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North Carolina-Durham-3815 Westgate Drive Sublease - Blue Cross and Blue Shield of North Carolina and Trimeris Inc.

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  • Commercial Lease. Start a state-specific lease for the rental of commercial property. Specify the term and rent due, as well as whether the landlord or tenant is responsible for property taxes, insurance, and maintenance and repairs.
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                               SUBLEASE AGREEMENT

      THIS SUBLEASE (this "Sublease") dated this 12th day of May, 1999, is
entered into by and between Blue Cross and Blue Shield of North Carolina,
hereinafter referred to as "Sublandlord," and Trimeris, Inc., hereinafter
referred to as "Subtenant."

      WHEREAS, Sublandlord, as tenant, and Hamad Jassim Althani, as landlord,
hereinafter referred to as "Prime Landlord," entered into that certain lease
agreement dated November 8, 1994, as amended by first amendment to lease
agreement dated December 15, 1995, and second amendment to lease agreement dated
February 1999 (as amended, the "Prime Lease") pertaining to the rental of
approximately 15,658 rentable square feet known as Suite 390, which is the
entire third floor of that certain building known as South Park Office Center,
located at 3815 Westgate Drive, Durham, Durham County, North Carolina (the
"Premises").

      WHEREAS, Sublandlord desires to sublet the Premises to Subtenant, subject
to the written consent of the Prime Landlord, and Subtenant desires to sublet
the Premises from Sublandlord in accordance with the terms and provisions
provided herein.

      NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Sublandlord and Subtenant hereby agree as follows:

1.    The  Sublandlord  hereby sublets and demises to the  Subtenant,  and the
      Subtenant  hereby leases from the  Sublandlord,  the Premises,  together
      with Sublandlord's  rights in all improvements  located thereon and with
      all  rights,  privileges  and  appurtenances  thereto  or therein to the
      extent of the Premises,  for a term commencing on the day that this
      Sublease is fully  executed by the parties,  approved  in writing by
      Prime  Landlord,  and the  Premises is delivered to  Subtenant,  but in
      no event later than May 15,  1999;  and expiring on December 31, 2001
      (the "Term").

2.    Subtenant  shall pay  Sublandlord  monthly rent  throughout the Term, in
      advance  on the  first  day of each and  every  month of the Term in the
      amounts  set forth in the Prime  Lease and  adjusted  annually  by Prime
      Landlord.  Sublandlord  shall notify Subtenant  promptly of any increase
      in rent once  Sublandlord  has  received  notice  from  Prime  Landlord.
      Subject  to  paragraph  10  hereof,  all rent and any other  sums due to
      Sublandlord  shall be paid to Sublandlord at Attn:  Penny  Kaffenberger
      Blue Cross and Blue Shield of North  Carolina,  P.O. Box 2291,  Durham,
      North Carolina 27707 or at such other address  directed by  Sublandlord.
      The  first  monthly  installment  of  rent,  Twenty-three  Thousand  Six
      Hundred Fifty Six and 63/100  ($23,656.63),  shall be paid and delivered
      to  Sublandlord  at execution of this Sublease by  Subtenant,  provided,
      however,  that if the Term  commences on a date other than the first day
      of the month,  rent for the first  month of the Term  shall be  prorated
      based on the number of days remaining in the first month of the Term.

3.    In addition to the monthly rent stated above, Subtenant shall also
      reimburse Sublandlord for Sublandlord's proportionate share of the
      operating expense increases within 10 days of receiving invoice, as
      outlined in the Prime Lease, which amounts shall be paid to Sublandlord
      upon receipt of invoice. Sublandlord shall notify Subtenant promptly of
      any change in such operating expenses once Sublandlord has received such
      information from Prime Landlord.

<PAGE>

4.    Unless otherwise defined in this Sublease, all capitalized terms used
      herein that are defined in the Prime Lease, shall have the meaning
      ascribed to such term in the Prime Lease.

5.    Except as otherwise provided in this Sublease, the terms, provisions and
      conditions contained in the Prime Lease are incorporated herein by
      reference, and are made a part hereof as if set forth at length herein;
      provided, however, that:

      a.    each  reference  in the Prime  Lease to "Lease"  shall be deemed a
            reference to "Sublease";

      b.    each reference in the Prime Lease to the "leased premises" or
            "Leased Premises" shall be deemed a reference to the "Premises";

      c.    each  reference in the Prime Lease to "Lessor" and "Lessee"  shall
            be  deemed  a  reference   to   "Sublandlord"   and   "Subtenant,"
            respectively;  provided,  however, the following provisions of the
            Prime Lease are  expressly not  incorporated  herein by reference:
            paragraphs 2, 22, 23,  35(c),  35(d),  35(g),  and 37; the section
            entitled  "Lessor's  Liability";   the  section  entitled  "Lessor
            Improvements  on exhibit A; exhibit D; exhibit F; paragraphs 7 and
            8 of the first amendment to lease agreement;

      d.    except as provided  in this  Sublease,  (i) all terms,  covenants,
            and  conditions  which  Sublandlord  is bound to comply with under
            the Prime Lease shall be binding upon  Subtenant  hereunder,  (ii)
            Subtenant  agrees to observe or perform the terms,  covenants  and
            conditions   on  its  part  to  be  observed   and   performed  by
            Sublandlord  as tenant under the Prime Lease and Subtenant  agrees
            to be bound by the  provisions  of the Prime Lease,  and (iii) the
            remedies of the parties,  as Subtenant and  Sublandlord  hereunder
            shall be the same as the  respective  remedies  of the  Lessor and
            Lessee under the Prime Lease;

      e.    Sublandlord  shall have no obligation or liability to Subtenant in
            the event  that the Prime  Landlord  fails to  perform  any of its
            obligations under the Prime Lease,  unless such failure arose as a
            result of  Sublandlord's  defaulting in the  performance of any of
            Sublandlord's   obligations  under  the  Prime  Lease  beyond  any
            applicable  cure periods  contained  therein,  and Subtenant shall
            look solely to the Prime Landlord for the  performance of any such
            obligations;   provided,   however,   Sublandlord  shall  use  its
            reasonable  good faith  efforts to  cooperate  with  Subtenant  to
            obtain  Prime  Landlord's  performance  of its  obligations  or to
            cause Prime Landlord to perform its obligations; and

      f.    each obligation of tenant under the Prime Lease assumed hereunder by
            Subtenant by operation of this Sublease shall commence as of the
            Commencement Date, and in no event shall Subtenant be liable for any
            costs, claims, damages, or violations of the Lease caused by
            Sublandlord or on behalf of Sublandlord prior to the Commencement
            Date.

6.    Sublandlord  shall  not  commit or  permit  to be  committed  any act or
      omission  which shall  violate any term or  condition of the Prime Lease
      or do  anything  which  would  result in a default by it under the Prime
      Lease,  cause the Prime Lease to be  terminated,  rejected or forfeited,
      or  cause  the  Sublease  or the  Term to be  terminated  or  forfeited.
      Sublandlord  covenants  that it shall not, by any action,  avoid or seek
      to avoid the  observance or  performance  of the terms to be observed or
      performed by Sublandlord under the Prime Lease.

                                     Page 2

<PAGE>

7.    Sublandlord agrees that it will not modify, amend or change the Prime
      Lease in any manner that would affect the Subtenant's right hereunder
      without Subtenant's prior written consent and that it will not do
      anything or permit anything to be done that would cause the Sublease or
      the Term hereof to be terminated or forfeited.

8.    Sublandlord represents and warrants, that as of the date hereof, (i)
      neither Prime Landlord nor Sublandlord are in default (or with the mere
      passage of time or the giving of notice would ripen into a default) under
      the terms of the Prime Lease; and (ii) a true, correct and complete copy
      of the Prime Lease is attached hereto as exhibit A.

9.    Notwithstanding anything in this Sublease to the contrary, Sublandlord
      hereby irrevocably appoints Subtenant as its attorney-in-fact coupled with
      an interest to seek performance of Prime Landlord's obligations under the
      Prime Lease directly from Prime Landlord to the extent that such
      obligations are those which Sublandlord owes to Subtenant under this
      Sublease.

10.   Intentionally omitted.

11.   Sublandlord  covenants  and agrees to deliver to  Subtenant,  within one
      (1)  business  day of receipt by  Sublandlord,  copies of any notices of
      default  or of  events,  which  with the  further  passage of time could
      ripen into a default,  received by Sublandlord from Prime Landlord under
      the Prime Lease.  Upon receiving any other written notice,  statement or
      other written  communication  from Prime  Landlord which pertains to the
      Premises,  the party  receiving such notice shall forward a copy of such
      notice to the other.

12.   Subtenant agrees at its expense to keep and maintain the Premises in good
      repair and in a good, sanitary and safe condition and to return the
      Premises to Sublandlord at the end of the Term in as good a condition as
      received, normal wear and tear and casualty excepted.

13.   Subtenant acknowledges that this Sublease shall not be effective unless
      and until Prime Landlord's written consent is given.

14.   It is understood  and agreed upon by all parties hereto that neither the
      Sublease of the above  described  Premises,  nor  anything  contained in
      this  agreement  shall  release  the  Sublandlord   from  its  duty  and
      obligation  to perform  and be bound by all the  covenants,  terms,  and
      conditions  contained  in  the  Prime  Lease  with  the  Prime  Landlord
      provided,  however,  that  Subtenant  shall  perform all such duties and
      obligations  and be bound by such  covenants,  terms,  and conditions in
      the first instance.

15.   Sublandlord agrees that if Subtenant pays all rent and other sums due
      hereunder and performs all of the terms and conditions of this Sublease
      and of the Prime Lease required hereunder, that Subtenant's quiet
      enjoyment of the Premises for the Term shall not be disturbed or
      interfered with by Sublandlord.

                                     Page 3
<PAGE>


16.   Notwithstanding anything herein to the contrary, Subtenant agrees that it
      will not assign this Sublease or sublet the Premises without the prior
      written approval of the Prime Landlord and Sublandlord, which approval by
      Sublandlord will not be unreasonably withheld, conditioned or delayed.

17.   During  the  term of this  Sublease,  Subtenant,  at its  sole  cost and
      expense and for the mutual  benefit of the  Sublandlord,  Prime Landlord
      and Subtenant shall carry and maintain  comprehensive  public  liability
      insurance,   including  property  damage,  insuring  Sublandlord,  Prime
      Landlord,  and  Subtenant  against  liability  for  injury to persons or
      property  occurring in or about the  Premises  arising out of the use or
      occupancy  thereof,  and  Subtenant  shall  name  Sublandlord  and Prime
      Landlord as additional  insureds  hereunder.  Said  liability  insurance
      shall be in amounts as called for in the Prime  Lease.  On or before the
      commencement of this Sublease,  Subtenant shall deliver to Sublandlord a
      copy of a certificate  of insurance  evidencing  that such insurance has
      been  purchased  and is in effect.  Any  insurance  which  Subtenant  is
      required  to  maintain  under this  Sublease  shall  include a provision
      which  requires  the  insurance  carrier  to  give  Prime  Landlord  and
      Sublandlord  not less than thirty (30) days' written notice prior to any
      cancellation  or modification  of such coverage.  Further,  if Subtenant
      fails  to  maintain  said  liability  insurance,  this  act  shall  be a
      material  breach of this Sublease,  and Sublandlord may elect any of its
      remedies under this Sublease,  and, in addition,  Sublandlord may obtain
      such  insurance on behalf of Subtenant,  in which case  Subtenant  shall
      reimburse  Sublandlord  for the costs thereof  within  fifteen (15) days
      after receipt of a statement indicating the cost of such insurance.

18.   Subtenant  shall  not do or  permit  to be done or omit or  permit to be
      omitted  any act or thing  that  will  constitute  or cause a breach  or
      violation  of any of the terms,  covenants  or  conditions  of the Prime
      Lease or this  Sublease.  Each party will  indemnify  and hold  harmless
      the other from and against  all losses,  costs,  damages,  expenses  and
      liability,  including  reasonable  attorneys'  fees  actually  incurred,
      which may be  incurred  or pay out by reason  of  injuries  to person or
      property  occurring  in, on or about the  Premises,  occasioned  by such
      party's use,  occupancy,  negligence or intentional acts or by reason of
      any breach or default of this Sublease.

19.   Sublandlord  hereby  represents  that to the  best of its  knowledge  it
      knows of no facts or  circumstances  related  to  environmental  matters
      concerning  the  Premises  that could  lead to any future  environmental
      claims,  liabilities,  responsibilities  against Subtenant.  Sublandlord
      shall  indemnify and hold  Subtenant  harmless  from all costs,  losses,
      damages,  liabilities or claims (including  reasonable  attorney's fees)
      arising out of the  operations or activities or presence of  Sublandlord
      on the Premises relating to environmental matters.

20.   The Premises  shall be delivered  to Subtenant in AS-IS  condition.  Any
      improvements   to  be   performed   within   the   Premises   must  have
      Sublandlord's and Prime Landlord's prior written consent,  which consent
      by  Sublandlord  will  not be  unreasonably  withheld,  conditioned,  or
      delayed.  Such  improvements  shall be paid for by Subtenant and removed
      by  Subtenant  at the  expiration  of the Term if so required  under the
      Prime  Lease and with all  resulting  damage to the  Premises  from such
      removal also repaired to its original  condition as at the  commencement
      of the Term by Subtenant at its sole cost and expense.

                                     Page 4
<PAGE>


21.   Together  with the  payment  made at  Sublease  execution  of the  first
      monthly installment of rent, and expenses,  Subtenant shall deposit with
      Sublandlord the sum of Twenty-three  Thousand Six Hundred  Fifty Six and
      63/100  dollars  ($23,656.63), as  security  for Subtenant's obligations
      under  this  Sublease.  Sublandlord  will  not be  required  to keep the
      security  deposit  separate  from its general funds and  Subtenant shall
      not be  entitled  to  interest  on  the  security deposit. The  security
      deposit   will  not  be  a   limitation   on Sublandlord's   damages  or
      other  rights  under  this   Sublease.   If Subtenant  pays all such due
      amounts  and   performed  all  of  its obligations under this  Sublease,
      Sublandlord  will  return the unused portion of the security  deposit to
      Subtenant   within   thirty  (30)  days  after the expiration or earlier
      termination of the Term.

22.   The  parties  also  agree  that (a)  Subtenant  shall use and occupy the
      Premises   solely  for  uses   permitted   in  the  Prime   Lease;   (b)
      Sublandlord's  refusal to consent to or to approve  any matter or thing,
      whenever  Sublandlord's  consent  or  approval  is  required  under this
      Sublease or under the Prime Lease,  shall be deemed  reasonable if Prime
      Landlord  has  refused  to  give  such  consent  or  approval;  provided
      Sublandlord  agrees to use  reasonable  efforts and good faith to assist
      Subtenant in obtaining Prime Landlord's  consent;  (c) if for any reason
      the term of the Prime Lease shall be terminated  prior to the expiration
      date of the  Sublease,  the Sublease  shall  thereupon be  automatically
      terminated,  and Sublandlord  shall not be liable to Subtenant by reason
      thereof,  unless such  termination  shall have been affected  because of
      the  breach  or  default  by  Sublandlord  under  the  Prime  Lease  not
      occasioned  by any breach or default by Subtenant,  but Subtenant  shall
      be entitled  whatever  rights and  remedies  against the Prime  Landlord
      that  may  be  available  to   Sublandlord   in  connection   with  such
      termination,  provided,  however,  that  Subtenant  shall  receive  from
      Sublandlord  prompt  notice of any  default  under  the  Prime  Lease by
      Sublandlord  and  Subtenant  shall have the right to cure such  default;
      and (d) Subtenant  acknowledges  and agrees that in the event  Subtenant
      fails to vacate the Premises when required  hereunder,  Sublandlord  may
      incur  damages  under  the  terms of the Prime  Lease,  in which  event,
      Subtenant  agrees to indemnify  and hold harmless  Sublandlord  from and
      against  any  and  all  costs,   expenses  and  liabilities   (including
      reasonable  attorneys' fees) incurred by Sublandlord arising out of such
      failure.

23.   Any notice  required  to be given by either  party to the other shall be
      in  writing  and shall be (a)  delivered  personally,  and the giving of
      such  notice  shall be  complete  on the date of  delivery;  (b) sent by
      reputable  overnight  delivery  service,  and the giving of such  notice
      shall be complete on the immediately  succeeding business day after such
      notice is deposited  with such delivery  service,  or (c) sent by United
      States  registered or certified mail,  postage  prepaid,  return receipt
      request,  and the  giving  of  such  notice  shall  be  complete  on the
      immediately   succeeding  second  business  day  after  such  notice  is
      deposited into the U.S. mail; at the following addresses:

            If to Sublandlord:
            Blue Cross and Blue Shield of North Carolina
            Post Office Box 2291
            Durham, North Carolina 27702-2291
            Attn: Joseph A. Palumbo
                  Senior Director - Corporate Services

            If to Subtenant:
            Trimeris, Inc.
            Two University Place, Suite 100
            4727 University Drive
            Durham, North Carolina 27707
            Attn: Chief Financial Officer

                                     Page 5
<PAGE>


            With a copy to Prime Landlord:
            Hamad Jassim Althani by Rajai Zumot
            c/o CB Richard Ellis
            Post Office Box 19206
            Raleigh, North Carolina 27619
            Attn: Mark Andrews

      Either party may change its address by written notice to the other.

24.   Sublandlord and Subtenant each represent and warrant to the other that it
      had no dealings with any broker or agent in connection with the Sublease
      except for Vector Properties, LLC and Corporate Realty Advisors.
      Sublandlord shall be responsible for payment of any and all fees payable
      to Vector Properties, LLC and Corporate Realty Advisors as a result of
      this Sublease.

25.   To the extent any terms or provisions or this Sublease are inconsistent
      with or shall conflict with any other terms or provisions of the Prime
      Lease, the terms and provisions of this Sublease shall control.

26.   This Sublease and the exhibits incorporated herein by reference set forth
      all of the agreements, covenants, representations and warranties of
      Sublandlord and Subtenant. No modification or amendment of this Sublease
      shall be binding or effective unless in writing signed by Sublandlord and
      Subtenant.

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

                                    Blue  Cross  and  Blue   Shield  of  North
                                    Carolina

                                    By:/s/ Kenneth C. Otis II
                                       -------------------------------------
                                    Name: Kenneth C. Otis II
                                         -----------------------------------
                                    Its: President
                                        ------------------------------------
                                    Date: May 12, 1999
                                         -----------------------------------

                                    Trimeris, Inc.

                                    By: /s/ Matthew A. Megaro
                                       -------------------------------------
                                    Name: Matthew A. Megaro
                                         -----------------------------------
                                    Its: President
                                        ------------------------------------
                                    Date: April 27, 1999
                                         -----------------------------------

                                     Page 6
<PAGE>


                      CONSENT OF PRIME LANDLORD TO SUBLEASE

      The Prime Landlord, Hamad Jassim Althani, as landlord, entered into that
certain Prime Lease pertaining to the rental of the Premises, and hereby
consents to the sublease of the Premises under the terms and conditions set
forth in the Sublease dated as of May 12, 1999, by and between Blue Cross
and Blue Shield North Carolina and Trimeris, Inc., to which this consent is
attached. This consent shall apply only to this Sublease and shall not be deemed
to be consent to any other sublease or assignment by Sublandlord. The Prime
Lease remains in full force and effect and the obligations of the Prime Landlord
and the Sublandlord pursuant to the Prime Lease are not modified or extinguished
by this Sublease. Prime Landlord agrees to accept the tender of rent and the
performance of other obligations of Sublandlord under the Prime Lease from
Subtenant as if tendered or performed by Sublandlord.

      Prime Landlord represents and warrants to Subtenant, that as of the date
hereof, (i) neither Prime Landlord nor Sublandlord are in default (or with the
mere passage of time or the giving of notice would ripen into a default) under
the terms of the Prime Lease; (ii) a true, correct and complete copy of the
Prime Lease is attached hereto as exhibit A; and (iii) no further consent or
approval is required of any lender having an interest in the Premises or any
other party claiming an interest in and to the Premises through Prime Landlord
to the sublease of the Premises.

      As a material inducement for the Subtenant to enter into the Sublease,
Prime Landlord hereby agrees with the Subtenant that after the commencement of
occupancy of the Premises by Subtenant, if Sublandlord shall fail at any time to
make any payment or perform any obligation as tenant under the Prime Lease in
accordance with its terms and if Prime Landlord shall then declare Sublandlord
in default under the Prime Lease, Prime Landlord shall not exercise any remedy
for the Sublandlord's default which would affect any rights of the Subtenant
under the Sublease, including, but not limited to a termination of the
Sublandlord's rights of possession to the Premises under Prime Lease, or a
termination of the Prime Lease, without in each instance the Prime Landlord
giving the Subtenant notice of such default under the Prime Lease with
particularity at the address set forth in Sublease and an opportunity of the
Subtenant to cure such Sublandlord's default. If the Sublandlord's default under
Prime Lease is a monetary default, Subtenant shall have the right, but not the
obligation, over a period of ten (10) days after written notice from Prime
Landlord of the default to make such payment, and if the Sublandlord's default
is a non-monetary default, then Subtenant shall have the right, but not the
obligation, over a period of thirty (30) days after written notice from Prime
Landlord of the default to perform such obligation the subject of the default,
provided however, if such performance cannot be completed within such thirty
(30) day period, Subtenant shall be permitted to proceed with such cure for as
long as Subtenant continues and diligently proceeds to complete same, and upon
the performance by the Subtenant as set forth above, the default of the
Sublandlord under the Prime Lease shall be deemed cured. Prime Landlord agrees
to accept the performance by Subtenant as set forth herein as performance by the
Sublandlord under the provisions of the Prime Lease; provided, however, that the
performance by the Subtenant of the Sublandlord's obligations under the Prime
Lease in curing such default shall not prejudice the Subtenant's rights against
the Sublandlord.

                                     Page 7


<PAGE>



      The execution of this consent by Prime Landlord is not a release by Prime
Landlord of Sublandlord of any of its duties and obligations under the Prime
Lease.

                                    PRIME LANDLORD:

                                    Hamad Jassim Althani


                                    By:_____________________________________



                                     Page 8