------------- -----------------------
Name: Dani P. Bolognesi Date
Exhibit 11.1 Computations of Basic Loss Per Share.
TRIMERIS, INC.
STATEMENTS RE: COMPUTATIONS OF BASIC LOSS PER SHARE
(in thousands, except per share data)
Three Months
Ended March 31,
1998 1999
---- ----
Common shares outstanding
(weighted average) (1) 10,520 10,677
Common Stock equivalents
(using the treasury stock method):
Stock Options and Awards
(weighted average) Pursuant
to Staff Accounting Bulletin
No. 83 (2) 100 100
-------- ---------
Total weighted average shares 10,620 10,777
======== =========
Net loss $ (2,967) $ (5,367)
======== =========
Basic net loss per share $ (0.28) $ (0.50)
========== ==========
(1) Assumes the retroactive conversion of the Preferred Stock into shares of
Common Stock which occurred upon the completion of the Company's Initial
Public Offering in October, 1997, for all periods presented.
(2) Includes all options and awards issued during the twelve-month period prior
to the initial filing of the registration statement relating to the
Company's Initial Public Offering, in accordance with Securities and
Exchange Commission Staff Accounting Bulletin No. 83.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-30-1999
<CASH> 9,831
<SECURITIES> 4,151
<RECEIVABLES> 46
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,361
<PP&E> 4,678
<DEPRECIATION> 2,957
<TOTAL-ASSETS> 16,798
<CURRENT-LIABILITIES> 3,168
<BONDS> 0
0
0
<COMMON> 11
<OTHER-SE> 12,874
<TOTAL-LIABILITY-AND-EQUITY> 16,798
<SALES> 0
<TOTAL-REVENUES> 81
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,637
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> (5,367)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,367)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,367)
<EPS-PRIMARY> (0.50)
<EPS-DILUTED> (0.50)
</TABLE>
