Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made and entered into this the 21st day of June, 2004, by and
between TRIMERIS, INC., a Delaware corporation (the “Company”), and GEORGE W.
(“BARNEY”) KOSZALKA (“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 21st day of June,
2004, 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 of
Scientific Operations 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 thirty-five thousand
dollars ($235,000) 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 Employment shall
Executive’s Base Salary be decreased from the amount of Base Salary then in
effect.

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(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 thirty-five percent (35%) 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) Right to Offset. In the event that Company shall make any payment to or on
behalf of Executive with respect to Executive’s short-term disability or
long-term disability coverage during the term of this Agreement, Company shall
have the right to offset the amount of any such payment against any salary owed
to Executive.

 

4. Benefits During the Term of Employment.

 

(a) Executive shall be eligible to participate in any life, health and long-term
disability insurance programs, pension and retirement programs, stock option and
other incentive compensation programs, and other fringe benefit programs made
available to senior executive employees of the Company from time to time, and
Executive shall be entitled to receive such other fringe benefits as may be
granted to him from time to time by the Company’s Board of Directors.

 

(b) Executive shall be allowed four (4) weeks of vacation with pay and leaves of
absence with pay on the same basis as other senior executive employees of the
Company.

 

(c) The Company shall reimburse Executive for reasonable business expenses
incurred in performing Executive’s duties and promoting the business of the
Company, including, but not limited to, reasonable entertainment expenses,
travel and lodging expenses, following presentation of documentation in
accordance with the Company’s business expense reimbursement policies.

 

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5. Term; Termination of Employment.

 

As used herein, the phrase “Term of Employment” shall mean the period commencing
on the Effective Date and ending on the same date two (2) years later; provided,
however, that as of the expiration date of each of (i) the initial Term of
Employment and (ii) if applicable, any Renewal Period (as defined below), the
Term of Employment shall automatically be extended for a 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 Agreement is incorporated in this
Agreement by reference and is hereby made a part of this Agreement as if fully
set forth herein.

 

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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 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

 

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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 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

 

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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 be 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

 

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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
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

 

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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, including the Executive Employment Agreement previously executed by
the parties dated February 25, 2004 which the parties now consider to be of no
effect. This Agreement can only be changed or modified pursuant to a written
instrument duly executed by each of the parties hereto.

 

(c) If any provision of this Agreement or any portion thereof is declared
invalid, illegal, or incapable of being enforced by any court of competent
jurisdiction, the remainder of such provisions and all of the remaining
provisions of this Agreement shall continue in full force and effect.

 

(d) This Agreement shall be governed by and construed in accordance with the
internal, domestic laws of the State of North Carolina.

 

(e) The Company may assign this Agreement to any direct or indirect subsidiary
or parent of the Company or joint venture in which the Company has an interest,
or any successor (whether by merger, consolidation, purchase or otherwise) to
all or substantially all of the stock, assets or business of the Company and
this Agreement shall be binding upon and inure to the benefit of such successors
and assigns. Except as expressly provided herein, Executive may not sell,
transfer, assign, or pledge any of his rights or interests pursuant to this
Agreement.

 

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(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.

 

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

 

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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.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

EXECUTIVE

  TRIMERIS, INC.

By:

  

/s/ George W. Koszalka

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By:

 

/s/ Dani P. Bolognesi

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Name:

  

George W. Koszalka

 

Name:

 

Dani P Bolognesi, Ph.D.

Title:

  

Executive Vice President

of Scientific Operations

 

Title:

 

Chief Executive Officer and

Scientific Officer

Address:

  

136 Donegal Drive

 

Address:

 

3518 Westgate Drive

    

Chapel Hill, NC 27517

     

Durham, NC 27707

 

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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.

 

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¨ Additional sheets attached.

 

¨ No material.

 

EXECUTIVE:

 

/s/ George W. Koszalka

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George W. Koszalka

 

Date: 7/26/2004

 

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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 21st day of June, 2004, by and between
GEORGE W. (“BARNEY”) KOSZALKA, 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 the occurrence of any of the following events
within 90 days immediately following a “Change in Control”, as defined below,
unless such event is 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 the Employment
Agreement, including, but not limited to, a material adverse alteration in the
nature or status of Executive’s responsibilities or Base Salary;

 

(ii) the Company’s requiring the Executive to be based anywhere other than the
metropolitan area where he currently works and resides; and

 

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(iii) the surviving entity does not offer Executive an employment agreement
substantially comparable to the rights he had, at the time of the Change in
Control, under the Employment Agreement.

 

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”). Executive’s right to
terminate his employment for Good Cause due to any “Change in Control” must be
exercised within sixty (60) days after receiving written notice or his receiving
actual knowledge of such Good Cause.

 

(d) Cause shall mean:

 

(i) fraud, misappropriation, embezzlement, or other act of material misconduct
against the Company or any of its affiliates;

 

(ii) substantial and willful failure to perform specific and lawful directives
of the CEO and CSO;

 

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(iii) willful and knowing violation of any rules or regulations of any
governmental or regulatory body, which is materially injurious to the financial
condition of the Company; or 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 on June 21st, 2006 or his Base Salary for a period of one
(1) year from the effective date of termination, whichever is longer (the
“Salary Continuation Period”), as if Executive were still employed during the
Salary Continuation Period; and (ii) during the Salary Continuation Period,
Executive and his spouse and dependents

 

15

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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 the length of the Salary
Continuation Period 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
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.

 

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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.

 

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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 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

 

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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. 2004 Executive Employment Agreement and

Separation and Severance Plan

Plan Number:

  501

Plan Year:

  Calendar year

Plan Type:

  Welfare benefit plan

Effective Date:

  June 21, 2004

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/ George W. Koszalka            

--------------------------------------------------------------------------------

 

(SEAL)

George W. Koszalka

   

 

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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
GEORGE W. (“BARNEY”) KOSZALKA (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
21st day of June, 2004 between the Company and Executive (the “Severance
Agreement”), to be paid beginning no sooner than the eighth day following
execution of this document, Executive hereby releases, waives and forever
discharges the Company, its parent, affiliates and subsidiaries, and all of its
benefit plans, plan administrators, trustees, agents, subsidiaries, affiliates,
employees, officers, shareholders, successors and assigns (hereafter “the
Releasees”) from any and all liability, actions, charges, causes of action,
demands, damages, attorneys fees or claims for relief or remuneration of any
kind whatsoever, whether known or unknown at this time, arising out of or in any
way connected with Executive’s employment, or the termination of employment,
with the Company. These include, but are not limited to, any claim (including
related attorneys’ fees and costs) under the Age Discrimination in Employment
Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act, the Worker’s Adjustment and Retraining Notification Act, the Equal Pay Act,
the Post Civil War Civil Rights Act, the Fair Labor Standards Act, the Family
and Medical Leave Act, the North Carolina Wage and Hour Act, the North Carolina
Hazardous Chemicals Right to Know Act, the North Carolina Retaliatory Employment
Discrimination Act, all as amended, or any other federal, state or local law or
ordinance, and any claim for benefits or other claims under the Employee
Retirement Income Security Act of 1974, as amended (except as expressly provided
below). This waiver, release and discharge also includes without limitation, any
wrongful or unlawful discharge claims, discipline or retaliation claims, any
claims relating to any contract of employment, whether express or implied, any
claims related to promotions or demotions, any claims for or relating to
relocation, compensation including commissions, short term or long term
incentives, the Company’s Executive benefit plans and the management thereof
(except as expressly provided below), any claims for defamation, slander, libel,
invasion of privacy, misrepresentation, fraud, infliction of emotional distress,
any claims based on stress to the extent permitted by law, any claims for breach
of any covenant of good faith and fair dealing, and any other claims relating to
the Executive’s employment with the Company and termination thereof. This
Settlement Agreement does not apply to any claims or rights that may arise under
the Age Discrimination in Employment Act after the date that this Settlement
Agreement is signed.

 

Executive expressly waives all claims, including those which he/she does not
know or suspect to exist in his/her favor as of the date of this Settlement
Agreement. As used in this Settlement Agreement, the parties understand the word
“claims” to include all actions, claims and grievances, whether actual or
potential, known or unknown, and specifically but not exclusively

 

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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.

 

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.

 

21

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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: George W. Koszalka

 

--------------------------------------------------------------------------------

Date

 

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