Document:

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                                                                   EXHIBIT 10.42

** CERTAIN INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT
TO A CONFIDENTIAL TREATMENT REQUEST UNDER RULE 24B-2 OF THE COMMISSION.

                                   AMENDMENT 2
                                       TO
                   RESEARCH AND DEVELOPMENT SERVICES AGREEMENT

                  THIS AMENDMENT is made effective as of January 6, 2000,
between LUCENT TECHNOLOGIES INC., a Delaware corporation, having its principal
office at 600 Mountain Avenue, Murray Hill, New Jersey 07974 ("Lucent") and
PLIANT SYSTEMS, INC. ("Pliant"), previously known as BROADBAND TECHNOLOGIES,
INC. ("BBT"), a Delaware corporation, having an address at 4024 Stirrup Creek
Drive, Durham, North Carolina 27709-3737, (hereinafter collectively the
"Parties").

                  WHEREAS, Lucent and Pliant entered into a Manufacturing
Agreement dated as of February 4, 1998;

                  WHEREAS, Lucent and Pliant entered into a Research and
Development Services Agreement dated as of February 4, 1998 and amended on
February 23, 1999 (hereinafter the "R&D Agreement");

                  WHEREAS, Lucent and Pliant entered into Product Letter #1
dated as of March 22, 1999 (hereinafter the "PiPON Product Letter");

                  WHEREAS, the Parties desire that their business relationship
be redirected from manufacturing and focused on research and development
projects in accordance with the terms and conditions set forth herein; and

                  WHEREAS, Lucent and Pliant desire that the Manufacturing
Agreement and any and all amendments, modifications and revisions to the
Manufacturing
<PAGE>
                                                                               2

Agreement and the PiPON Product Letter be terminated, rescinded and superseded
by this Amendment to the R&D Agreement (hereinafter this "Amendment").

                  NOW, THEREFORE, in consideration of the covenants and other
terms set forth herein, Lucent and Pliant do hereby agree as follows:

                  Section 1. Termination of Manufacturing Agreement . Subject to
the terms, conditions and exceptions set forth herein, including, without
limitation, the provisions of Section 4 below, Lucent and Pliant agree that the
Manufacturing Agreement and any and all amendments, modifications and revisions
to the Manufacturing Agreement and the PiPON Product Letter are hereby
terminated. Lucent and Pliant agree that Lucent is under no further obligation
to purchase Material (as that term is defined in Section 2.0 of the
Manufacturing Agreement) from Pliant or to make any deficiency payments to
Pliant under Section 7.0 or any other provision of the Manufacturing Agreement.

                  Section 2. Amendment to the R&D Agreement. In consideration of
the cancellation of the Parties' respective obligations under the Manufacturing
Agreement and PiPON Product Letter, as provided in Section 1 above, Lucent and
Pliant agree as follows:

                  A.    The Projects (as such term is defined in Section 1.14 of
                    the R&D Agreement) to be completed under the R&D Agreement
                    shall be supplemented to include any or all of the Projects
                    described on Schedule A, which is attached hereto and
                    incorporated herein by reference. The Parties may revise or
                    supplement the Projects to be performed under this Amendment
                    upon written agreement. Any Project to be undertaken in
<PAGE>
                                                                               3

                    connection with this Amendment shall be subject to the
                    requirements of Section 2.02 of the R&D Agreement pertaining
                    to Project Letters.

                  B.    The Parties acknowledge that Project Letter No. 5 on
                    Schedule A is currently a place-holder for additional work
                    to be performed by Pliant upon agreement of the Parties. The
                    subject matter and scope of the Project to be performed
                    under Project Letter No. 5 on Schedule A shall be determined
                    by the Parties no later than June 1, 2000 and shall have a
                    completion date no later than December 31, 2001. Lucent
                    acknowledges that the payments listed on Schedule B for
                    Project Letter No. 5 are to be made to Pliant even if there
                    is no agreement as to the subject matter of Project Letter
                    No. 5.

                  C.    Lucent shall pay Pliant for each Project in accordance
                    with the payment schedule set forth in Schedule B, which is
                    attached hereto and incorporated herein by reference. The
                    payment schedule set forth in Schedule B shall rescind and
                    supersede all prior payment obligations to which the Parties
                    have agreed in the R&D Agreement and Manufacturing Agreement
                    as amended.

                  D.    The aggregate sum to be paid by Lucent to Pliant for any
                    and all Projects performed under this Amendment is $18.75
                    million (hereinafter "the Balance") plus Conversion Costs.
                    The Parties acknowledge that $9 million of the Balance was
                    transferred
<PAGE>
                                                                               4

                    from the Manufacturing Agreement to the R&D Agreement in
                    connection with this Amendment and $5.3 million of the
                    Balance is attributable to work to be performed under
                    Project Letter No. 5, which is currently undefined. The
                    Parties agree that payment by Lucent to Pliant of the
                    aforementioned $9 million, which is related to Project
                    Letters No. 3, 4, and 5 and displayed on Schedule B, is a
                    firm obligation of Lucent to Pliant which obligation is not
                    contingent upon performance of the Projects by Pliant, and
                    shall not be affected if any other provision of the R&D
                    Agreement is determined to be invalid or unenforceable.

                  Section 3. Possible Modifications to Payment for Project
                  Letter No. 5.

                          A.   If Pliant incurs Conversion Costs (as hereinafter
                             defined) as a result of terminating the existing
                             Manufacturing Agreement and PiPON Product Letter,
                             Lucent agrees to reimburse such reasonable
                             Conversion Costs up to a maximum of $1.1 million
                             for Project Letters No. 1, Phase 3; Project Letter
                             No. 3; and Project Letter No. 4. Conversion Costs
                             for the aforementioned Projects and for Project
                             Letter No. 5 are dependent on the scope of the
                             Project and will be mutually agreed by the Parties
                             as the Project Letters are executed. All Conversion
                             Costs to be reimbursed by Lucent shall be
                             identified in the respective Project Letter and
                             added to the payment owed for that Project. All
                             Conversion Costs are payable to Pliant by Lucent by
                             December 31, 2001.
<PAGE>
                                                                               5

                             Reimbursement of Conversion Costs shall be
                             conditioned upon Lucent's receipt of satisfactory
                             documentation of Pliant's actual costs. "Conversion
                             Costs" means incremental cost/expense incurred by
                             the Pliant's development organization to complete
                             the Project Letter work associated with the $9
                             million Manufacturing Absorption obligation
                             transferred from the Manufacturing Agreement to the
                             R & D Agreement. Conversion Costs include but are
                             not limited to: engineering and project management
                             resources, project build and qualification
                             resources, travel, and service expenses.

                          B.   Pliant may elect to license Lucent's Voice
                             Frequency Data Enhancement ("VFDE") technology, on
                             a non-exclusive basis, within forty-five (45) days
                             of the effective date of this Amendment. The
                             granting of such a non-exclusive license by Lucent
                             shall be contingent upon the Parties' written
                             agreement to mutually acceptable terms and
                             conditions for such license. The Parties agree that
                             such license for use of Lucent's VFDE technology in
                             accordance with the terms of the license agreement
                             shall, among other things, include a license fee to
                             be negotiated by the Parties, but which fee shall
                             in no event be more than $3.5 million.

                  Section 4. Continuing Obligations. Notwithstanding the
provisions of Section 1 above regarding termination of the Manufacturing
Agreement and PiPON Product Letter, the Parties shall have continuing
obligations regarding
<PAGE>
                                                                               6

PiPON product already delivered to Lucent under the following provisions of the
Manufacturing Agreement: Section 22, "Indemnity," Section 23, "Infringement,"
Section 39, "Repair Not Covered Under Warranty," Section 40.0, "Repair
Procedures," Section 51.0, "Warranty," and under the following provisions of
Product Letter #1 (the "PiPON" Product Letter): Section 14, "Warranty," Section
15, "Warranty Tracking," and Section 16, "Product Repair," which provisions are
incorporated herein by reference. The obligations in Sections 39, 40 and 51 of
the Manufacturing Agreement, and Sections 14, 15, 16 of the PiPON Product Letter
shall continue for one (1) year from the effective date of this Amendment. The
Parties agree that Materials required for product repair will be supplied by
Lucent to Pliant. Pliant's fees for out of warranty repairs and No Trouble Found
conditions are listed in Schedule B. The Parties agree that obligations
contained in PiPON Product Letter, Section 11.4, "BBT and Lucent Obligations for
Material", currently outstanding purchase orders from Lucent to Pliant, and
currently outstanding invoices from Pliant to Lucent shall continue. In the
event the Manufacturing Agreement and PiPON Product Letter contain conflicting
terms, the terms of the PiPON Product Letter shall control. The obligations of
Sections 22 and 23 of the Manufacturing Agreement shall survive the termination
or expiration of this Amendment.

                  Section 5. Original Equipment Manufacturer's (OEM) Agreement.
Lucent will at its sole discretion, and approval of Pliant, enter into an OEM
Agreement with Pliant whereby Lucent may purchase Pliant's Pliant(TM)3000
Integrated Access Platform product and certain plug-ins ("the Products") subject
<PAGE>
                                                                               7

to, among other things, satisfactory and timely completion by Pliant of the
design and development of the Products, acceptable pricing of the Products by
Pliant, the market demands of Lucent's customers, Lucent's strategic direction
and the negotiation of mutually acceptable written terms and conditions in an
OEM agreement. Upon execution of an OEM Agreement and upon prior written
approval, the Parties will issue a press release or other public announcements
relating to an OEM Agreement.

                  Section 6. Definitions. All capitalized terms in this
Amendment which are not defined shall have the meaning set forth in the
Manufacturing Agreement or the R&D Agreement, as the case may be.

                  Section 7. All terms and conditions of the R&D Agreement which
are not specifically modified herein shall remain in full force and effect.

                  Section 8. Assignment of VFDE. The rights of Pliant, under
this Amendment No. 2 to enter into a license with Lucent with respect to VFDE
technology pursuant to Section 3B hereof and any such license that may be
entered into, may not be assigned by Pliant to any third party. In the event
that Pliant undergoes a Change of Control as such term is defined in Section
1.10 of the R&D Agreement, Pliant shall obtain Lucent's prior written consent to
the assignment of any such right or license in connection with the Change of
Control, it being understood that under no circumstances shall such right or
license be assigned or otherwise transferred to a competitor of Lucent. In the
event of a Change of Control involving a competitor of Lucent, Pliant's license
to use VFDE technology, if any, shall immediately terminate and Pliant shall
return to Lucent all proprietary information pertaining to VFDE.
<PAGE>
                                                                               8

                  Section 9. Simultaneously with the execution of this
Amendment, and as a condition of execution of this Amendment, Pliant will
deliver to Lucent a release executed by Pliant in the form attached as Schedule
C and Lucent will deliver to Pliant a release executed by Lucent in the form
attached Schedule D.

                  IN WITNESS WHEREOF, Lucent and Pliant have caused this
Agreement to be executed by their duly authorized representatives.
<TABLE>
<CAPTION>
<S>     <C>                                                <C>         <C>
        PLIANT SYSTEMS, INC.                                       LUCENT TECHNOLOGILES INC.

By:     Original signed by David E. Orr                   By:      Original signed by David W. Heard
        -----------------------------------------                  --------------------------------------------------

Name:   David E. Orr                                      Name:    David W. Heard
        -----------------------------------------                  --------------------------------------------------

Title:  President and CEO                                 Title:   Access Product Management Vice President
        -----------------------------------------                  --------------------------------------------------

Date:   January 6, 2000                                   Date:    January 6, 2000
        -----------------------------------------                  --------------------------------------------------
</TABLE>
<PAGE>
           Amendment 2 to Research and Development Services Agreement
                                   Schedule A

PROJECT LETTER 1 - PHASE 1
Scope of Work:
--------------
       *******************************************************************
*********************************************************************
PLIANT Deliverables:
-------------------
         - **********************************************
         - ***************************************************
         - ***********************************************
PLIANT Delivery Schedule:
------------------------
          ***************************************************************
                 **********************************************************
         ***************************************************************
Cost of Project:
---------------
***********

PROJECT LETTER 1 - PHASE 2
Scope of Work:
--------------
     ***************************************************************
       *****************************
PLIANT Deliverables:
-------------------
         - ************************************
         - **********************
PLIANT Delivery Schedule:
------------------------
          ************************************************************
             ******************
Cost of Project:
---------------
******

PROJECT LETTER 1 - PHASE 3
Scope of Work:
--------------
             ****************************************************************
               ********************************************
PLIANT Deliverables:
-------------------
         - ***************************************************************
             **************************************

PLIANT Delivery Schedule:
------------------------
          **************************************************************
Cost of Project:
---------------
         *************************

                                     Page 1
<PAGE>
           Amendment 2 to Research and Development Services Agreement
                                   Schedule A

PROJECT LETTER 2
Scope of Work:
--------------
             **************************************************************
               ********************************************************
PLIANT Deliverables:
-------------------
         - **************************************************************
             **************
         *******************************
         - ****************************
PLIANT Delivery Schedule:
------------------------
          *************************************************************
Cost of Project:
---------------
         *****

PROJECT LETTER 3
Scope of Work:
--------------
          **************************************************************
PLIANT Deliverables:
-------------------
         - *************************************************************
               ************************************************
         - ************************************************************
PLIANT Delivery Schedule:
------------------------
         *****************************************************************
Cost of Project Letter:
----------------------
         ***************************

PROJECT LETTER 4
Scope of Work:
--------------
              **************************************************************
               **************************************************************
               ****
PLIANT Deliverables:
-------------------
         - ************************************
         - ************************************
         - ****************************************************************
PLIANT Delivery Schedule:
------------------------
         ***************************************************************
                 **********************************************************
Cost of Project:
---------------
***************************

                                     Page 2
<PAGE>
           Amendment 2 to Research and Development Services Agreement
                                   Schedule A

PROJECT LETTER 5
Scope of Work:
--------------
              **************************************************************
               *************************************************************
               **************************************************************
               **************************************************************
               **************************************************************
               **********************************
PLIANT Deliverables:
-------------------
         ****************
PLIANT Delivery Schedule:
------------------------
         *****************************************************************
                          *****************************************
Cost of Project:
---------------
***************************

                                     Page 3
<PAGE>
                                                                      Schedule B

                          LUCENT / PLIANT SYSTEMS, INC.
        AMENDMENT 2 TO RESEARCH & DEVELOPMENT SERVICES AGREEMENT PAYMENT
                           SCHEDULE AND REPAIR PRICES

                                  (IN MILLIONS)
<TABLE>
<CAPTION>
                      PAYMENT DUE DATE / AMOUNT                                         DELIVERABLE DUE
----------------------------------------------------------------------          --------------------------------
<S>                                      <C>                     <C>                         <C>
PROJECT LETTER # 1-1                                                                       31-MAR-00
--------------------
                                   AMOUNT PAID TO DATE         $10.00
                                              1-JAN-00          $1.75
                                              1-APR-00          $0.75
                                      REMAINING AMOUNT          $2.50
                                                                -----
                                         PROJECT TOTAL         $12.50

PROJECT LETTER # 1-2                                                                       31-JUL-00
--------------------
                                   AMOUNT PAID TO DATE          $1.25
                                             31-JAN-00          $0.80
                                              1-APR-00          $0.75
                                      REMAINING AMOUNT          $1.55
                                                                -----
                                         PROJECT TOTAL          $2.80

PROJECT LETTER # 1-3                                                                       31-JUL-00
--------------------
                                   AMOUNT PAID TO DATE          $0.00
                                             31-JAN-00          $0.50
                                              1-APR-00          $0.10
                                             31-JUL-00          $0.40
                                                                -----
                                         PROJECT TOTAL          $1.00

PROJECT LETTER #2                                                                          31-DEC-00
-----------------
                                   AMOUNT PAID TO DATE          $0.00
                                             31-JAN-00          $0.45
                                             31-JUL-00          $0.50
                                             31-OCT-00          $0.50
                                             31-JAN-01          $2.60
                                              1-APR-01          $0.15
                                                                -----
                                         PROJECT TOTAL          $4.20

PROJECT LETTER #3                                                                   01-JAN-00 TO 31-DEC-01
-----------------
                                   AMOUNT PAID TO DATE          $0.00
                                             31-JAN-00          $0.15
                                              1-APR-00          $0.15
                                             31-JUL-00          $0.15
                                             31-OCT-00          $0.15
                                             31-JAN-01          $0.15
                                              1-APR-01          $0.15
                                             31-JUL-01          $0.30
                                                                -----
                                         PROJECT TOTAL          $1.20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                      <C>                     <C>                         <C>
PROJECT LETTER #4                                                                          30-SEP-01
-----------------
                                   AMOUNT PAID TO DATE          $0.00
                                             31-JAN-01          $1.00
                                              1-APR-01          $1.00
                                             31-MAY-01          $1.00
                                                                -----
                                         PROJECT TOTAL          $3.00

PROJECT LETTER #5                                                                             TBD
                                   AMOUNT PAID TO DATE          $0.00
                                             31-JAN-00          $1.10
                                             31-JUL-00          $1.70
                                             31-OCT-00          $1.10
                                              1-APR-01          $0.70
                                             31-MAY-01          $0.70
                                                                -----
                                         PROJECT TOTAL          $5.30

REMAINING AMOUNT: ALL                                          $18.75
PROJECTS                                                         PLUS
                                                           CONVERSION
                                                                COSTS
</TABLE>
                               PRICES FOR REPAIRS

o   OUT OF WARRANTY REPAIRS: $150 PER HOUR PLUS MATERIALS.
o   LUCENT IS RESPONSIBLE FOR PROVIDING THE MATERIALS REQUIRED FOR REPAIR.
o   FOR PURPOSES OF CLARIFICATION, OUT OF WARRANTY REPAIRS INCLUDES, BUT IS NOT
    LIMITED TO, DIAGNOSTICS, ASSEMBLY, AND TESTING PERFORMED BY PLIANT WHICH IS
    NOT ATTRIBUTABLE TO PLIANT'S WORKMANSHIP DEFECTS.
o   NO TROUBLE FOUND FOR "IN WARRANTY" REPAIRS: $150 PER HOUR WITH A ONE-HOUR
    MINIMUM.
o   LUCENT IS RESPONSIBLE FOR ALL TRANSPORTATION COSTS.
<PAGE>
                                                                               1

                                                                      Schedule C
                                                                      ----------

                              PLIANT SYSTEMS, INC.
                         RELEASE AND COVENANT NOT TO SUE

                  TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW
THAT PLIANT SYSTEMS, INC., a Delaware corporation ("Pliant") previously known as
BROADBAND TECHNOLOGIES, INC. (BBT"), on behalf of itself, its divisions, heirs,
successors and assigns, its wholly owned subsidiaries and their respective
divisions, heirs, successors and assigns, and all other persons that Plaint has
the power and authority to bind through its execution of this Release and
Covenant Not to Sue (herein, separately and collectively, the "Releasors"), in
consideration of good and valuable consideration received from Lucent
Technologies Inc., a Delaware corporation ("Lucent"), the receipt and
sufficiency of which is hereby acknowledged, hereby release, acquit and forever
discharge Lucent, each of Lucent's wholly owned subsidiaries, each of the
above's respective officers, directors, employees, shareholders, agents and
attorneys and the respective heirs, executors, administrators, successors and
assigns of each of the foregoing (herein, separately and collectively, the
"Releasees"), from any and all actions, complaints, causes of action, demands,
damages, costs and expenses, liabilities, suits and claims, in law or in equity,
whether now known or unknown, whether asserted or unasserted (collectively
"Claims") arising out of or related to the Manufacturing Agreement between
Lucent and BBT dated as of February 4, 1998 and Product Letter # 1 dated as of
March 22, 1999 which the Releasors ever had, now have, or hereinafter can, shall
or may have from the beginning of the world to the date of this Release
(hereinafter collectively referred to as the "Released Claims"), except that
such release, acquittal and discharge shall not apply to, and the Released
Claims shall
<PAGE>
                                                                               2

                                                                      Schedule C
                                                                      ----------

not include, any Claims arising out of or related to Lucent's Continuing
Obligations as defined in Section 4 of Amendment 2 to the Research and
Development Services Agreement dated as of January 6, 2000.

                  Pliant represents and warrants that it has duly considered,
approved and authorized this Release and Covenant Not To Sue, has taken all
necessary actions for this Release and Covenant Not To Sue to be valid and
binding and warrants that the execution of this Release and Covenant Not To Sue
by the undersigned on behalf of Pliant duly binds and commits all Releasors.

                  Releasors covenant and agree that they will forever refrain
from instituting, reinstating, maintaining or prosecuting any action or
proceeding against Releasees upon any Claims, whether or not now or hereafter
known, suspected or claimed which Releasors ever had, now have or hereafter can,
shall or may have or allege against Releasees on account of any of the Released
Claims.

                  Notwithstanding Section 1542 of the California Civil Code,
which provides:

         "A general release does not extend to claims which the creditor does
         not know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor,"

this Release and Covenant Not to Sue shall constitute a full release in
accordance with its terms. Pliant knowingly and voluntarily waives the
provisions of Section 1542, if applicable, and any provisions of similar effect
in the law of the State of Minnesota or federal law or statutes, if applicable,
and acknowledges and agrees that this waiver is an essential part of this
Release and Covenant Not To Sue. Pliant further acknowledges that this Release
and Covenant Not To Sue has been negotiated and agreed to in light of such
<PAGE>
                                                                               3

                                                                      Schedule C
                                                                      ----------

possible damages, losses, fees, costs or expenses and that Pliant took that into
account in agreeing to execute this Release and Covenant Not To Sue.

                  Releasors represent and warrant that Releasors have not sold,
assigned, transferred, conveyed or otherwise disposed of any claim, demand or
cause of action or any part thereof relating to any matter covered by this
Release and Covenant Not To Sue and agree to indemnify Releasees against any and
all claims by third persons resulting from any such sale, assignment, transfer,
conveyance or other disposition.

                  This Release and Covenant Not To Sue shall not be altered or
modified in any way except by written consent of authorized representatives of
Releasors and Releasees.

                  This Release and Covenant Not To Sue shall be governed by the
laws of the State of New Jersey.

                  IN WITNESS WHEREOF, RELEASORS have caused this Release to be
executed by their duly authorized agent as of January 6, 2000.

                                           PLIANT SYSTEMS, INC.

                                   By:     Original signed by David E. Orr
                                           ----------------------------------

                                   Name:   David E. Orr
                                           ----------------------------------

                                   Title:  President and CEO
<PAGE>
                                                                               1

                                                                      Schedule D
                                                                      ----------

                            LUCENT TECHNOLOGIES INC.
                         RELEASE AND COVENANT NOT TO SUE

                  TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW
THAT LUCENT TECHNOLOGIES INC., a Delaware corporation ("Lucent"), on behalf of
itself, its divisions, heirs, successors and assigns, its wholly owned
subsidiaries and their respective divisions, heirs, successors and assigns, and
all other persons that Lucent has the power and authority to bind through its
execution of this Release and Covenant Not to Sue (herein, separately and
collectively, the "Releasors"), in consideration of good and valuable
consideration received from Pliant Systems, Inc., a Delaware corporation
("Pliant") previously known as Broadband Technologies Inc. ("BBT"), the receipt
and sufficiency of which is hereby acknowledged, hereby release, acquit and
forever discharge Pliant, each of Plaint's wholly owned subsidiaries, each of
the above's respective officers, directors, employees, shareholders, agents and
attorneys and the respective heirs, executors, administrators, successors and
assigns of each of the foregoing (herein, separately and collectively, the
"Releasees"), from any and all actions, complaints, causes of action, demands,
damages, costs and expenses, liabilities, suits and claims, in law or in equity,
whether now known or unknown, whether asserted or unasserted (collectively
"Claims") arising out of or related to the Manufacturing Agreement between
Lucent and BBT dated as of February 4, 1998 and Product Letter # 1 dated as of
March 22, 1999 which the Releasors ever had, now have, or hereinafter can, shall
or may have from the beginning of the world to the date of this Release
(hereinafter collectively referred to as the "Released Claims"), except that
such release, acquittal and discharge shall not apply to, and the Released
Claims shall not include, any Claims
<PAGE>
                                                                               2

arising out of or related to Plaint's Continuing Obligations as defined in
Section 4 of Amendment 2 to the Research and Development Services Agreement
dated as of January 6, 2000.

                  Lucent represents and warrants that it has duly considered,
approved and authorized this Release and Covenant Not To Sue, has taken all
necessary actions for this Release and Covenant Not To Sue to be valid and
binding and warrants that the execution of this Release and Covenant Not To Sue
by the undersigned on behalf of Lucent duly binds and commits all Releasors.

                  Releasors covenant and agree that they will forever refrain
from instituting, reinstating, maintaining or prosecuting any action or
proceeding against Releasees upon any Claims, whether or not now or hereafter
known, suspected or claimed which Releasors ever had, now have or hereafter can,
shall or may have or allege against Releasees on account of any of the Released
Claims.

                  Notwithstanding Section 1542 of the California Civil Code,
which provides:

         "A general release does not extend to claims which the creditor does
         not know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor,"

this Release and Covenant Not to Sue shall constitute a full release in
accordance with its terms. Lucent knowingly and voluntarily waives the
provisions of Section 1542, if applicable, and any provisions of similar effect
in the law of the State of Minnesota or federal law or statutes, if applicable,
and acknowledges and agrees that this waiver is an essential part of this
Release and Covenant Not To Sue. Lucent further acknowledges that this Release
and Covenant Not To Sue has been negotiated and agreed to in light of such
possible damages, losses, fees, costs or expenses and that Lucent took that into
account in agreeing to execute this Release and Covenant Not To Sue.
<PAGE>
                                                                               3

                  Releasors represent and warrant that Releasors have not sold,
assigned, transferred, conveyed or otherwise disposed of any claim, demand or
cause of action or any part thereof relating to any matter covered by this
Release and Covenant Not To Sue and agree to indemnify Releasees against any and
all claims by third persons resulting from any such sale, assignment, transfer,
conveyance or other disposition.
                  This Release and Covenant Not To Sue shall not be altered or
modified in any way except by written consent of authorized representatives of
Releasors and Releasees.
                  This Release and Covenant Not To Sue shall be governed by the
laws of the State of New Jersey.

                  IN WITNESS WHEREOF, RELEASORS have caused this Release to be
executed by their duly authorized agent as of January 6, 2000.

                                  Lucent Technologies Inc.

                          By:     Original signed by David W. Heard
                                  -------------------------------------------

                          Name:   David W. Heard
                                  -------------------------------------------

                          Title:  Access Product Management Vice PresidentExhibit 10.27

                               EXECUTIVE AGREEMENT

         THIS AGREEMENT is made and entered into this the 7th day of January,
2000, by and between TRIMERIS, Inc., a Delaware corporation (the "Company"), and
ROBERT R. BONCZEK ("Bonczek").

                              W I T N E S S E T H:

         WHEREAS, Bonczek and the Company deem it to be in their respective best
interests to enter into an agreement providing for the Company's appointment of
Bonczek as an officer of the Company 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 2nd day of
         September, 1999, which date shall be referred to herein as the
         "Effective Date".

2.       Position and Duties.

                  (a) The Company hereby appoints Bonczek as its Acting Chief
         Administrative Officer and Acting Chief Financial Officer commencing as
         of the Effective Date for the "Term" (as herein defined below). In this
         capacity, Bonczek shall devote his best efforts and attention to the
         performance of the services customarily incident to such offices and
         positions 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.
         Bonczek shall in his capacity as an officer of the Company be
         responsible to and obey the reasonable and lawful directives of the CEO
         and CSO. Bonczek shall use his best efforts during the Term to protect,
         encourage, and promote the interests of the Company.

                  (b) The Company and Bonczek agree that the position, salary
         and duties outlined in subsection 2(a) above and subsections 3(a) and
         (b) below are transitional in nature. The Company, in its sole
         discretion, shall have the ability to reassign Bonczek to other duties
         or offices (including a reassignment to a lesser role), to reduce
         Bonczek's salary or to change Bonczek's position or title at any time
         without Bonczek's consent, provided that:

                           (i) In the case of a reassignment or change of
                  position or title in which Bonczek remains an officer of the
                  Company, such reassignment or change of position or title
                  leaves Bonczek in a position at least comparable to Bonczek's
                  status and compensation under the Initial Consulting Agreement
                  between Bonczek and Company dated August 25, 1997 and as
                  amended on January 23, 1998 and April 28, 1999 (the "Initial
                  Consulting Agreement"); and
<PAGE>

                           (ii) In the case of a reassignment or change of
                  position or title in which Bonczek is no longer an officer of
                  the Company, such reassignment or change of position or title
                  leaves Bonczek in a position at least comparable to Bonczek's
                  status and compensation under the Initial Consulting Agreement
                  for a period of at least twenty-four (24) full months
                  following the reassignment or change (the "Protected Period").

         The Company and Bonczek agree that any such reassignment, reduction of
         salary or change in position or title permitted under this paragraph (a
         "Permitted Reassignment") shall not entitle Bonczek to the payment of
         severance benefits under the Severance Agreement (as herein defined
         below).

3.       Compensation.

                  (a) Base Salary. The Company shall pay to Bonczek during the
         Term a minimum salary at the rate of Two Hundred Ten Thousand dollars
         ($210,000.00) 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. (Bonczek'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").

                  (b) Performance Bonus. In addition to the compensation
         otherwise payable to Bonczek pursuant to this Agreement, Bonczek shall
         be eligible to receive an annual bonus ("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 Bonczek. Bonczek's Bonus shall be in an
         amount up to forty-five percent (45%) of his Base Salary, provided that
         the Company, in computing Bonczek's annual bonus, shall have the right
         to make such adjustments as it may deem appropriate to reflect any
         mid-year changes in Bonczek's salary or position pursuant to subsection
         2(b) above.

                  (c) Long Term Stock Options. The Company has recommended that
         the Compensation Committee of the Board grant Bonczek nonqualified
         stock 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 in an equal number
         of shares over a period of four (4) years beginning August 17, 1999,
         and further subject to the terms set forth in this paragraph. Such
         options shall continue to vest so long as Bonczek remains an officer or
         on the payroll of the Company. In the event of termination of both
         Bonczek's appointment as an officer and on the payroll of the Company,
         no additional options shall vest, but stock options previously vested
         shall remain exercisable in accordance with the option agreement.
         Notwithstanding the foregoing, if Bonczek's is terminated under
         circumstances entitling Bonczek to severance benefits under the
         Severance Agreement (as herein defined below), Bonczek's options shall
         continue to vest during the Continuation Period (as defined in the
         Severance Agreement) following termination in accordance with the
         vesting schedule set

                                        2
<PAGE>

         forth in this paragraph and the option agreement, and shall remain
         exercisable for the remainder of the option term. All options will be
         subject to the terms and conditions of the Trimeris, Inc. Amended and
         Restated Stock Incentive Plan.

                  (d) Relocation Expenses. If Bonczek decides to relocate his
         primary residence to the Raleigh/Durham/Chapel Hill area during the
         term of this Agreement, the Company shall reimburse Bonczek for all
         conventional and reasonable relocation expenses. In addition, the
         Company shall also pay Bonczek an additional amount of up to
         Twenty-Five Thousand dollars ($25,000.00) for miscellaneous expenses
         and charges not capable of being itemized.

                  (e) Reimbursement of Lost Income. In consideration of Bonczek
         forgoing the supplemental income and career enhancement opportunities
         normally attendant to him, Company agrees to award Bonczek upon
         execution of this Agreement, a one time payment of Sixteen Thousand
         dollars ($16,000.00).

4.       Benefits During the Term.

                  (a) During the Term, Bonczek shall not 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. However, Bonczek 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) During the Term, Bonczek shall be allowed four (4) weeks
         of vacation with pay and leaves of absence with pay.

                  (c) During the Term, the Company shall reimburse Bonczek for
         reasonable business expenses incurred in performing Bonczek'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. As used herein, the phrase "Term" 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 and (ii) if applicable, any Renewal Period (as defined below),
the Term shall automatically be extended for a two (2) year period (each a
"Renewal Period") unless either the Company or Bonczek provides two (2) months'
written notice to the contrary. Notwithstanding the foregoing, the Term shall
expire on the first to occur of the following:

                  (a) Reassignment. The Company may, at any time and without
         prior notice, terminate Bonczek's appointment as an officer for the
         purpose of reassigning Bonczek to a lesser capacity so long as such
         reassignment satisfies the conditions of a Permitted Reassignment
         pursuant to subsection 2(b)(ii) of this Agreement. Upon such Permitted

                                        3
<PAGE>

         Reassignment, Bonczek's Term hereunder shall expire on the last day of
         the Protected Period.

                  (b) Termination by the Company. Notwithstanding anything to
         the contrary in this Agreement, whether express or implied, the Company
         may, at any time, terminate Bonczek's appointment (as an officer or
         otherwise) for any reason other than Cause, Death or Disability by
         giving Bonczek at least 60 days' prior written notice of the effective
         date of termination. Company may terminate Employee's appointment (as
         an officer or otherwise) for Cause, Death or Disability without prior
         notice, except that Bonczek 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 his intended
         actions and specifically describing the alleged events, activities or
         omissions giving rise thereto and with respect to those events,
         activities or omissions for which a cure is possible, a reasonable
         opportunity to cure such breach; and provided further, however, that
         for purposes of determining whether Cause is present, no act or failure
         to act by Bonczek shall be considered "willful" if done or omitted to
         be done by Bonczek in good faith and in the reasonable belief that such
         act or omission was in the best interest of the Company and/or required
         by applicable law. The terms "Cause" and "Disability" shall have the
         meaning given them under the Severance Agreement.

                  (c) Termination by Bonczek. In the event that Bonczek's
         appointment (as an officer or otherwise) with the Company is
         voluntarily terminated by Bonczek, the Company shall have no further
         obligation hereunder from and after the effective date of termination
         except as may be provided in the Severance Agreement (as herein defined
         below) and the Company shall have all other rights and remedies
         available under this Agreement or any other agreement and at law or in
         equity. Bonczek shall give the Company at least 30 days' advance
         written notice of his intention to terminate his appointment hereunder.

                  (d) Salary and Benefits Upon Termination. In the event of
         termination of appointment (as an officer or otherwise), Bonczek shall
         receive all regular Base Salary due up to the date of termination, and
         if it has not previously been paid to Bonczek, Bonczek shall be paid
         any Bonus to which Bonczek 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 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.
         Bonczek'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 and applicable option agreements thereunder, or any
         successor plans and agreements, which are not part of this Agreement.
         Bonczek'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, Bonczek,
         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.

                                       4
<PAGE>

                  (e) Agreement. The Severance Agreement is incorporated in this
         Agreement by reference and is hereby made a part of this Agreement as
         if fully set forth herein.

6.       Confidential Information, Non-Solicitation and Non-Competition.

                  (a) During the Term and at all times thereafter, Bonczek 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 Bonczek in the course of his appointment by the Company (as
         an officer or otherwise), 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. Bonczek
         acknowledges that such Confidential Information is specialized, unique
         in nature and of great value to the Company, and that such information
         gives the Company a competitive advantage. Upon the termination of his
         appointment for any reason whatsoever, Bonczek shall promptly deliver
         to the Company all documents, slides, computer tapes and disks (and all
         copies thereof) containing any Confidential Information.

                  (b) During the Term and for two (2) years thereafter, Bonczek
         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"). Bonczek 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 Bonczek and, in particular, Bonczek agrees that he will
         not induce any employee of the Company to carry out any such activity;
         provided, however, that the "beneficial ownership" by Bonczek, 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, 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 Bonczek 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

                                       5
<PAGE>

         human viral diseases based on a viral fusion protein target and any
         other business in which the Company may engage or propose to engage
         during the term of this Agreement.

                  (c) During the Term and for two (2) years thereafter, Bonczek
         shall not, directly or indirectly, influence or attempt to influence
         customers or suppliers of the Company or any of its subsidiaries or
         affiliates, to divert their business to any Competitor of the Company.

                  (d) Bonczek recognizes that he will possess confidential
         information about employees of the Company relating to their education,
         experience, skills, abilities, compensation and benefits, and
         interpersonal relationships with customers of the Company. Bonczek
         recognizes that the information he will possess about these 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. Bonczek agrees that, during the Term, and for a period of two
         (2) years thereafter, he will not, directly or indirectly, solicit or
         recruit any employee of the Company for the purpose of being employed
         by him or by any Competitor of the Company on whose behalf he is acting
         as an agent, representative or employee and that he will not at any
         time convey any such confidential information or trade secrets about
         other employees of the Company to any other person.

                  (e) Bonczek 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 and
         thereafter, Bonczek will hold Third Party Information in the strictest
         of confidence and will not disclose (to anyone other than Company
         personnel who need to know such information in connection with their
         work for Company), or use, except in connection with any work for
         Company, Third Party Information unless expressly and specifically
         authorized to do so prior to any proposed disclosure by an officer of
         Company.

                  (f) Inventions:

                      (i)   Assignment. Bonczek 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 Bonczek, either alone or
                            jointly with others, during his period of
                            appointment or engagement with Company. Proprietary
                            Rights assigned under this Section 6 are hereinafter
                            referred to as "Company Inventions". Bonczek 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

                                       6
<PAGE>

                            vest in Company's full legal title to such Company
                            Inventions, and Bonczek agrees to continue this
                            assistance after the termination of his appointment
                            or engagement with Company. Furthermore, Bonczek
                            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. Bonczek expressly acknowledges
                            that the foregoing power of attorney is coupled with
                            an interest and is therefore irrevocable and will
                            survive Bonczek's termination of appointment or
                            engagement, death or incompetency.

                      (ii)  Government. Bonczek also will assign to or as
                            directed by Company all his right, title and
                            interest in and to any and all Proprietary Rights,
                            full title to which may required to be in the United
                            States by a contract between Company and the United
                            States or any of its agencies.

                      (iii) Independent Proprietary Rights. Notwithstanding
                            anything in this Agreement to the contrary,
                            Bonczek's obligation to assign or offer to assign
                            Bonczek's rights in Proprietary Rights to Company
                            will not extend or apply to Proprietary Rights that
                            Bonczek has developed entirely on Bonczek's own time
                            without using Company's equipment, supplies,
                            facilities or trade secret information unless such
                            Proprietary Right: (a) relates to Company's business
                            or actual demonstrably anticipated research or
                            development or (b) results from any work performed
                            by Bonczek for Company. Bonczek will bear the burden
                            of proof in establishing that the Proprietary Right
                            qualifies for exclusion under this subsection
                            6(f)(iii).

                      (iv)  Assignment of Company Inventions. Bonczek 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. Bonczek's obligation to
                            assist Company with respect to Proprietary Rights
                            relating to such Company Inventions will continue
                            beyond the termination of Bonczek's appointment or
                            engagement, but Company will compensate Bonczek at a
                            reasonable rate after Bonczek's termination for the
                            time actually spent by Bonczek at Company's request
                            on such assistance.

                            Bonczek hereby waives and quitclaims to Company all
                            claims, of any nature whatsoever, which Bonczek 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 Bonczek's appointment or engagement,
                            Bonczek will promptly disclose to Company fully and
                            in writing, and will hold in trust for the

                                       7
<PAGE>

                            sole right and benefit of Company, any and all
                            Proprietary Rights. In addition, after termination
                            of Bonczek's appointment or engagement, Bonczek will
                            disclose all patent applications filed by Bonczek
                            within a year after termination of such appointment
                            or engagement.

                      (vi)  Prior Proprietary Rights. Proprietary Rights, if
                            any, patented or unpatented, which Bonczek made
                            prior to Bonczek's commencement of appointment or
                            engagement with Company are excluded from the scope
                            of this Agreement. To preclude any possible
                            uncertainty, Bonczek has set forth on the attached
                            Exhibit A, a complete list of all Proprietary Rights
                            that Bonczek 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 Bonczek's
                            appointment or engagement with Company, that Bonczek
                            considers to be Bonczek's property or the property
                            of the third parties, and Bonczek wishes to have
                            excluded from the scope of this Agreement. If
                            disclosure of any such Proprietary Right on Exhibit
                            A would cause Bonczek to violate any prior
                            confidentiality agreement with another party,
                            Bonczek understands that he is not to list such
                            Inventions in Exhibit A but that he is to inform
                            Company in writing that all such Proprietary Rights
                            have not been listed for that reason.

                  (g) If it is determined by a court of competent jurisdiction
         in any state that any restriction in this Section 6 is excessive in
         duration or scope or is unreasonable or unenforceable under the laws of
         that state, it is the intention of the parties that such restriction
         may be modified 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 Bonczek leaves the Company
for whatever reason, Bonczek 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. Bonczek 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. Miscellaneous. This Agreement shall also be subject to the following
miscellaneous considerations:

                  (a) Bonczek 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 Bonczek's

                                       8
<PAGE>

         appointment by the Company, this Agreement supersedes all prior and
         existing negotiations and agreements between the parties concerning
         Bonczek's appointment as an officer (including but not limited to the
         Initial Consulting Agreement), and this Agreement can only be changed
         or modified pursuant to a written instrument duly executed by each of
         the parties hereto.

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

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

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

                  (f) Any rights of Bonczek hereunder shall be in addition to
         any rights Bonczek may otherwise have under benefit plans, agreements,
         or arrangements of the Company to which he is a party or in which he is
         a participant. Provisions of this Agreement shall not in any way
         abrogate Bonczek's rights under such other plans, agreements, or
         arrangements.

                  (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 Bonczek 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.

                                       9
<PAGE>

                  (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.

         9. Legal and Equitable Remedies. Because Bonczek's services are
personal and unique, and because Bonczek will have access to and become
acquainted with Proprietary and Confidential Information of Company, Company
will have the right to enforce this Agreement and any of its provisions by
injunction, specific performance or other equitable relief in any court of
competent jurisdiction, without prejudice to any other rights and remedies that
Company may have for a breach of this Agreement.

         10. 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.

         11. Resolution of Disputes. Except as otherwise specifically provided
in Sections 8 and 10 of the Severance Agreement attached hereto, any dispute or
controversy arising under or in connection with this Agreement and Severance
Agreement shall be settled exclusively by arbitration administered by the
American Arbitration Association and conducted before a panel of three
arbitrators in Raleigh, Wake County, North Carolina, all in accordance with its
Commercial Arbitration rules then in effect. The Company and Bonczek 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
Bonczek 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, Bonczek, shall be entitled by arbitration
to seek de novo review of any material violation of the Severance Agreement or
any denial of a claim or obligation to pay a claim thereunder.

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

ROBERT R. BONCZEK                                COMPANY

                                                 TRIMERIS, INC.

BY:      /S/ ROBERT R. BONCZEK                   BY:      /S/ DANI P. BOLOGNESI
         ---------------------------                      ---------------------

TITLE: ACTING CHIEF ADMINISTRATIVE               NAME: DANI P. BOLOGNESI, PH.D
OFFICER AND ACTING CHIEF FINANCIAL OFFICER       TITLE:  CHIEF EXECUTIVE OFFICER
                                                 AND CHIEF SCIENTIFIC OFFICER

                                       10
<PAGE>

                                    EXHIBIT A
                                       TO
                               EXECUTIVE AGREEMENT

         1. The following is a complete list of all inventions or improvements
relevant to the subject matter of my appointment or engagement by the Company
that have been made or conceived or first reduced to practice by me alone or
jointly with others prior to my appointment or engagement by the 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.

         2. I propose to bring to my appointment or engagement 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 appointment or
engagement 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 the Company management to
determine what steps should be taken to protect the interests of all parties
concerned:

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

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

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

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

                           Additional sheets attached.
                  -----

                    X      No material.
                  -----

Date:    7 January 2000

ROBERT R. BONCZEK:

/S/ ROBERT R. BONCZEK
---------------------------
Robert R. Bonczek

<PAGE>

                        EXHIBIT B TO EXECUTIVE AGREEMENT

                  EXECUTIVE SEPARATION AND SEVERANCE AGREEMENT

         THIS SEPARATION AND SEVERANCE AGREEMENT (the "Severance Agreement") is
made a part of that Executive Agreement (the "Agreement"), entered into and
effective as of the 2nd day of September, 1999, by and between ROBERT R.
BONCZEK, an individual resident of the State of Delaware ("Bonczek"), and
TRIMERIS, INC., a Delaware corporation (the "Company").

                              W I T N E S S E T H:
                               -------------------

         WHEREAS, the Company desires to provide for severance benefits under
the terms and conditions set forth herein; and

         WHEREAS, this Severance Agreement constitutes part of the Agreement and
is incorporated therein by reference and fully set forth therein.

                                    COVENANTS

         NOW, THEREFORE, in consideration of the premises, mutual promises
contained herein, and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

         1. Certain Definitions. The following terms shall have the meanings set
forth herein.

                  (a) "Administrator" shall mean the Company. The Company shall
         also be the "named fiduciary" hereunder. The Company shall have the
         authority to designate one or more of its officers, employees or
         directors to act on its behalf in administering this Severance
         Agreement.

                  (b) "Base Salary" shall mean Bonczek's regular pay (in the
         form of salary or fees, as the case may be) 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
         Bonczek may be eligible.

                  (c) "Good Reason" shall mean, without the express written
         consent of Bonczek, the occurrence of any of the following events
         unless such events are fully corrected within 30 days following written
         notification by Bonczek to the Company that he intends to terminate his
         appointment as an officer hereunder for one of the reasons set forth
         below:

                      (i)   a material breach by the Company of any provision of
                            the Agreement or Severance Agreement, including, but
                            not limited to, the assignment to Bonczek of any
                            duties inconsistent with Bonczek's position in the
                            Company or a material adverse alteration in the
                            nature or status of

<PAGE>
                            Bonczek's responsibilities, except for a Permitted
                            Reassignment as permitted in subsection 2(b) of the
                            Agreement;

                      (ii)  the Company's requiring Bonczek to be based anywhere
                            other than the metropolitan area where the Company
                            is currently located; and

                      (iii) the occurrence of a "Change in Control" as defined
                            below.

         For purposes of this Agreement a "Change in Control" shall mean an
         event as a result of which: (i) any "person" (as such term is used in
         Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
         "Exchange Act")), is or becomes the "beneficial owner" (as defined in
         Rule 13d-3 under the Exchange Act, except that a person shall be deemed
         to have "beneficial ownership" of all securities that such person has
         the right to acquire, whether such right is exercisable immediately or
         only after the passage of time), directly or indirectly, of more than
         50% of the total voting power of the voting stock of the Company; (ii)
         the Company consolidates with, or merges with or into another
         corporation or sells, assigns, conveys, transfers, leases or otherwise
         disposes of all or substantially all of its assets to any person, or
         any corporation consolidates with, or merges with or into, the Company,
         in any such event pursuant to a transaction in which the outstanding
         voting stock of the Company is changed into or exchanged for cash,
         securities or other property, other than any such transaction where (A)
         the outstanding voting stock of the Company is changed into or
         exchanged for (i) voting stock of the surviving or transferee
         corporation or (ii) cash, securities (whether or not including voting
         stock) or other property, and (B) the holders of the voting stock of
         the Company immediately prior to such transaction own, directly or
         indirectly, not less than 50% of the voting power of the voting stock
         of the surviving corporation immediately after such transaction; or
         (iii) during any period of two consecutive years, individuals who at
         the beginning of such period constituted the Board of the Company
         (together with any new directors whose election by such Board or whose
         nomination for election by the stockholders of the Company was approved
         by a vote of 66-2/3% of the directors then still in office who were
         either directors at the beginning of such period or whose election or
         nomination for election was previously so approved) cease for any
         reason to constitute a majority of the Board of the Company then in
         office; or (iv) the Company is liquidated or dissolved or adopts a plan
         of liquidation, provided, however, that a Change in Control shall not
         include any going private or leveraged buy-out transaction which is
         sponsored by Bonczek or in which Bonczek 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, Bonczek shall have the
         option of electing to terminate his appointment or engagement due to a
         Change in Control and receive such severance benefits or electing to
         remain employed under the terms of this Severance Agreement, but not
         both. Bonczek's right to terminate his appointment or engagement 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:

                                       2
<PAGE>

                      (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;

                      (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;

                      (iv)  conviction of or plea of guilty or nolo contendere
                            to a felony; or

                      (v)   a material breach of the terms and conditions of the
                            Agreement;

                  provided, however, that with regard to subparagraphs (ii) and
                  (v) above, Bonczek 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 Bonczek shall be considered "willful" if
                  done or omitted to be done by Bonczek 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 Bonczek's
         incapacity due to physical or mental illness (as determined in good
         faith by a physician acceptable to the Company and Bonczek), Bonczek
         shall have been absent from the performance of his duties with the
         Company for 120 consecutive days during any twelve (12) month period or
         if a physician acceptable to the Company and Bonczek advises the
         Company that it is likely that Bonczek will be unable to return to the
         performance of his duties for 120 consecutive days during the
         succeeding twelve (12) month period.

         2. Responsibility for Benefits. The Company will pay the entire cost of
all benefits provided under this Severance Agreement, solely from its general
assets. The benefits made available by this Severance Agreement are "unfunded,"
and Bonczek is not required or permitted to make any contribution with respect
to this Severance Agreement.

         3. Payment of Benefits. In the event Bonczek's appointment as an
officer of the Company is terminated (a) by the Company other than for Cause,
Disability, Death or Permitted Reassignment, or (b) by Bonczek for Good Reason
(as defined herein), Bonczek shall receive the following severance benefits upon
his satisfaction of the condition in Section 4 hereof: (i) his Base Salary
during the period commencing on the effective date of such termination and
ending on the second anniversary of the date of such termination or, if earlier,
the last day of the Protected Period (the "Continuation Period"), as if Bonczek
were still employed or providing services to the Company, as the case may be,
during the Continuation Period.

                                       3
<PAGE>

         4. Conditions to Receipt of Benefits. Upon the occurrence of an event
described in Section 3 above, Bonczek will be eligible for severance benefits
hereunder only if Bonczek executes and delivers to the Company a Settlement
Agreement and Release in the form of Exhibit 1 attached hereto and made a part
hereof.

         5. Termination Events Not Covered; Termination of this Severance
Agreement. Notwithstanding anything to the contrary contained herein, the
Company shall not pay Bonczek severance benefits under this Severance Agreement
if:

                  (a) Bonczek dies during the Term;

                  (b) Bonczek's appointment or engagement is terminated for
         Cause or Disability;

                  (c) Bonczek's appointment as an officer is terminated in a
         Permitted Reassignment;

                  (d) Bonczek terminates his appointment with the Company for a
         reason other than Good Reason as defined herein;

                  (e) Bonczek revokes his agreement to release the Company from
         any and all claims related to his appointment pursuant to the
         Settlement Agreement and Release executed in satisfaction of Section 4
         hereof; or

This Severance Agreement shall terminate and be of no further force or effect
upon the occurrence of an event described in paragraphs (a), (b), (d) or (e) of
this Section. Following an event described in paragraph (c) of this Section,
this Severance Agreement shall terminate and be of no further force or effect at
the end of the Protected Period unless Bonczek becomes entitled to severance
benefits pursuant to Section 3 of this Severance Agreement prior to the end of
such Period.

         6. How Severance Benefits Are Paid. The Company will pay severance
benefits in installments through the Company's regular payroll procedure
according to Bonczek's pay schedule at the time of termination of appointment;
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 Bonczek's execution of the Settlement Agreement and Release. Bonczek's
severance benefits may 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;

                                       4
<PAGE>

                  (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 Agreement.

         8. Benefit Claims and Appeal Procedures. Bonczek has the right to make
a written claim for benefits under this Severance Agreement. If all or part of
Bonczek's claim for benefits is denied, or if there is a dispute regarding
Bonczek's rights under this Severance Agreement, the Administrator will notify
Bonczek in writing of the reasons for the denial of Bonczek'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 Bonczek 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 Bonczek if additional time is required for review of the claim. If
Bonczek disagrees with the Administrator's decision, Bonczek may appeal and
request a review of the case by the Administrator. Bonczek must request a review
of the claim in writing within sixty (60) days after the Administrator notifies
Bonczek of its decision. Bonczek's request must state why Bonczek disagrees with
the decision, and Bonczek must include any information, questions or comments to
support his appeal. Bonczek or his legal representative may review any documents
related to the claim. The Administrator will review the appeal and notify
Bonczek 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 Bonczek
if additional time is required for review of the appeal. The Administrator will
notify Bonczek of its final decision and the reasons for the decision.

         9. Additional Information Regarding this Severance Agreement.

                  (a) This Severance Agreement shall not be amended except by a
         written agreement executed by Bonczek and by an authorized officer of
         the Company (other than Bonczek).

                  (b) The Agreement and this Severance Agreement provides the
         sole and exclusive agreement concerning severance benefits for Bonczek
         in the event of a

                                       5
<PAGE>

         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 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) Bonczek acknowledges that no representation, promise or
         inducement has been made other than as set forth in the Agreement and
         this Severance Agreement, and that he does not enter into this
         Agreement and Severance Agreement in reliance upon any representation,
         promise or inducement not set forth herein and the Agreement. The
         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 Bonczek 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.

                  (f) Capitalized terms used in this Severance Agreement shall
         have the meanings specified in the Agreement, unless expressly provided
         otherwise herein.

         10. Bonczek's Rights Under ERISA. As a participant under this Severance
Agreement, Bonczek is entitled to certain rights and protections under ERISA.
Bonczek 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). Bonczek 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 Bonczek 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
Bonczek. The Company may not terminate Bonczek's appointment or engagement or
otherwise discriminate against Bonczek in any way to prevent him from obtaining
a severance benefit or exercising rights under ERISA. Under ERISA, Bonczek may
take the following steps to enforce his rights: (a) if Bonczek requests certain
materials from the administrator regarding this Severance Agreement and does not
receive them within 30 days, Bonczek may file suit in a federal court; in such a
case, the court may require the Administrator to provide the materials and pay
Bonczek up to $100 a day until Bonczek receives the materials, unless the
materials were not sent due to reasons beyond the control of the Administrator;
(b) if Bonczek's claim for benefits is denied or ignored in whole or in part,
Bonczek may file suit in federal court; (c) if Bonczek is discriminated against
for pursuing a benefit or exercising ERISA rights, Bonczek may seek help from
the United States Department of Labor or file suit in a federal court. If
Bonczek files a suit, the court will decide who should pay court costs and legal

                                       6
<PAGE>

fees. If Bonczek has any questions about this statement or about ERISA rights,
Bonczek should contact the Administrator. Bonczek 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 Bonczek 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 Bonczek the right to
severance benefits upon termination of appointment.

         Plan Sponsor:              Trimeris, Inc.
         Tax ID Number:             56-6017737

         Plan Name:                 Trimeris, Inc. 1999 Executive Agreement and
                                    Separation and Severance Plan

         Plan Number:               _______

         Plan Year:                 Calendar year

         Plan Type:                 Welfare benefit plan

         Effective Date:            September 2, 1999

         Agent For Service
         of Legal Process:          Trimeris, Inc.
                                    Attention:  Secretary

  [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE TO FOLLOW.]

                                       7
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Severance
Agreement under seal as of the date first set forth above (the individual party
adopting the word "SEAL" as his seal).

                                     COMPANY:

                                     TRIMERIS, INC.

                                     By: /s/ Dani P. Bologensi
                                        ----------------------
                                           Dani P. Bolognesi, Ph.D.
                                           Chief Executive Officer and
                                           Chief Scientific Officer

                                     ROBERT R. BONCZEK:

                                     /s/ Robert R. Bonczek               (SEAL)
                                     -----------------------------------
                                     Name: Robert R. Bonczek

                                       8
<PAGE>

                                    EXHIBIT 1

                        SETTLEMENT AGREEMENT AND RELEASE

         THIS SETTLEMENT AGREEMENT AND RELEASE ("Settlement Agreement") sets out
the complete agreement and understanding between TRIMERIS, INC. (the "Company")
and ROBERT R. BONCZEK ("Bonczek") regarding the termination of Bonczek's
appointment as an officer 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 2nd day of September, 1999 between the Company and Bonczek (the
"Severance Agreement"), to be paid beginning no sooner than the eighth day
following execution of this document, Bonczek 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 Bonczek's appointment or engagement, or the termination of
appointment or engagement, 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 Bonczek 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 Bonczek's appointment or
engagement 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.

         Bonczek expressly waives all claims, including those which he/she does
not know or suspect to exist in his/her favor as of the date of this Settlement
Agreement. As used in this Settlement Agreement, the parties understand the word
"claims" to include all actions, claims and grievances, whether actual or
potential, known or unknown, and specifically but not exclusively including all
claims against the Releasees arising from Bonczek's appointment or engagement
with the Company, the termination thereof or any other conduct by the Releasees
occurring on or prior to the date Bonczek signs this Settlement Agreement. All
such claims are

<PAGE>

forever barred by this Settlement Agreement whether they arise in contract or
tort or under a statute or any other law.

         Bonczek 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 Bonczek 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.

         Bonczek'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 Bonczek'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 Bonczek'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 Bonczek was eligible to participate and
in fact was participating in such plans.

         II. VOLUNTARY AGREEMENT AND OTHER ACKNOWLEDGMENTS: Bonczek 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.

                                       2
<PAGE>

         III. REVOCATION OF SETTLEMENT AGREEMENT: I understand that I can change
my mind and revoke my signature on this Settlement Agreement within seven days
after signing it by hand delivering notice of such revocation to the Chairman of
the Compensation Committee of the Company. I understand that if I revoke this
Settlement Agreement, I will not be entitled to any severance benefits under the
Severance Agreement. I understand that, unless properly revoked by me during
this seven-day period, the release and waiver in the first section above will
become effective seven days after I sign the Settlement Agreement.

         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 Bonczek 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 Bonczek's release and waiver pursuant to Section I of
this Settlement Agreement is found to be unenforceable, however, Bonczek 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 Bonczek.

         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 Bonczek.

AGREED AND UNDERSTOOD:

ROBERT R. BONCZEK:

-------------------------                         -----------------------
Name: Robert R. Bonczek                                    Date

                                       3

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