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, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
---------------------------------------------------
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 12, 2000 was 15,649,259.
<PAGE>
TRIMERIS, INC.
(A Development Stage Company)
FORM 10-Q
For the Three Months Ended March 31, 2000
INDEX
<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION Page
- ------------------------------------ ----
<S> <C> <C>
Item 1. Financial Statements
Balance Sheets as of March 31, 2000 (unaudited) and
December 31, 1999 1
Statements of Operations (unaudited) for the Three Months Ended
March 31, 2000 and 1999 and Period From Inception
(January 7, 1993) Through March 31, 2000 2
Statements of Cash Flows (unaudited) for the Three Months Ended
March 31, 2000 and 1999 and Period From Inception
(January 7, 1993) Through March 31, 2000 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 12
PART 2. OTHER INFORMATION
- --------------------------------
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
Signature Page 15
Exhibit Index 16
</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,
1999 2000
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 37,023 $ 88,863
Short-term investments 10,775 16,447
Accounts receivable - Roche 144 3,014
Accounts receivable 24 12
Prepaid expenses 268 369
----------- ----------
Total current assets 48,234 108,705
Property, furniture and equipment, net 2,585 2,576
----------- ----------
Other assets:
Patent costs, net 643 795
Equipment deposits 188 205
----------- ----------
Total other assets 831 1,000
----------- ----------
Total assets $ 51,650 $ 112,281
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,159 $ 4,749
Current installments of capital lease obligations 717 809
Accrued compensation 1,028 799
Accrued expenses 3,474 3,495
----------- ----------
Total current liabilities 11,378 9,852
Obligations under capital leases, excluding current installments 1,206 1,270
Deferred revenue 729 412
----------- ----------
Total liabilities 13,313 11,534
----------- ----------
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, 1999 and March 31, 2000 (unaudited) -- --
Common Stock at $.001 par value per share, 30,000 shares
authorized, 13,765 and 15,648 shares issued and outstanding
at December 31, 1999 and March 31, 2000 (unaudited) 14 16
Additional paid-in capital 105,580 173,074
Deficit accumulated during the development stage (62,990) (68,515)
Deferred compensation (4,162) (3,787)
Notes receivable from stockholders (105) (41)
------------ -----------
Net stockholders' equity 38,337 100,747
------------ -----------
Total liabilities and stockholders' equity $ 51,650 $ 112,281
============ ===========
</TABLE>
See accompanying notes to financial statements.
1
<PAGE>
TRIMERIS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Cumulative
Three Months from Inception
Ended March 31, (January 7, 1993)
--------------- to March 31,
1999 2000 2000
---- ---- ----
<S> <C> <C> <C>
Revenue $ 81 $ - $ 11,034
--------- --------- -----------
Operating expenses:
Research and development 3,964 4,905 62,948
General and administrative 1,673 1,832 20,812
--------- --------- -----------
Total operating expenses 5,637 6,737 83,760
--------- --------- -----------
Operating loss (5,556) (6,737) (72,726)
---------- ---------- ------------
Other income (expense):
Interest income 231 1,266 5,456
Interest expense (42) (54) (1,245)
---------- ---------- ------------
Total other income (expense) 189 1,212 4,211
--------- --------- -----------
Net loss $ (5,367) $ (5,525) $ (68,515)
========== ========== ============
Basic net loss per share $ (0.50) $ (0.37)
=========== ===========
Weighted average shares used in per share
computations 10,777 15,042
========= =========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
TRIMERIS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Cumulative
Three Months Ended From Inception
March 31, (January 7, 1993)
--------------------- to March 31,
1999 2000 2000
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(5,367) $ (5,525) $(68,515)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 183 340 3,924
Other amortization 5 - 83
Amortization of deferred compensation 183 375 3,245
401(K) plan stock match - - 528
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
Changes in operating assets and liabilities:
Accounts receivable and loans to employees 22 12 (12)
Accounts receivable - Roche - (2,870) (3,014)
Prepaid expenses (12) (101) (369)
Other assets (5) (17) (205)
Accounts payable (789) (1,410) 4,749
Accrued compensation 327 (229) 799
Accrued expenses (354) 21 3,405
Deferred revenue - (317) 412
------- ---------- --------
Net cash used by operating activities (5,807) (9,721) (54,499)
-------- ---------- ---------
Cash flows from investing activities:
Sales (purchases) of short-term investments (895) (5,672) (16,447)
Purchases of property and equipment (306) - (1,504)
Equipment held for resale - - (61)
Organization costs - - (8)
Patent costs (7) (152) (816)
-------- ---------- ---------
Net cash used by investing activities (1,208) (5,824) (18,836)
-------- ---------- ---------
Cash flows from financing activities:
Proceeds from issuance of notes payable - - 6,150
Lease costs - - (13)
Principal payments under capital lease obligations (127) (175) (2,933)
Proceeds from issuance of Common Stock - - 31
Proceeds from issuance of Preferred Stock - - 23,896
Proceeds from stock offerings, net - 66,570 132,459
Proceeds from exercise of stock options 29 926 2,102
Proceeds from employee stock purchase plan exercise - - 475
Repayment of notes receivable from stockholders 24 64 227
Stock issuance costs - - (196)
------- --------- ---------
Net cash provided (used) by financing activities (74) 67,385 162,198
-------- --------- --------
Net increase (decrease) in cash and cash equivalents (7,089) 51,840 88,863
Cash and cash equivalents, beginning of period 16,920 37,023 -
------- --------- --------
Cash and cash equivalents, end of period $ 9,831 $ 88,863 $ 88,863
======= ========= ========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
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 1999 financial statements and notes thereto included in the
Company's 1999 Form 10-K filed with the Securities and Exchange Commission on
March 29, 2000.
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 INCOME (LOSS) PER SHARE
In accordance with SFAS No. 128, "Earnings Per Share" ("SFAS No. 128"),
basic loss per common share is calculated by dividing net loss by the
weighted-average number of common shares outstanding for the period after
certain adjustments described below. Diluted net income per common share
reflects 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. 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.
3. STATEMENTS OF CASH FLOWS
Interest of approximately $42,000 and $54,000 was paid during the three
months ended March 31, 1999 and 2000, respectively. Capital leases of $0 and
$331,000 were incurred for the three months ended March 31, 1999 and 2000,
respectively for the purchase of new furniture and equipment.
4
<PAGE>
4. PUBLIC OFFERINGS 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.
In June 1999, the Company closed a public offering of common stock at $11.75
per share. The net proceeds of the offering, including the proceeds received in
connection with the exercise of the Underwriters' over-allotment option, were
approximately $31.4 million after deducting applicable issuance costs and
expenses.
In February 2000, the Company closed a private placement of 1.75 million
shares of common stock at $40.50 per share. The net proceeds of the offering
were approximately $66.6 million after deducting applicable issuance costs and
expenses.
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. ROCHE COLLABORATION
In July 1999, the Company announced an agreement with F. Hoffmann-La Roche
Ltd to develop and market T20 and T1249 worldwide. In the United States and
Canada, the Company and Roche will share equally development expenses and
profits for the two fusion inhibitors. Outside of these two countries, Roche
will fund all development costs and pay the Company royalties on net sales of
these products. Roche made an initial cash payment to the Company of $10 million
and will provide up to an additional $78 million in cash and funding upon
achievement of developmental, regulatory and commercial milestones.
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 1999 Form 10-K filed with the
Securities and Exchange Commission on March 29, 2000. These factors include, but
are not limited to: that we are an early stage company with an uncertain future;
that we have never made money and expect our losses to continue; that we will
need to raise additional funds in the near future; that our quarterly operating
results are subject to fluctuations and you should not rely on them as an
indication of our future results; that we are heavily dependent on our lead
product candidate, T20; that our success in commercializing T20 and T1249 is
dependent on our relationship with Roche; that we face many uncertainties
relating to our human clinical trial results and clinical trial strategy; that
HIV may develop resistance to our drug candidates; that we have no experience
manufacturing pharmaceutical products; that we face risks associated with
manufacturing T20 and T1249; that our business is based on novel technology and
is highly risky and uncertain; that we are dependent on third-party contract
research organizations; that we have no sales, marketing or distribution
capabilities; that our stock price is highly volatile; that we depend on
collaborations and licenses with others; that 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; that there is uncertainty
regarding patents and proprietary rights; that we are subject to extensive
government regulation; that our products may not receive regulatory approval;
that we face intense competition; that we use hazardous materials; that we are
exposed to product liability risks; that we depend upon certain key personnel
and face risks relating to our ability to attract and retain key personnel; that
future sales of common stock by our existing stockholders could adversely affect
our stock price; that we have implemented certain anti-takeover provisions; and
that our actual results could differ materially from those anticipated in our
forward-looking statements. 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. 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
T20,
o the development of a manufacturing process for T20,
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, 2000, had an
accumulated deficit of approximately $68.5 million. We have received revenue
only from federal small business innovative research grants, otherwise known as
SBIR grants, an investigative contract, and an initial collaboration payment
from Roche, and have not generated any revenue from product sales or royalties.
We may never generate any revenue from product sales or royalties.
6
<PAGE>
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 work with Roche to manufacture, develop, sell, market
and distribute T20 and T1249,
o technological and other changes in the competitive landscape,
o changes in our existing research and development relationships and
strategic alliances,
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 partner's
ability to successfully develop and obtain regulatory approval for T20 or T1249
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.
7
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 AND 2000
REVENUE. Total revenue decreased from $81,000 for the three months ended March
31, 1999 to $0 for the three months ended March 31, 2000. Total revenue for the
three months ended March 31, 1999 was entirely derived from SBIR grants.
RESEARCH AND DEVELOPMENT EXPENSES. Total net research and development expenses
were $4.0 million and $4.9 million for the three months ended March 31, 1999 and
2000, respectively. Gross research and development expenses increased during the
three months ended March 31, 2000 because we:
o continued three Phase II clinical trials for T20,
o initiated a fourth Phase II clinical trial for T20,
o continued a Phase I clinical trial for T1249,
o continued manufacturing process development and purchase of drug
material from third party manufacturers to supply future clinical
trials, and
o increased the number of our personnel to support these activities.
Net research and development expenses include gross research and development
expenses less reimbursements from Roche. Roche paid 50% of the development costs
incurred during the three months ended March 31, 2000 for T20 and T1249 as
required by our collaboration agreement.
Total research personnel were 41 and 55 at March 31, 1999 and 2000,
respectively. We expect research and development expenses, net of the
reimbursements for T20 and T1249 development costs from Roche, to increase
substantially in the future due to:
o continued preclinical research and testing of product candidates,
o expanded clinical trials for T20, T1249 and other product candidates,
o the manufacture of drug material for these trials, and
o increased number of personnel to support these activities.
GENERAL AND ADMINISTRATIVE EXPENSES. Total general and administrative expenses
were $1.7 million and $1.8 million for the three months ended March 31, 1999 and
2000, respectively. During 1999 we made a non-recurring accrual of severance
costs for our former chief executive officer. Total expenses increased during
the three months ended March 31, 2000 because in 2000 we:
o initiated several market research studies which are shared equally with
Roche,
o expensed deferred compensation relating to stock options granted to
consultants during 1999,
o added personnel to support our growth, and
o incurred professional fees to support our growth.
We expect administrative expenses to increase in the future to support the
anticipated expansion of product development activities.
8
<PAGE>
OTHER INCOME (EXPENSE). Other income (expense) consists of interest income and
expense. Total other income was $189,000 and $1.2 million for the three months
ended March 31, 1999 and 2000, respectively. The increase was due to increased
interest income because of higher cash and investment balances during the three
months ended March 31, 2000 due to our stock offerings closed in June 1999 and
February 2000.
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, an initial public offering of common stock in October
1997, a public offering of common stock in June 1999, and a private placement of
common stock in February 2000. Net cash used by operating activities was $5.8
million and $9.7 million for the three months ended March 31, 1999 and 2000,
respectively. The cash used by operating activities was used primarily to fund
research and development relating to T20, T1249, and other product candidates,
and increased for the three months ended March 31, 2000 because of increased
research and development activities. Cash used by investing activities was $1.2
million and $5.8 million for the three months ended March 31, 1999 and 2000,
respectively. The increase for the three months ended March 31, 2000 was due to
the purchase of short-term investments as a result of our public offering of
common stock in February 2000.
As of March 31, 2000, we had $105.3 million in cash and cash equivalents
and short-term-investments, compared to $47.8 million as of December 31, 1999.
The increase is primarily a result of the closing of a private placement of
common stock in February 2000, which resulted in net proceeds of approximately
$66.6 million, less cash used by operating activities.
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. Although we expect to receive
reimbursement for 50% of the development costs for T20 and T1249 from Roche, 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 T20, T1249 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, 2000, we had commitments of approximately $29.0 million to
purchase product candidate materials and fund various clinical studies over the
next fifteen months. Substantially all of these expenditures will be shared
equally by Roche under our collaborative agreement. Under this collaborative
agreement, we are obligated to share equally the future development expenses for
T20 and T1249 for the United States and Canada. We also expect to have capital
expenditures of approximately $2.5 million during the remainder of 2000. Our
share of these expenditures may be financed with capital or operating leases,
debt or working capital. We expect that our existing capital resources, together
with the interest earned thereon, will be adequate to fund our capital
requirements through 2000. We believe that substantial additional funds will be
required after 2000.
If adequate funds are not available, we will be required to delay,
scale-back or eliminate certain preclinical testing, clinical trials and
research and development programs, including our collaborative efforts with
Roche. 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
new or existing collaborative partners. These partners may require us to
relinquish rights to our technologies or product candidates or to reduce our
share of potential profits. This could have a material adverse effect on our
business, financial condition or results of operations.
9
<PAGE>
Our future capital requirements and the adequacy of available funds will
depend on many factors, including the availability of funds from Roche under our
collaboration agreement, the results of clinical trials relating to T20 and
T1249, the progress and scope of our product development programs, the magnitude
of these programs, the results of preclinical testing and clinical trials, the
need for additional facilities based on the results of these clinical trials and
other product development programs, changes in the focus and direction of our
product development programs, the costs involved in preparing, filing,
processing, maintaining, protecting and enforcing patent claims and other
intellectual property rights, competitive factors and technological advances,
the cost, timing and outcome of regulatory reviews, changes in the requirements
of the FDA, administrative and legal expenses, evaluation of the commercial
viability of potential product candidates and compounds, the establishment of
capacity, either internally or through relationships with third parties, for
manufacturing, sales, marketing and distribution functions, and other factors,
many of which are outside of our control.
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.
T20
We are developing T20, our first drug candidate for HIV fusion inhibition,
which has been granted fast track designation by the FDA. T20 is currently in
Phase II clinical trials.
ONGOING T20 CLINICAL TRIALS
PHASE II -- T20-205. T20-205 is a Phase II trial initiated in March
1999 in which T20 was given in combination with oral anti-HIV drugs to 71 HIV-1
infected adults who had received T20 during earlier trials. Fifty mg of T20 was
given twice daily via subcutaneous injection. Combinations of the oral anti-HIV
drugs were individualized to each patient and were chosen based on genotypic
analysis evaluating patients' resistance to anti-HIV medications. In January
2000, we extended T20-205 beyond the initial 48 week duration because patients
in the trial appeared to continue receiving clinical benefit. Patients will
continue to receive T-20 therapy at their election, as long as they show
clinical benefit. Additional data from this trial is expected during 2000.
PHASE II -- T20-204. In November 1999, in collaboration with the
Division of AIDS of the National Institute for Allergy and Infectious Diseases,
or NIAID, we initiated a clinical trial to evaluate the safety and
pharmacokinetics of T20 in children living with HIV infection. The trial will be
managed by the Pediatric AIDS Clinical Trial Group, or PACTG, and has been
designated as a fast-track study within the PACTG system.
The study is designed to investigate the safety, tolerability and
pharmacokinetics of T20 in pediatric patients. The trial is conducted in two
parts and will enroll up to twelve pediatric patients ages 3 to 12. The first
part examines safety parameters to establish a well-tolerated pediatric dose
that provides target concentrations of T-20 in the blood. The second part
evaluates the safety and tolerability of T20 in combination with other anti-HIV
drugs over a 24-week period. In this study, T20 is administered via subcutaneous
injections twice daily in conjunction with other oral anti-HIV drugs.
10
<PAGE>
PHASE II -- T20-206. In June 1999, we initiated T20-206, a Phase II
clinical trial for T20 that will assess the antiviral activity and long-term
safety of T-20 when used in combination with other anti-HIV drugs. T20-206
evaluates four groups of patients over a one-year period with planned interim
analyses. Three different doses of T20 will be combined with a background
regimen of amprenavir, efavirenz, ritonavir and abacavir. The control group will
receive the background regimen without T20. T20-206 will enroll approximately 68
HIV-infected individuals at several sites in the United States. At entry in the
trial, all enrolled patients will have prior exposure to nucleoside reverse
transcriptase inhibitors and protease inhibitors, but no prior exposure to
non-nucleoside reverse transcriptase inhibitors. The trial is fully enrolled and
data from an interim analysis of this trial is expected during 2000.
PHASE II - T20-208. In March 2000, we initiated T20-208, a Phase II
clinical trial for T20 that will evaluate alternative formulations of T20, which
could lead to a simpler dosing regimen. The trial is designed to enroll
approximately 60 patients in the United States, and will evaluate two
formulations of T20 compared to the formulation presently used in other ongoing
clinical trials. All three formulations will be given as twice daily
subcutaneous injections in combination with oral anti-HIV agents selected for
each patient on an individualized basis.
FUTURE T-20 CLINICAL TRIALS
Throughout the remainder of 2000, we expect to initiate additional
Phase II trials. We expect to begin a pivotal trial during 2000.
PIVOTAL TRIAL. Based on the results of the Phase II trials, we intend
to begin a pivotal trial during 2000 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.
T1249
We are also developing T1249, our second drug candidate for HIV fusion
inhibition, which has been granted fast track designation by the FDA. T1249 is
currently in a Phase I clinical trial.
PHASE I - T1249-101
In July 1999, we initiated T1249-101, a Phase I clinical trial designed
to assess the safety and pharmacokinetics of T1249. Three different daily doses
of T1249 will be administered as monotherapy for 14 days to HIV-infected adults
by once or twice daily subcutaneous injection. T1249-101 will enroll
approximately 60 HIV-infected individuals at several sites in the United States.
At entry, these patients will have received no other anti-HIV drugs for at least
two weeks prior to entering the study. This trial is fully enrolled and ongoing,
and we expect data from this trial to be available during 2000.
RISK FACTORS
Our business is subject to certain risks and uncertainties. Please read the
"Risk Factors" and "Business" sections of our 1999 Form 10-K filed with the
Securities and Exchange Commission on March 29, 2000, which highlight some of
these risks. If any of these risks materialize, our business, financial
condition and results of operations could be materially adversely affected.
11
<PAGE>
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, 2000. All of our investments mature in
eighteen months or less.
Carrying Average
Amount Interest
(thousands) Rate
---------- ----------
Cash equivalents - fixed rate $ 88,412 6.03%
Short-term investments - fixed rate 16,447 6.50%
Overnight cash investments - fixed rate 514 5.52%
----------- ----------
Total investment securities $ 105,373 6.10%
========= ==========
12
<PAGE>
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) On February 2, 2000, we completed a private placement
financing by issuing 1,750,000 shares of common stock at
$40.50 per share to new and current stockholders for an
aggregate offering price of $70,875,000 (less estimated
financing costs, including underwriting commissions, of
$4,305,000). Deutsche Bank Securities Inc. acted as placement
agent for the shares issued in connection with the private
placement financing. The registration statement on Form S-3
(File No. 333-31662) to register the resale of the 1,750,000
shares of common stock issued in this financing was declared
effective on April 14, 2000. An exemption from registration
was claimed pursuant to Section 4(2) of the Securities Act of
1933, as amended, and Rule 506 promulgated thereunder. Net
proceeds of approximately $66,600,000 from this private
placement financing will be used to fund the clinical
development of our product candidates, T20 and T1249, to fund
increased research and development activities, to provide
working capital and for general corporate purposes.
(d) Use of Proceeds:
INITIAL PUBLIC OFFERING, OCTOBER 1997
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 updated
and supplemented in our subsequent periodic reports to date.
The registration statement on Form S-1 (File No. 333-31109) to
which this use of proceeds relates was declared effective on
October 6, 1997. A subsequent registration statement on Form
S-1 (File No. 333-37319) was filed pursuant to Rule 462(b) and
declared effective on October 7, 1997. Through March 31, 2000,
we have expended for working capital the total net proceeds
from our initial public offering of $34,532,000. 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.
13
<PAGE>
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 January 28, 2000 under Item 5
describing our plans to complete a private placement of our common
stock to new and current shareholders in order to raise net
proceeds of up to approximately $65 million.
We filed a report on Form 8-K on February 4, 2000 under Item 5
announcing the closing of a private placement of 1,750,000 shares
of common stock to new and current shareholders at a price per
share of $40.50.
We filed a report on Form 8-K on April 3, 2000 under Item 5
describing certain changes in management. On April 3, 2000, Dr. M.
Nixon Ellis was appointed Executive Vice President and Chief
Business Officer, and Mr. Robert Bonczek was appointed Chief
Financial Officer.
14
<PAGE>
SIGNATURES
In accordance with 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 12, 2000 By: /s/ DANI P. BOLOGNESI
- ------------ ----------------------
Dani P. Bolognesi
Chief Executive Officer,
and Chief Scientific Officer
May 12, 2000 /s/ ROBERT R. BONCZEK
- ------------ ----------------------
Robert R. Bonczek
Chief Financial Officer (Principal
Financial Officer)
May 12, 2000 /s/ TIMOTHY J. CREECH
- ------------ ----------------------
Timothy J. Creech
Director of Finance
and Secretary (Principal Accounting
Officer)
15
<PAGE>
EXHIBIT INDEX
Number Description
- ------ -----------
10.1 Employment Agreement between Trimeris,
Inc. and M. Nixon Ellis dated March 31,
2000
11.1 Computations of Basic Loss Per Share
27.1 Financial Data Schedule
16
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this the 31st day of March,
2000, by and between TRIMERIS, INC., a Delaware corporation (the "Company"), and
M. NIXON ELLIS ("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 31st day of
March, 2000, which date shall be referred to herein as the "Effective
Date".
2. Position and Duties.
(a) The Company hereby employs Executive as its Executive Vice
President and Chief Business 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 Chief
Executive Officer (CEO) and Chief Scientific Officer (CSO) 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 CEO and CSO.
(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.
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 Twenty Thousand
Dollars ($220,000.00) 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 Compensation
Committee of the Board of Directors. 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
<PAGE>
Employment shall Executive's Base Salary be decreased from the amount
of Base Salary then in effect.
(b) 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 forty-five percent (45%) 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 Executive.
(c) Signing Bonus. In consideration of Executive's executing this
Agreement, Company agrees to award Executive, upon execution of this
Agreement, a one time payment of Twenty Five Thousand Dollars
($25,000.00).
(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 One Hundred Thousand
(100,000) 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 31, 2000. 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.
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
2
<PAGE>
Employment shall automatically be extended for a one (1) year period (each a
"Renewal Period") unless either the Company or Executive provides sixty (60)
days' prior written 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 sixty (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 CEO and CSO, as reasonably determined by the
CEO and CSO unless and until the CEO and CSO has given him reasonable
written notice of their 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. 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
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, shall be entitled to de novo review
of any material violation of the 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
Agreement. The Severance
3
<PAGE>
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) Executive acknowledges and agrees that:
(i) As a result of his employment with the Company, Executive
will become knowledgeable of and familiar with the Company's
Confidential Information (as defined below), including
know-how related to the Company's services, plus the special
requirements or preferences of the Company's research,
development, marketing, licensing agreements or arrangements
and investor relations, so that he would have a competitive
advantage against the Company for at least two (2) years
following termination of his employment with the Company
absent the protection afforded by the restrictive covenants in
this Section 6 of the Executive Employment Agreement (the
"Restrictive Covenants");
(ii) The time, territory and scope of the Restrictive
Covenants are reasonable and necessary for protection of the
Company's legitimate business interests;
(iii) Executive has received sufficient and valuable
consideration in exchange for his agreement to the Restrictive
Covenants, including but not limited to his salary and
benefits under the Executive Employment Agreement, his salary
continuation under the Separation and Severance Agreement and
any other consideration provided to him under this Agreement;
(iv) The non-compete covenant of Section 6(c) will not impose
undue hardship on Executive or prevent Executive from being
able to earn an adequate living following termination of this
Agreement;
(v) The time period of protection provided by the Restrictive
Covenants shall not be reduced by any period of time during
which Executive is in violation of such covenants or any
period of time required for litigation to enforce such
covenants; and
(vi) Executive has read and reviewed the Restrictive Covenants
before agreeing to the terms of this Agreement.
(b) 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
4
<PAGE>
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 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.
(c) 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 Securities Exchange Act of 1934, as
amended, (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 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.
(d) 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.
(e) 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
5
<PAGE>
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.
(f) 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.
(g) 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 6 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 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
6
<PAGE>
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 6(g)(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
7
<PAGE>
Executive is to inform Company in writing that all such
Inventions have not been listed for that reason.
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 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
8
<PAGE>
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 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.
(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 CEO and CSO 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 Rights, Company Inventions 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.
9
<PAGE>
12. Resolution of Disputes. Except as otherwise specifically provided in
Section 10 of the Severance Agreement attached hereto, any dispute or
controversy arising under or in connection with this Agreement and/or
the Separation 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, shall be entitled by arbitration to seek de novo review
of any material violation of the Severance Agreement in accordance with
Section 10 of such Severance Agreement or any denial of a claim or
obligation to pay a claim thereunder.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE
PAGE TO FOLLOW.]
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
<TABLE>
<CAPTION>
EXECUTIVE TRIMERIS, INC.
<S> <C> <C> <C>
By: /s/ M. Nixon Ellis By: /s/ Dani P. Bolognesi
---------------------------- -------------------------------
Name: M. Nixon Ellis Name: Dani P Bolognesi, Ph.D.
Title: Executive Vice President Title: Chief Executive Officer
Chief Business Officer and Chief and Scientific Officer
Address: 5915 St. Mary's Road Address: 4727 University Drive
Hillsborough, NC 27278 Durham, NC 27707
</TABLE>
11
<PAGE>
EXHIBIT A
TO
EXECUTIVE EMPLOYMENT AGREEMENT
The following is a complete list of all inventions or improvements relevant to
the subject matter of my employment by Company that have been made or conceived
or first reduced to practice by me alone or jointly with others prior to my
employment by Company and therefore should be excluded from the coverage of this
Agreement:
____ Additional sheets attached.
X 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.
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 Company management to determine what steps should be taken to protect the
interests of all parties concerned.
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
____ Additional sheets attached.
X No material.
- ----
EXECUTIVE:
/s/ M. Nixon Ellis
- --------------------
M. Nixon Ellis
Date: March 31, 2000
--------------
12
<PAGE>
EXHIBIT B
TO
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
SEPARATION AND SEVERANCE AGREEMENT
THIS SEPARATION AND SEVERANCE AGREEMENT (the "Severance Agreement") is
made a part of that Executive Employment Agreement (the "Employment Agreement"),
entered into and effective as of the 31st day of March, 2000, by and between M.
NIXON ELLIS , an individual resident of the State of North Carolina (the
"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.
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 thirty (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:
(i) a material breach by the Company of any provision of this
Severance Agreement, including, but not limited to, 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
13
<PAGE>
(iii) the occurrence of a "Change in Control" as defined
below.
For purposes of this Severance 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, as amended (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 in accordance with this Severance
Agreement or electing to remain employed under the terms of the
Employment 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;
14
<PAGE>
(ii) substantial and willful failure to perform specific and
lawful directives of the CEO and CSO;
(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 conviction of or plea of guilty or nolo contendere
to a felony;
(iv) a material breach of the terms and conditions of this
Severance Agreement or the Employment Agreement; or
(v) failure by Executive to abide by any obligation of
non-compete or non-solicitation provision of Section 6 of the
Employment Agreement or any previous agreements for
employment.
provided, however, that with regard to subparagraphs (ii) and
(iv) above, Executive may not be terminated for Cause unless
and until the CEO and CSO have given him reasonable written
notice of their 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 one hundred twenty (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 one
hundred twenty (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
15
<PAGE>
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.
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 and
complies with the provisions of Section 6 of the Employment Agreement.
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.
(e) Executive fails to comply with or otherwise violates any of
the provisions of Section 6 of the Employment Agreement.
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
16
<PAGE>
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.
(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 the 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.
17
<PAGE>
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.
(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
18
<PAGE>
regarding this Severance Agreement and does not receive them within thirty (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; or (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
Plan Name: Trimeris, Inc. 2000 Executive Employment
Agreement and Separation and Severance Plan
Plan Number: _______
Plan Year: Calendar year
Plan Type: Welfare benefit plan
Effective Date: March 31, 2000
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.
/s/ Dani P. Bolognesi
- --------------------------------
Dani P. Bolognesi, Ph.D.
Chief Executive Officer and Chief Scientific Officer
EXECUTIVE:
/s/ M. Nixon Ellis (SEAL)
- ----------------------------------
M. Nixon Ellis
19
<PAGE>
EXHIBIT 1
TO
SEPARATION AND SEVERANCE AGREEMENT
----------------------------------
SETTLEMENT AGREEMENT AND RELEASE
THIS SETTLEMENT AGREEMENT AND RELEASE ("Settlement Agreement") sets out
the complete agreement and understanding between TRIMERIS, INC. (the "Company")
and M. NIXON ELLIS (the "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 the
31st day of March, 2000 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
20
<PAGE>
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 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.
21
<PAGE>
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.
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.
IV. 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.
V. 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.
VI. 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.
VII. 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.
VIII. 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: M. Nixon Ellis Date
22
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,
1999 2000
---- ----
Common shares outstanding
(weighted average) (1) 10,677 14,942
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 10,777 15,042
======== =========
Net loss $ (5,367) $ (5,525)
======== =========
Basic net loss per share $ (0.50) $ (0.37)
========== ==========
(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-31-2000
<PERIOD-END> MAR-30-2000
<CASH> 88,863
<SECURITIES> 16,447
<RECEIVABLES> 3,026
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 108,705
<PP&E> 6,405
<DEPRECIATION> 3,829
<TOTAL-ASSETS> 112,281
<CURRENT-LIABILITIES> 9,852
<BONDS> 0
0
0
<COMMON> 16
<OTHER-SE> 100,731
<TOTAL-LIABILITY-AND-EQUITY> 112,281
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,737
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> (5,525)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,525)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,525)
<EPS-BASIC> (0.37)
<EPS-DILUTED> (0.37)
</TABLE>
