SUBSCRIPTION AGREEMENT


                                    SUBSCRIPTION  AGREEMENT (this  "Agreement"),
                  dated as of December 13, 1999, by and among HYBRIDON,  INC., a
                  Delaware  corporation (the "Company"),  and the Persons listed
                  on the signature pages hereof (the "Current  Purchasers")  and
                  such other Persons that from time to time hereafter may become
                  party  hereto  pursuant  to  Section  13.10  (the  "Additional
                  Purchasers" and, collectively with the Current Purchasers, the
                  "Purchasers").

                  The  Company  desires  to issue  and sell to  Purchasers,  and
Purchasers desire to purchase from the Company,  Notes due 2002 (the "Notes") in
substantially  the form  attached  hereto as Exhibit A, upon and  subject to the
terms and conditions  hereinafter set forth. As used herein, the term "Offering"
shall mean the  offering  of Notes by the  Company  during the  Offering  Period
hereinafter  referred to pursuant to this  Agreement and  substantially  similar
agreements.

                  Accordingly,  in  consideration of the premises and the mutual
agreements contained herein, Purchasers and the Company hereby agree as follows:

                  1.  Purchase  and Sale of the Notes.  Subject to the terms and
conditions  set forth  herein,  the Company  hereby  agrees to issue and sell to
Purchasers, and Purchasers,  severally and not jointly, hereby agree to purchase
from the Company Notes.  The aggregate  purchase price for the respective  Notes
sold to each Purchaser  pursuant to this Agreement  shall be one hundred percent
(100%) of the aggregate principal amount of such Notes. "Operative Documents" as
used  herein  shall  mean this  Agreement,  the  Notes,  the  Subordination  and
Intercreditor  Agreement of even date herewith (the  "Intercreditor  Agreement")
and the form of Warrant  Agreement  attached  hereto as Exhibit B (the  "Warrant
Agreement").

                  2.       Delivery of Notes.

                  2.1.  Delivery of Notes. (a) The Company shall offer the Notes
for sale. Upon receipt of subscriptions for Notes pursuant to the Offering,  the
Company may conduct an initial closing (any closing  hereunder,  a "Closing" and
the date thereof,  a "Closing Date") and may conduct  subsequent  Closings on an
interim basis during the Offering Period. The Offering Period shall terminate at
12:00 noon (New York Time) on December  31,  1999,  subject to  extension at the
sole option of the Company, for an additional 60 days (the "Termination Date").

                  (b) Contemporaneously  with the execution and delivery of this
Agreement  by a  Purchaser  and  pending  the sale of Notes at a  Closing,  such
Purchaser  will be  required to deposit  the  Purchase  Price in escrow with the
Escrow  Agent (as defined in the Escrow  Agreement  hereinafter  referred to) by
wire transfer of immediately available funds for the account of the Escrow Agent
made payable to Sachnoff & Weaver, 30 South Wacker Drive,  29th Floor,  Chicago,
Illinois,  60606, Attention Douglas Newkirk,  pursuant to the terms of an escrow
agreement in  substantially  the form attached  hereto as Exhibit C (the "Escrow
Agreement").

                  (c) At a Closing,  the funds  required for the purchase of the
Notes by respective  Purchasers  will be released by the Escrow Agent net of any
Required Deductions (as

<PAGE>

defined in the Escrow  Agreement) from the escrow account in accordance with the
terms of the Escrow  Agreement.  The Company will promptly deliver to Purchasers
the Notes to be  purchased  on the date of a Closing  as set forth in  Article 1
hereof  against  the  receipt by the  Company of the  Purchase  Price net of any
Required  Deductions from escrow in accordance with the Escrow  Agreement.  Each
Purchaser  hereby  authorizes  the Secured  Party (as  defined  below) to accept
delivery  of  Notes  on such  Purchaser's  behalf  unless  the  Purchaser  is in
attendance  at such Closing.  The Notes shall be  registered in the  Purchasers'
respective   names  or  the  name  of  the  nominee(s)  of  such  Purchasers  in
denominations of $1,000 and integral  multiples thereof pursuant to instructions
delivered to the Company not less than two days prior to a Closing.  Interest on
each Note sold in the  Offering  shall  accrue only from the date of issuance of
such Note.

                  2.2.  Warrants.  Pursuant to the Notes, if the Company prepays
the Notes (or any portions thereof), then the Company shall simultaneously issue
to the holders of such prepaid  Notes (or  portions)  warrants  ("Warrants")  to
purchase  a number of shares of Common  Stock  equal to the  number of shares of
Common Stock then issuable upon conversion of such prepaid Notes (or the prepaid
portions  thereof,  if prepaid in part).  The terms of the Warrants  shall be as
more fully described in the Warrant  Agreement  between the Company  ChaseMellon
Shareholder  Services  LLC, as Warrant Agent and the Secured Party (the "Warrant
Agreement"), a form of which is attached hereto as Exhibit B.

                  3.  Conditions to the  Obligations of Purchasers at a Closing.
The  obligation  of Purchasers to purchase and pay for the Notes to be purchased
by  Purchasers  at a Closing is subject to the  satisfaction  on or prior to the
relevant Closing Date of the following  conditions,  which may only be waived by
written consent of the Secured Party.

                  3.1.  Representations and Warranties.  The representations and
warranties of the Company  contained in this Agreement shall be true and correct
in all  material  respects  when  made,  and  shall be true and  correct  in all
material respects at and as of the date of such Closing as if they had been made
on and as of such Closing.

                  3.2.  Performance  of  Covenants.  All  of the  covenants  and
agreements  of the  Company  contained  in this  Agreement  and  required  to be
performed on or prior to the relevant  Closing Date shall have been performed in
a manner reasonably satisfactory to the Secured Party.

                  3.3.  Closing  Documents.  The Company shall have delivered to
the Secured Party the following:

                  (a) a certificate executed by the President or Chief Executive
Officer  of the  Company  dated  the  relevant  Closing  Date  stating  that the
conditions set forth in Sections 3.1 and 3.2 have been satisfied; and

                  (b) a certificate  of the Secretary or Assistant  Secretary of
the Company,  dated the relevant  Closing Date,  certifying the attached copy of
the By-laws of the Company,  the  authorization  of the execution,  delivery and
performance of the Operative  Documents,  and the  resolutions  authorizing  the
actions to be taken by the Company under the Operative Documents.

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<PAGE>

                  3.4. No Legal Order Pending. There shall not then be in effect
any legal or other order enjoining or restraining the transactions  contemplated
by this Agreement.

                  3.5. No Law Prohibiting or Restricting  Such Sale. There shall
not be in effect any law, rule or regulation  prohibiting  or  restricting  such
sale or  requiring  any consent or  approval of any person  which shall not have
been  obtained  to  issue  the  Notes  (except  as  otherwise  provided  in this
Agreement).

                  3.6. Proceedings. All corporate and other proceedings taken or
to be taken  in  connection  with the  transactions  contemplated  hereby  to be
consummated  at each  Closing  and  all  documents  incident  thereto  shall  be
reasonably  satisfactory  in form and substance to the Secured Party,  including
but not limited to the authorization of the issuance of the Notes,  Warrants and
the Note-Underlying Common Stock (as defined below).

                  4.  Conditions to the Obligations of the Company at a Closing.
The obligation of the Company to issue and sell Notes to Purchasers at a Closing
is subject to the satisfaction of the following conditions, each of which may be
waived by the Company:

                  4.1.  Representations and Warranties.  The representations and
warranties  of each  Purchaser  contained  in this  Agreement  shall be true and
correct  when made,  and shall be true and correct at and as of the date of such
Closing as if they had been made on and as of such Closing.

                  4.2. No Law Prohibiting or Restricting  Such Sale. There shall
not be in effect any law, rule or regulation  prohibiting  or  restricting  such
sale or  requiring  any consent or  approval of any person  which shall not have
been  obtained  to  issue  the  Notes  (except  as  otherwise  provided  in this
Agreement).

                  5.       Creation of Security Interest.

                  5.1. Grant of Security Interest. The Company hereby grants and
pledges to Youssef El-Zein (a  representative  designated by Pillar  Investments
Ltd.) or a successor  representative  chosen,  at any time,  by the holders of a
majority  (measured by dollar amount) of the Notes outstanding from time to time
(the "Secured Party"),  solely as agent for Purchasers and not in his individual
capacity, a continuing security interest in all presently existing and hereafter
acquired or arising  assets and  property of the Company  described on Exhibit D
hereto (the "Collateral") in order to secure prompt payment of the principal sum
and interest  evidenced by the Notes, and the performance by the Company of each
of its obligations  under this Agreement and the Notes.  Such security  interest
shall  automatically  terminate upon the earlier of (i) the payment of principal
and  interest  on the  Notes  and (ii)  such  time as the  Notes  are no  longer
outstanding  (the  "Security  Interest  Termination  Date").  Purchasers  hereby
acknowledge and agree that the security interests granted hereby are subordinate
and  subject to any prior  security  interest in the  Collateral  granted by the
Company, except as modified by the Intercreditor  Agreement, and are subordinate
and subject to any lien granted in the future to secure  Operating  Indebtedness
of the Company.  Purchasers  and the Secured  Party hereby agree not to exercise
any of their rights with respect to the Collateral under this Agreement, at law,
in equity or  otherwise  until the holders of Operating  Indebtedness  have been
paid in full.


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<PAGE>

                  5.2.  Designation  of Secured Party as Agent.  Purchasers,  by
their  acceptance  of the  benefits  of this  Agreement  and the  Notes,  hereby
irrevocably  designate the Secured Party to act as Secured Party with respect to
this Agreement and as specified in the other Operative Documents. Each Purchaser
hereby  irrevocably  authorizes,  and each holder of any Note,  by such holder's
acceptance of such Note, shall be deemed  irrevocably to authorize,  the Secured
Party to take such action on its behalf under the  provisions of this  Agreement
and the other  Operative  Documents  and any other  instruments  and  agreements
referred to herein or therein and to  exercise  such powers and to perform  such
duties  hereunder and thereunder as are  specifically  delegated to, or required
of, the Secured  Party by the terms  hereof or thereof and such other  powers as
are  reasonably  incidental  thereto.  Each  Purchaser,  on behalf of itself and
future  holders of the Notes issued to such  Purchaser,  hereby  authorizes  and
directs the Secured Party,  from time to time in the Secured Party's  discretion
to take any  action  and  promptly  to  execute  and  deliver  on its behalf any
document  or  instrument  that the  Company  may  reasonably  request to effect,
confirm  or  evidence  the  provisions  of this  Article 5,  including,  without
limitation,  the  occurrence  of the Security  Interest  Termination  Date,  any
subordination agreement, or otherwise. In addition, Purchasers and Secured Party
hereby  covenant and agree  promptly to execute and deliver any such document or
instrument in respect of such subordination, and in respect of the occurrence of
the Security Interest Termination Date, as the Company may reasonably request.

                  5.3.  Delivery  of  Additional   Documentation  Required.  The
Company  shall from time to time  execute and deliver to Secured  Party,  at the
request of Secured  Party,  all financing  statements  and other  documents that
Secured Party may reasonably  request to perfect and continue  perfected Secured
Party's  security  interests in the  Collateral and in order fully to consummate
all of the transactions  contemplated under this Agreement,  it being understood
and agreed by the  Purchasers  and the Secured  Party that the Company  need not
deliver  possession of any Collateral to the Secured  Party,  take any action to
perfect the security  interest granted hereby other than the filing of financing
statements  under the  Uniform  Commercial  Code or take any other  action  that
would,  in its sole  judgment,  conflict  with the terms of or pertaining to any
Operating Indebtedness.

                  6.  Representations  and Warranties of Purchasers.  Purchasers
hereby severally represent and warrant to the Company as follows:

                  6.1.  Investment  Intent.  Each Purchaser  recognizes that the
purchase of the Notes involves a high degree of risk including,  but not limited
to, the  following:  (i) the Company  remains a development  stage business with
limited  operating  history and  requires  substantial  funds in addition to the
proceeds  of  the  Offering;  (ii)  an  investment  in  the  Company  is  highly
speculative,  and  only  investors  who can  afford  the  loss of  their  entire
investment should consider investing in the Company, the Notes, the Warrants, or
the shares of Note-Underlying Common Stock, (iii) such Purchaser may not be able
to liquidate his investment; (iv) transferability of the Notes, the Warrants and
the  Note-Underlying  Common Stock is extremely  limited;  (v) in the event of a
disposition  of the Notes,  the Warrants and the  Note-Underlying  Common Stock,
such  Purchaser  could  sustain the loss of his entire  investment  and (vi) the
Company has not paid any dividends  since  inception and does not anticipate the
payment of dividends on the Common Stock in the foreseeable  future.  Such risks
are more fully set forth in the SEC Reports (as hereinafter defined).

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<PAGE>

                  6.2. Lack of Liquidity.  Each Purchaser confirms that he or it
is able  (i) to bear  the  economic  risk of this  investment,  (ii) to hold the
Notes,  the  Warrants  and any  shares of  Note-Underlying  Common  Stock for an
indefinite  period of time, and (iii) presently to afford a complete loss of his
or its investment;  and represents that he or it has sufficient liquid assets so
that the  illiquidity  associated  with this investment will not cause any undue
financial  difficulties or affect such Purchaser's ability to provide for his or
its current  needs and  possible  financial  contingencies,  and that his or its
commitment to all  speculative  investments  is reasonable in relation to his or
its net worth and annual income.  Furthermore,  each Purchaser acknowledges that
the Warrants contain certain  restrictions on exercise,  voting,  conversion and
certain other rights,  as more  particularly set forth in the Warrant  Agreement
attached hereto as Exhibit B.

                  6.3.   Knowledge  and   Experience.   Each  Purchaser   hereby
acknowledges and represents that such Purchaser has prior investment experience,
including investment in securities that are non-listed, unregistered and are not
traded  on  the  Nasdaq  National  or  SmallCap  Market,  nor  on  the  National
Association  of  Securities  Dealers,  Inc.'s (the "NASD")  automated  quotation
system,  or such  Purchaser  has  employed at its own expense the services of an
investment  advisor,  attorney and/or  accountant to request  documents from the
Company  pursuant  to  Section  6.5  hereof  and to  read  all of the  documents
furnished or made available by the Company to such Purchaser and to evaluate the
investment,  tax and  legal  merits  and the  consequences  and  risks of such a
transaction on such Purchaser's behalf, that such Purchaser or such professional
advisor has such knowledge and experience in financial and business  matters and
that such  Purchaser or such  professional  advisor is capable of evaluating the
merits and risks of the prospective investment and, if applicable, satisfies the
conditions set out in Rule 501(h) under the Securities Act.

                  6.4. Purchaser Capacity. Each Purchaser hereby represents that
such  Purchaser  either by  reason of such  Purchaser's  business  or  financial
experience,  or  the  business  or  financial  experience  of  such  Purchaser's
professional  advisors (who are  unaffiliated  with, and who are not compensated
by, the Company or any  affiliate or selling  agent of the Company,  directly or
indirectly),  has the  capacity to protect  such  Purchaser's  own  interests in
connection with the transaction contemplated hereby.

                  6.5.   Receipt   of   Information.   Each   Purchaser   hereby
acknowledges that such Purchaser has carefully  reviewed (a) the SEC Reports and
(b) this Agreement and all  attachments to it, and hereby  represents  that such
Purchaser  has  been  furnished  by  the  Company  during  the  course  of  this
transaction  with all information  regarding the Company which such Purchaser or
its  representative  has  requested  or desired to know,  has been  afforded the
opportunity to ask questions of, and to receive  answers from,  duly  authorized
officers  or other  representatives  of the  Company  concerning  the  terms and
conditions  of the  Offering,  the Notes,  the Warrants and the  Note-Underlying
Common  Stock and the  affairs of the Company and has  received  any  additional
information which such Purchaser or its representative has requested.

                  6.6. Reliance on Information. Each Purchaser has relied solely
upon the  information  provided  by the  Company in the SEC  Reports and in this
Agreement  in  making  the  decision  to  invest  in the  Notes.  To the  extent
necessary,  each Purchaser has retained,  at the sole expense of such Purchaser,
and relied upon, appropriate  professional advice regarding the investment,  tax
and legal  merits and  consequences  of this  Agreement  and its purchase of the


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<PAGE>

Notes, its potential acquisition of the Warrants and the conversion of the Notes
into, or exercise of the Warrants for, Note-Underlying Common Stock.

                  6.7. No Solicitation.  Each Purchaser represents that (i) such
Purchaser  was  contacted  regarding the sale of the Notes by the Company (or an
authorized agent or representative thereof) with whom such Purchaser had a prior
substantial pre-existing  relationship and (ii) no Notes were offered or sold to
such  Purchaser  by  means  of any  form  of  general  solicitation  or  general
advertising,  and in connection  therewith no Purchaser (A) received or reviewed
any  advertisement,  article,  notice  or  other  communication  published  in a
newspaper or magazine or similar  media or broadcast  over  television  or radio
whether  closed  circuit,  or generally  available;  or (B) attended any seminar
meeting or industry  investor  conference  whose  attendees  were invited by any
general solicitation or general advertising.

                  6.8. Registration. Each Purchaser hereby acknowledges that the
Offering has not been reviewed by the Securities and Exchange  Commission or any
state regulatory authority, since the Offering is intended to be exempt from the
registration  requirements  of  Section  5 of the  Securities  Act  pursuant  to
Regulation  D. No  Purchaser  shall sell or otherwise  transfer  the Notes,  the
Warrants  or  any  Note-Underlying  Common  Stock  unless  such  securities  are
registered   under  the   Securities  Act  or  unless  an  exemption  from  such
registration is available.

                  6.9. Purchase for own Account. Each Purchaser understands that
neither  the Notes nor the  Warrants  nor any shares of  Note-Underlying  Common
Stock  have  been  registered  under the  Securities  Act by reason of a claimed
exemption  under the provisions of the  Securities  Act which depends,  in part,
upon such Purchaser's investment intention.  In this connection,  each Purchaser
hereby  represents that such Purchaser is purchasing  Notes for such Purchaser's
own account for investment and not with a view toward the resale or distribution
to others or for resale in connection  with, any distribution or public offering
(within the meaning of the Securities  Act),  nor with any present  intention of
distributing  or  selling  the  same  and  such  Purchaser  has  no  present  or
contemplated  agreement,  undertaking,  arrangement,  obligation  or  commitment
providing for the disposition  thereof.  No Purchaser,  if an entity, was formed
for the purpose of purchasing the Notes.

                  6.10.  Holding  Period.  Nothing in this Section 6.10 shall be
construed  to relieve the Company of its  registration  obligations  pursuant to
Section 12, hereof.  Each Purchaser  understands  that there is no public market
for the Notes or the  Warrants and that no market is expected to develop for any
such Notes or Warrants.  Each Purchaser understands that even if a public market
develops for such Notes or Warrants, reliance upon Rule 144 under the Securities
Act for resales  requires,  among other  conditions,  a one-year  holding period
prior to the resale (in limited amounts) of securities  acquired in a non-public
offering  without  having to satisfy  the  registration  requirements  under the
Securities  Act. Each Purchaser  understands  and hereby  acknowledges  that the
Company is under no  obligation  to  register  any of the Notes or any  Warrants
under the Securities Act or any applicable  non-United States,  state securities
or "blue sky" laws.  Each  Purchaser  shall hold the Company and its  directors,
officers,  employees,  controlling  persons and agents and the Secured Party and
their respective heirs,  representatives,  successors and assigns harmless from,
and shall indemnify them against,  all liabilities,  costs and expenses incurred
by  them  as a  result  of (i) any  misrepresentation  made  by  such  Purchaser
contained in this Agreement  (including in Article 14 hereof),  (ii) any sale or
distribution  by  such

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<PAGE>

Purchaser  in  violation  of the  Securities  Act or any  applicable  non-United
States,  state  securities or "blue sky" laws or (iii) any untrue statement made
by such Purchaser.

                  6.11. Legends. Each Purchaser consents to the placement of the
legend set forth  below on any  certificate  or other  document  evidencing  the
Notes:

                  THE  TERMS  OF  THIS  NOTE  ARE  SUBJECT  TO  THE  TERMS  OF A
                  SUBSCRIPTION AGREEMENT AND AN INTERCREDITOR AGREEMENT,  COPIES
                  OF WHICH ARE AVAILABLE  FROM HYBRIDON,  INC. (THE  "COMPANY").
                  THE  SECURITIES   REPRESENTED  BY  THIS  NOTE  HAVE  NOT  BEEN
                  REGISTERED UNDER THE UNITED STATES  SECURITIES ACT OF 1933, AS
                  AMENDED  (THE  "SECURITIES  ACT"),  OR  ANY  APPLICABLE  STATE
                  SECURITIES  LAWS,  AND  MAY NOT BE  SOLD,  OFFERED  FOR  SALE,
                  PLEDGED  OR  HYPOTHECATED  OR  OTHERWISE  TRANSFERRED  IN  THE
                  ABSENCE OF A REGISTRATION  STATEMENT IN EFFECT WITH RESPECT TO
                  THE  SECURITIES  UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
                  THE  SECURITIES  ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO
                  COMPLIANCE WITH APPLICABLE  STATE SECURITIES LAWS AND THE LAWS
                  OF OTHER APPLICABLE JURISDICTIONS.

                  THE SECURED PARTY (AS DEFINED IN THE  SUBSCRIPTION  AGREEMENT)
                  IS THE EXCLUSIVE AGENT OF THE HOLDER OF THIS NOTE WITH RESPECT
                  TO  CERTAIN  ACTIONS  HEREUNDER  AND  UNDER  THE  SUBSCRIPTION
                  AGREEMENT; THE SECURED PARTY, IN HIS SOLE DISCRETION, MAY TAKE
                  OR FOREBEAR FROM TAKING  CERTAIN  ACTIONS  HEREUNDER AND UNDER
                  THE SUBSCRIPTION AGREEMENT ON BEHALF OF THE HOLDERS OF NOTES.

Each  Purchaser  further  consents to the  placement of one or more  restrictive
legends on the  Warrants  and the  Note-Underlying  Common  Stock as required by
applicable securities laws. Each Purchaser is aware that the Company will make a
notation in its  appropriate  records  with respect to the  restrictions  on the
transferability of such Notes, Warrants and Note-Underlying Common Stock.

                  6.12.  Financial Review.  Each Purchaser  understands that the
Company  will  review  this  Agreement  and is hereby  given  authority  by each
Purchaser  to call such  Purchaser's  bank or place of  employment  or otherwise
review the financial  standing of such Purchaser;  and it is further agreed that
the Company, at its sole discretion,  reserves the unrestricted  right,  without

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<PAGE>

further  documentation or agreement on the part of such Purchaser,  to reject or
limit any purchase, and to close the Offering to such Purchaser at any time.

                  6.13. Residence of Purchaser. Each Purchaser hereby represents
that the address of such Purchaser  furnished by such Purchaser on the signature
page hereof is such  Purchaser's  principal  residence  if such  Purchaser is an
individual or its  principal  business  address if it is a corporation  or other
entity.

                  6.14. Power and Authority. Each Purchaser represents that such
Purchaser has full power and authority  (corporate,  statutory and otherwise) to
execute and deliver this  Agreement and to purchase the Notes,  the Warrants and
any shares of  Note-Underlying  Common Stock.  This  Agreement  constitutes  the
legal, valid and binding obligation of each Purchaser,  enforceable against such
Purchaser in accordance with its terms.

                  6.15.  Plans.  If a Purchaser is a  corporation,  partnership,
limited liability company,  trust,  employee benefit plan, individual retirement
account or other entity,  then subject to the terms  contained in this Agreement
(a) it is authorized  and qualified to become an investor in the Company and the
person signing this Agreement on behalf of such entity has been duly  authorized
by such entity to do so, and (b) it is duly organized,  validly  existing and in
good standing under the laws of the jurisdiction of its organization.

                  6.16. NASD. Each Purchaser acknowledges that if he or she is a
registered  representative of an NASD member firm, he or she must give such firm
the notice required by the NASD's Rules of Fair Practice,  receipt of which must
be acknowledged by such firm in Section 14.3 below.

                  6.17.  Securities  Laws. Each Purchaser  acknowledges  that at
such time, if ever, as the Notes, the Warrants or  Note-Underlying  Common Stock
are  registered,  sales of the Notes,  the Warrants and  Note-Underlying  Common
Stock will be subject to applicable non-United States and state securities laws,
including,  without  limitation,  those of the State of New Jersey which require
any securities sold in New Jersey to be sold through a registered  broker-dealer
or in reliance upon an exemption from registration.

                  6.18. Brokers.  Each Purchaser represents and warrants that it
has not engaged,  consented to nor authorized any broker, finder or intermediary
to  act  on  its  behalf,  directly  or  indirectly,  as  a  broker,  finder  or
intermediary in connection with the transactions contemplated by this Agreement.
Each  Purchaser  shall  indemnify and hold harmless the Company from and against
all fees,  commissions or other payments owing to any such person or firm acting
on behalf of such Purchaser hereunder.

                  6.19. Recent Financing Activities. Each Purchaser acknowledges
that it is aware of the  following  recent  financing  activities of the Company
that have not yet been disclosed in the SEC Reports, and that such Purchaser has
had the opportunity to review the agreements and instruments  relating  thereto,
and to ask  questions  of the Company  regarding  the same:  (a) an aggregate of
$1,000,000  principal  amount  of  promissory  notes  were  sold  to E.  Andrews
Grinstead III, who is the Company's  President and Chief Executive  Officer,  at
face value during September 1999; (b) an additional $500,000 principal amount of
promissory  notes

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<PAGE>

were sold to E. Andrews  Grinstead III, at face value during  November 1999; and
(c) an aggregate of  approximately  $455,000 of debt was sold to purchasers in a
private placement  transaction in October 1999, which debt will, on December 31,
1999,  automatically convert into either Notes or preferred stock of the Company
having the terms set forth in the term sheet attached hereto as Exhibit E.

                  6.20. Beneficial Owner. Each Purchaser,  whose name appears on
the signature line below,  will be the  beneficial  owner of the Notes that such
Purchaser acquires.

                  6.21.  Accredited Investor.  Each Purchaser represents that it
is an "accredited investor" as such term is defined in Rule 501 of Regulation D.

                  6.22.   Reliance  on  Representation   and  Warranties.   Each
Purchaser  understands  that  the  Notes  are  being  offered  and  sold  to the
undersigned   in  reliance  on  specific   exemptions   from  the   registration
requirements  of United States  Federal and state  securities  laws and that the
Company  is  relying  upon  the  truth  and  accuracy  of  the  representations,
warranties,  agreements,  acknowledgments  and understandings of the undersigned
set forth herein in order to determine the  applicability of such exemptions and
the  suitability of the  undersigned to acquire the Notes,  the Warrants and the
Note-Underlying Common Stock.

                  6.23.    Reserved.

                  6.24.  Abdication of Rights to Secured  Party.  Each Purchaser
acknowledges that such Purchaser has irrevocably designated Secured Party to act
on such  Purchaser's  behalf with  respect to the Notes,  the  Warrants  and the
Collateral,  under the Notes,  the Warrant  Agreement and this  Agreement.  Each
Purchaser further  acknowledges and accepts that the actions of Secured Party on
such  Purchaser's  behalf may be materially  different  than how such  Purchaser
would have acted in such  Purchaser's own capacity,  and that such Purchaser may
be materially and adversely affected thereby.

                  7.       [Reserved]

                  8.  Representation,  Warranties  and Covenants of the Company.
The Company hereby represents, warrants and covenants to each Purchaser that all
reports  required to be filed by the Company since and including the most recent
filing  of the  Company's  Annual  Report on Form  10-K,  to and  including  the
relevant  Closing Date  (collectively,  the "SEC  Reports") have been duly filed
with the Securities and Exchange  Commission,  complied at the time of filing in
all material  respects with the  requirements of their respective forms and were
complete  and  correct  in all  material  respects  as of the dates at which the
information was furnished,  and contained (as of such dates) no untrue statement
of a material  fact or omitted to state a material  fact  necessary  in order to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.

                  9.       [Reserved]

                  10.      Secured Party's Rights and Remedies

                                       9
<PAGE>

                  10.1. Rights and Remedies.  Upon the occurrence and during the
continuance  of an Event of Default (as defined in the Note),  the Secured Party
may,  in  addition to the  remedies  pursuant to Section 6 of the Notes,  at its
election,  without  notice of its election and without  demand,  take any action
permitted  by law,  including  the  exercise  of any  rights  accorded a secured
creditor under the Uniform  Commercial Code as in effect in the  Commonwealth of
Massachusetts at such time.

                  11.  Certain  Definitions.  For the purposes of this Agreement
the following terms have the respective meanings set forth below:

                  11.1.  "Business  Day" means a Monday  through Friday on which
banks are generally open for business in New York, Massachusetts and California.

                  11.2.  "Common  Stock" means the Company's  common stock,  par
value $.001 per share.

                  11.3.  "Note-Underlying  Common  Stock"  shall mean the Common
Stock issuable upon conversion of, or in lieu of cash interest on, the Notes and
any Common Stock  issuable upon exercise of any Warrants that may be issued upon
prepayment of Notes.

                  11.4. "Offering" shall have the meaning ascribed to such terms
in the first paragraph of this Agreement.

                  11.5.  "Person"  means any  individual,  sole  proprietorship,
partnership,  limited liability company,  joint venture,  trust,  unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.

                  11.6.  "Regulation D" means Regulation D promulgated under the
Securities Act.

                  11.7.  "Secured Party" shall have the meaning ascribed to such
term in Section 5.1.

                  11.8.  "Securities  Act"  means,  as of any  given  time,  the
Securities Act of 1933, as amended, or any similar federal law then in force.

                  11.9.   "Securities  and  Exchange  Commission"  includes  any
governmental body or agency succeeding to the functions thereof.

                  11.10.  "Operating  Indebtedness"  means the principal of (and
premium,  if any) and  accrued  interest on  (including  all  interest  accruing
subsequent to the commencement of any bankruptcy or similar proceeding,  whether
or not a claim for  post-petition  interest is  allowable as a claim in any such
proceeding) all reimbursement  obligations and other liabilities  (contingent or
otherwise)  with  respect  to letters of credit,  bank  guarantees  or  bankers'
acceptances,  and  any  amendments,  renewals,  extensions,   modifications  and
refundings  of  any  such  indebtedness  or  obligation.   Notwithstanding   the
foregoing,  the Operating Indebtedness shall not include any

                                       10
<PAGE>

such  obligations  or  liabilities  to the extent they exceed  $1,000,000 in the
aggregate at any time outstanding.

                  11.11.  "SEC Reports" shall have the meaning  ascribed thereto
in Article 8.

                  11.12.  "Transfer  Restricted  Securities" means each Warrant,
each Note and, if any Note has been converted or any Warrant has been exercised,
the Note-Underlying Common Stock issued upon such conversion or exercise,  until
the  earlier  of (a) the date on which such  Note,  Warrant  or  Note-Underlying
Common  Stock,  as  applicable,   has  been  effectively  registered  under  the
Securities Act and disposed of pursuant to, and in accordance with, an effective
registration  statement  under the  Securities  Act,  (b) the date on which such
Note, Warrant or Note-Underlying Common Stock, as applicable,  is distributed to
the public  pursuant  to Rule 144 or any other  applicable  exemption  under the
Securities Act without additional  restriction upon public resale or (c) at such
time as such Note, Warrant or Note-Underlying  Common Stock, as applicable,  may
be sold by a Holder under Rule 144(k).

                  12.      Registration Rights.

                  12.1 As used in this  Article  12, the  following  terms shall
have the following meanings:

                  (a)  "Affiliate"  shall mean,  with  respect to any Person (as
defined below), any other Person controlling,  controlled by, or under direct or
indirect  common control with,  such Person (for the purposes of this definition
"control," when used with respect to any specified Person,  shall mean the power
to direct the  management  and policies of such person,  directly or indirectly,
whether through ownership of voting  securities,  by contract or otherwise;  and
the terms "controlling" and "controlled" shall have meanings  correlative to the
foregoing).

                  (b)      [Reserved].

                  (c) "Holders" shall mean the Purchasers and any person holding
Registrable  Securities  or any person to whom the rights under  Article 12 have
been transferred in accordance with Section 12.10 hereof.

                  (d)      [Reserved]

                  (e) The  terms  "register,"  "registered"  and  "registration"
refer to the  registration  effected  by  preparing  and  filing a  registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.

                  (f) "Registrable  Securities"  shall mean the shares of Common
Stock issuable upon conversion of the Notes; provided,  however, that securities
shall only be treated as Registrable  Securities if and only for so long as they
(A) have not been  disposed  of pursuant to a  registration  statement  declared
effective by the Securities and Exchange Commission, (B) have not been sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act so that all transfer  restrictions  and  restrictive  legends
with respect  thereto are removed upon the  consummation  of such sale,  (C) are
held by a Holder or a permitted

                                       11
<PAGE>

transferee  pursuant to Section  12.10 or (D) are not freely  tradeable  without
limitations  as to  volume  or  filing  requirements  under  applicable  federal
securities laws.

                  (g)  "Registration  Expenses" shall mean all expenses incurred
by the  Company in  complying  with  Section  12.2  hereof,  including,  without
limitation, all registration,  qualification and filing fees, printing expenses,
escrow fees,  fees and  expenses of counsel for the  Company,  blue sky fees and
expenses and the expense of any special audits  incident to, or required by, any
such registration (but excluding the fees of legal counsel for any Holder).

                  (h)  "Registration  Statement" shall have the meaning ascribed
to such term in Section 12.2.

                  (i)  "Registration  Period" shall have the meaning ascribed to
such term in Section 12.4.

                  (j) "Selling  Expenses" shall mean all underwriting  discounts
and selling commissions applicable to the sale of Registrable Securities and all
fees and expenses of legal counsel for any Holder.

                  12.2.  The Company  shall use its  reasonable  best efforts to
file a "shelf" registration statement on the appropriate form (the "Registration
Statement")  with the  Securities and Exchange  Commission,  by ninety (90) days
after the  Termination  Date and shall use its reasonable best efforts to effect
the registration,  qualifications or compliances (including, without limitation,
the execution of any required  undertaking  to file  post-effective  amendments,
appropriate  qualifications  or exemptions  under  applicable  blue sky or other
state  securities  laws and appropriate  compliance  with applicable  securities
laws,  requirements or  regulations)  prior to the date which is two hundred ten
(210)  days after the  Termination  Date.  Notwithstanding  the  foregoing,  the
Company shall not be obligated to enter into any underwriting  agreement for the
sale of any of the Registrable Securities.

                  12.3. All  Registration  Expenses  incurred in connection with
any registration,  qualification or compliance pursuant to Section 12.2 shall be
borne by the Company.  All Selling  Expenses  relating to the sale of securities
registered by or on behalf of Holders shall be borne by such Holders pro rata on
the basis of the number of securities so  registered;  provided that if a Holder
uses its own legal  counsel in addition to one counsel for all of the Holders of
securities  registered on behalf of the Holders, such Holder shall bear the cost
of such counsel.

                  12.4.  In the  case  of  the  registration,  qualification  or
compliance  effected by the  Company  pursuant  to this  Agreement,  the Company
shall,  upon  reasonable  request,  inform  each Holder as to the status of such
registration, qualification and compliance. At its expense the Company shall:

                  (a) use its reasonable best efforts to keep such registration,
and any qualification, exemption or compliance under state securities laws which
the Company determines to obtain,  continuously effective until the Holders have
completed the  distribution  described in the  registration  statement  relating
thereto.  Notwithstanding the foregoing,  at the Company's election, the Company
may cease to keep such registration,  qualification or compliance effective with
respect to any Registrable  Securities,  and the registration rights of a

                                       12
<PAGE>

Holder  shall  expire,  upon the earlier of (i) such time as the Holder may sell
under Rule 144(k) under the Securities Act (or other exemption from registration
acceptable to the Company) in a three-month  period all  Registrable  Securities
then held by such Holder and (ii)  November 30, 2002.  The period of time during
which the  Company is  required  hereunder  to keep the  Registration  Statement
effective is referred to herein as the "Registration Period."; and

                  (b)      advise the Holders:

                  (i) when the Registration  Statement or any amendment  thereto
has  been  filed  with  the  Securities  and  Exchange  Commission  and when the
Registration  Statement  or any  post-effective  amendment  thereto  has  become
effective;

                  (ii) of any request by the Securities and Exchange  Commission
for amendments or supplements  to the  Registration  Statement or the prospectus
included therein or for additional information;

                  (iii)  of  the  issuance  by  the   Securities   and  Exchange
Commission of any stop order  suspending the  effectiveness  of the Registration
Statement or the initiation of any proceedings for such purpose;

                  (iv) of the  receipt by the Company of any  notification  with
respect to the suspension of the  qualification  of the  Registrable  Securities
included  therein for sale in any  jurisdiction or the initiation or threatening
of any proceeding for such purpose; and

                  (v) of the  happening of any event that requires the making of
any changes in the Registration  Statement or the prospectus included therein so
that, as of such date, the statements therein are not misleading and do not omit
to state a material fact required to be stated  therein or necessary to make the
statements  therein  (in  the  case  of  the  prospectus,  in the  light  of the
circumstances under which they were made) not misleading;

                  (vi) make every reasonable  effort to obtain the withdrawal of
any order  suspending the  effectiveness  of any  Registration  Statement at the
earliest possible time;

                  (vii)  furnish to each Holder,  without  charge,  at least one
copy of such Registration  Statement and any  post-effective  amendment thereto,
including financial statements and schedules,  and, if the Holder so requests in
writing,  all exhibits  (including those  incorporated by reference) in the form
filed with the Securities and Exchange Commission;

                  (viii) during the Registration Period, deliver to each Holder,
without charge,  as many copies of the prospectus  included in such Registration
Statement and any amendment or supplement  thereto as such Holder may reasonably
request;  and the Company  consents to the use,  consistent  with the provisions
hereof, of the prospectus or any amendment or supplement  thereto by each of the
selling  Holders of Registrable  Securities in connection  with the offering and
sale of the Registrable  Securities  covered by the prospectus and any amendment
or supplement  thereto.  In addition,  upon the reasonable request of the Holder
and subject in all cases to confidentiality protections reasonably acceptable to
the Company, the Company will meet with a Holder or a representative  thereof at
the Company's headquarters to discuss all information relevant for disclosure in
the  Registration  Statement  covering  the  Registrable

                                       13
<PAGE>

Securities,   and  will  otherwise  cooperate  with  any  Holder  conducting  an
investigation  for the purpose of reducing or eliminating such Holder's exposure
to liability  under the Securities Act,  including the reasonable  production of
information at the Company's headquarters;

                  (ix) during the Registration  Period,  deliver to each Holder,
without charge, (i) as soon as practicable (but in the case of the annual report
of the Company to its stockholders, within 120 days after the end of each fiscal
year of the Company) one copy of: (A) its annual report to its stockholders,  if
any  (which  annual  report  shall  contain  financial   statements  audited  in
accordance with generally accepted accounting principles in the United States of
America by a firm of certified public accountants of recognized  standing);  (B)
if not included in substance in its annual  report to  stockholders,  its annual
report on Form 10-K (or similar form); (C) each of its quarterly  reports to its
stockholders,  and, if not  included in substance  in its  quarterly  reports to
stockholders,  its quarterly  report on Form 10-Q (or similar  form),  and (D) a
copy of the full Registration Statement (the foregoing,  in each case, excluding
exhibits);  and (ii) upon  reasonable  request,  all  exhibits  excluded  by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;

                  (x) prior to any public  offering  of  Registrable  Securities
pursuant to any Registration  Statement,  register or qualify for offer and sale
under the securities or blue sky laws of such  jurisdictions as any such Holders
reasonably request in writing,  provided that the Company shall not for any such
purpose be  required  to qualify  generally  to  transact  business as a foreign
corporation  in any  jurisdiction  where it is not so qualified or to consent to
general  service of process in any such  jurisdiction,  and do any and all other
acts or things reasonably necessary or advisable to enable the offer and sale in
such  jurisdictions of the Registrable  Securities  covered by such Registration
Statement;

                  (xi)  cooperate  with the  Holders  to  facilitate  the timely
preparation and delivery of certificates  representing Registrable Securities to
be sold pursuant to any Registration  Statement free of any restrictive  legends
to the extent not required at such time and in such denominations and registered
in such names as Holders may request at least three (3)  business  days prior to
sales of Registrable Securities pursuant to such Registration Statement;

                  (xii) upon the occurrence of any event contemplated by Section
12.4(b)(v) above, the Company shall promptly prepare a post-effective  amendment
to the Registration Statement or a supplement to the related prospectus, or file
any other  required  document so that, as thereafter  delivered to purchasers of
the Registrable Securities included therein, the prospectus will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements  therein,  in the light of the circumstances  under which
they were made, not misleading; and

                  (xiii) use its  reasonable  best  efforts  to comply  with all
applicable rules and regulations of the Securities and Exchange Commission,  and
will make generally  available to the Holders not later than 45 days (or 90 days
if the fiscal quarter is the fourth fiscal  quarter) after the end of its fiscal
quarter  in  which  the  first  anniversary  date of the  effective  date of the
Registration  Statement occurs, an earnings statement  satisfying the provisions
of Section 11(a) of the Securities Act.

                                       14
<PAGE>

                  12.5.  Delay Periods;  Suspension of Sales.  Each Holder shall
suspend, upon request of the Company, any disposition of Registrable  Securities
pursuant to the  Registration  Statement and prospectus  contemplated by Section
12.2  during (i) any period  not to exceed  two  30-day  periods  within any one
12-month period the Company  requires in connection with a primary  underwritten
offering  of equity  securities  and (ii) any  period,  not to exceed one 45-day
period per  circumstance  or  development,  when the Company  determines in good
faith that offers and sales pursuant thereto should not be made by reason of the
presence of material  undisclosed  circumstances or developments with respect to
which the  disclosure  that would be required in such a prospectus is premature,
would  have an  adverse  effect  on the  Company  or is  otherwise  inadvisable;
provided  that the Company  makes such  determination  and applies such halts of
offers and sales  uniformly and  universally to all Persons then offering shares
of  Common  Stock  pursuant  to  effective  Registration  Statements  (including
Registration Statements on Forms S-4 and S-8).

                  12.6.  The  Holders  shall have no right to take any action to
restrain,  enjoin or otherwise delay any  registration  pursuant to Section 12.2
hereof  as a result  of any  controversy  that may  arise  with  respect  to the
interpretation or implementation of this Agreement.

                  12.7.  (a) To the extent  permitted by law, the Company  shall
indemnify each Holder,  each underwriter of the Registrable  Securities and each
person  controlling  such  Holder  within  the  meaning  of  Section  15 of  the
Securities  Act,  with  respect  to which  any  registration,  qualification  or
compliance  has been effected  pursuant to this  Agreement,  against all claims,
losses, damages and liabilities (or action in respect thereof), including any of
the foregoing incurred in settlement of any litigation,  commenced or threatened
(subject to  Subsection  12.7(c)  below),  arising out of or based on any untrue
statement (or alleged  untrue  statement)  of a material  fact  contained in any
registration  statement,  prospectus or offering  circular,  or any amendment or
supplement  thereof,  incident  to  any  such  registration,   qualification  or
compliance,  or based on any omission (or alleged  omission) to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  in light of the  circumstances in which they were made,
and shall reimburse each Holder, each underwriter of the Registrable  Securities
and each person controlling such Holder, for legal and other expenses reasonably
incurred in connection  with  investigating  or defending any such claim,  loss,
damage, liability or action as incurred;  provided that the Company shall not be
liable in any such case to the extent that any untrue  statement  or omission or
allegation  thereof is made in reliance upon and in conformity with  information
furnished  to the  Company  by or on  behalf  of such  Holder  and  stated to be
specifically for use in preparation of such registration  statement,  prospectus
or offering circular;  provided that the Company shall not be liable in any such
case where the claim,  loss,  damage or liability arises out of or is related to
the failure of the Holder to comply with the covenants and agreements  contained
in this Agreement  respecting sales of Registrable  Securities,  and except that
the foregoing  indemnity  agreement is subject to the condition that, insofar as
it relates to any such untrue  statement or alleged untrue statement or omission
or  alleged  omission  made in the  preliminary  prospectus  but  eliminated  or
remedied in the amended  prospectus  on file with the  Securities  and  Exchange
Commission at the time the registration  statement  becomes  effective or in the
amended prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b) of the Securities Act or in the prospectus subject to completion and
term  sheet  under  Rule 434 of the  Securities  Act,  which  together  meet the
requirements  of Section 10(a) of the Securities  Act (the "Final  Prospectus"),
such indemnity  agreement shall not inure to

                                       15
<PAGE>

the benefit of any such Holder,  any such  underwriter  or any such  controlling
person, if a copy of the Final Prospectus furnished by the Company to the Holder
for  delivery  was not  furnished  to the person or entity  asserting  the loss,
liability,  claim or damage at or prior to the time such  furnishing is required
by the  Securities  Act and the Final  Prospectus  would  have  cured the defect
giving rise to such loss, liability, claim or damage.

                  (b) Each Holder will severally, if Registrable Securities held
by such Holder are  included in the  securities  as to which such  registration,
qualification  or compliance is being effected,  indemnify the Company,  each of
its directors and officers,  each underwriter of the Registrable  Securities and
each person who  controls  the  Company  within the meaning of Section 15 of the
Securities Act, against all claims,  losses, damages and liabilities (or actions
in respect  thereof),  including any of the foregoing  incurred in settlement of
any litigation,  commenced or threatened  (subject to Subsection 12.7(c) below),
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement,  prospectus or offering
circular,  or  any  amendment  or  supplement  thereof,  incident  to  any  such
registration,  qualification or compliance, or based on any omission (or alleged
omission)  to state  therein a material  fact  required to be stated  therein or
necessary  to make  the  statements  therein  not  misleading,  in  light of the
circumstances  in which they were made,  and will  reimburse  the Company,  such
directors and officers,  each underwriter of the Registrable Securities and each
person  controlling  the Company  for  reasonable  legal and any other  expenses
reasonably  incurred in  connection  with  investigating  or defending  any such
claim,  loss,  damage,  liability  or  action as  incurred,  in each case to the
extent,  but only to the  extent,  that such  untrue  statement  or  omission or
allegation  thereof is made in  reliance  upon and in  conformity  with  written
information furnished to the Company by or on behalf of the Holder and stated to
be  specifically  for  use  in  preparation  of  such  registration   statement,
prospectus or offering circular;  provided that the indemnity shall not apply to
the extent that such claim, loss, damage or liability results from the fact that
a current copy of the  prospectus  was not made available to the Holder and such
current copy of the  prospectus  would have cured the defect giving rise to such
loss, claim,  damage or liability.  Notwithstanding  the foregoing,  in no event
shall a Holder be liable for any such claims,  losses, damages or liabilities in
excess of the proceeds  received by such Holder in the  offering,  except in the
event of fraud by such Holder.

                  (c) Each party entitled to indemnification  under this Section
12.7 (the  "Indemnified  Party")  shall  give  notice to the party  required  to
provide   indemnification   (the  "Indemnifying   Party")  promptly  after  such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought,  and shall  permit the  Indemnifying  Party to assume the defense of any
such claim or any litigation resulting therefrom,  provided that counsel for the
Indemnifying  Party,  who shall conduct the defense of such claim or litigation,
shall  be  approved  by  the   Indemnified   Party  (whose  approval  shall  not
unreasonably  be withheld),  and the  Indemnified  Party may participate in such
defense at such  Indemnified  Party's  expense,  and  provided  further that the
failure of any  Indemnified  Party to give notice as provided  herein  shall not
relieve the Indemnifying  Party of its obligations under this Agreement,  unless
such failure is materially  prejudicial to the  Indemnifying  Party in defending
such claim or  litigation.  An  Indemnifying  Party  shall not be liable for any
settlement of an action or claim  effected  without its written  consent  (which
consent will not be unreasonably withheld).

                                       16
<PAGE>

                  (d) If the  indemnification  provided for in this Section 12.7
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability,  claim, damage or expense referred to
therein,  then the Indemnifying  Party, in lieu of indemnifying such Indemnified
Party  thereunder,  shall  contribute  to the  amount  paid or  payable  by such
Indemnified Party as a result of such loss, liability,  claim, damage or expense
in such  proportion  as is  appropriate  to reflect  the  relative  fault of the
Indemnifying  Party on the one hand and of the Indemnified Party on the other in
connection  with the  statements  or  omissions  which  resulted  in such  loss,
liability,  claim,  damage or  expense as well as any other  relevant  equitable
considerations.  The  relative  fault  of  the  Indemnifying  Party  and  of the
Indemnified  Party shall be  determined  by reference  to,  among other  things,
whether  the  untrue or  alleged  untrue  statement  of a  material  fact or the
omission  to state a  material  fact  relates  to  information  supplied  by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
statement or omission.

                  12.8. (a) Each Holder agrees that,  upon receipt of any notice
from the Company of the happening of any event  requiring the  preparation  of a
supplement or amendment to a prospectus  relating to  Registrable  Securities so
that, as thereafter  delivered to the Holders,  such prospectus will not contain
an  untrue  statement  of a  material  fact or omit to state any  material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading,  each Holder will forthwith  discontinue  disposition of Registrable
Securities pursuant to the registration  statement  contemplated by Section 12.2
until its receipt of copies of the  supplemented or amended  prospectus from the
Company  and, if so directed by the Company,  each Holder  shall  deliver to the
Company  all copies,  other than  permanent  file  copies then in such  Holder's
possession,  of the prospectus  covering such Registrable  Securities current at
the time of receipt of such notice.

                  (b)  As a  condition  to  the  inclusion  of  its  Registrable
Securities,  each Holder shall furnish to the Company such information regarding
such  Holder and the  distribution  proposed  by such  Holder as the Company may
request in writing or as shall be required in connection with any  registration,
qualification or compliance referred to in this Article 12.

                  (c) Each Holder hereby  covenants  with the Company (i) not to
make any sale of the  Registrable  Securities  without  effectively  causing the
prospectus delivery  requirements under the Securities Act to be satisfied,  and
(ii) if such  Registrable  Securities  are to be  sold by any  method  or in any
transaction other than on a national  securities  exchange,  the Nasdaq National
Market,  Nasdaq SmallCap Market or in the over-the-counter  market, in privately
negotiated  transactions,  or in a combination  of such  methods,  to notify the
Company  at least five (5)  business  days prior to the date on which the Holder
first offers to sell any such Registrable Securities.

                  (d) Each Holder  acknowledges  and agrees that the Registrable
Securities sold pursuant to the Registration Statement described in this Article
12 are not transferable on the books of the Company unless the stock certificate
submitted  to the transfer  agent  evidencing  such  Registrable  Securities  is
accompanied  by a  certificate  reasonably  satisfactory  to the  Company to the
effect that (i) the  Registrable  Securities  have been sold in accordance  with
such

                                       17
<PAGE>

Registration  Statement  and  (ii)  the  requirement  of  delivering  a  current
prospectus has been satisfied.

                  (e) Each Holder  shall not take any action with respect to any
distribution  deemed to be made pursuant to such registration  statement,  which
would  constitute a violation of Regulation M under the Securities  Exchange Act
of  1934,  as  amended  (the  "Exchange  Act")  or any  other  applicable  rule,
regulation or law.

                  (f) At the end of the  Registration  Period,  the  Holders  of
Registrable  Securities included in the Registration Statement shall discontinue
sales of shares pursuant to such  Registration  Statement upon receipt of notice
from the Company of its intention to remove from registration the shares covered
by such  Registration  Statement  which remain  unsold,  and such Holders  shall
notify the  Company  of the  number of shares  registered  which  remain  unsold
immediately upon receipt of such notice from the Company.

                  12.9.  With a view to  making  available  to the  Holders  the
benefits  of  certain  rules and  regulations  of the  Securities  and  Exchange
Commission  which at any time permit the sale of the  Registrable  Securities to
the public  without  registration,  the Company  shall use its  reasonable  best
efforts:

                  (a) to make and keep public  information  available,  as those
terms are understood  and defined in Rule 144 under the  Securities  Act, at all
times;

                  (b) to file with the Securities  and Exchange  Commission in a
timely manner all reports and other documents  required of the Company under the
Exchange Act; and

                  (c) so long as a  Holder  owns  any  unregistered  Registrable
Securities,  to furnish to such  Holder  upon any  reasonable  request a written
statement by the Company as to its compliance with Rule 144 under the Securities
Act,  and of the  Exchange  Act, a copy of the most recent  annual or  quarterly
report of the Company,  and such other  reports and  documents of the Company as
such Holder may reasonably  request in availing itself of any rule or regulation
of the  Securities  and Exchange  Commission  allowing a Holder to sell any such
securities without registration.

                  12.10. The rights to cause the Company to register Registrable
Securities  granted to the  Holders by the  Company  under  Section  12.2 may be
assigned in full by a Holder in connection with a transfer by such Holder of its
Registrable  Securities,  provided  that  (i) such  transfer  may  otherwise  be
effected in  accordance  with  applicable  securities  laws;  (ii) such transfer
involves  not  fewer  than the fewer of all or  20,000  shares of such  Holder's
Registrable  Securities,  (iii) such Holder  gives prior  written  notice to the
Company; and (iv) such transferee agrees to comply with the terms and provisions
of this  Agreement,  and such  transfer is  otherwise  in  compliance  with this
Agreement. Except as specifically permitted by this Section 12.10, the rights of
a Holder with respect to  Registrable  Securities as set out herein shall not be
transferable  to any other Person,  and any attempted  transfer  shall cause all
rights of such Holder therein to be forfeited.

                  12.11. With the written consent of the Company and the Secured
Party, any provision of this Article 12 may be waived (either

                                       18
<PAGE>

generally or in a particular instance, either retroactively or prospectively and
either for a specified  period of time or  indefinitely)  or  amended.  Upon the
effectuation  of each such waiver or amendment,  the Company shall promptly give
written notice thereof to the Holders,  if any, who have not previously received
notice thereof.

                  13.      Miscellaneous.

                  13.1.  Amendments  and  Waivers.  (a) This  Agreement  and all
exhibits and schedules hereto set forth the entire  agreement and  understanding
among the parties as to the subject  matter hereof and merges and supersedes all
prior  discussions,  agreements and understandings of any and every nature among
them.  This  Agreement  may be amended only by mutual  written  agreement of the
Company  and the  Secured  Party,  and the  Company  may take any action  herein
prohibited or omit to take any action herein required to be performed by it, and
any breach of any covenant, agreement, warranty or representation may be waived,
only if the Company has  obtained  the written  consent or waiver of the Secured
Party.  No course of dealing between or among any persons having any interest in
this Agreement will be deemed  effective to modify,  amend or discharge any part
of this  Agreement or any rights or obligations of any person under or by reason
of this Agreement.

                  (b) After an  amendment or waiver  becomes  effective it shall
bind every holder of a Note  regardless of whether such holder held such Note at
the time such amendment or waiver became  effective,  or  subsequently  acquired
such Note.

                  13.2.  Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company and its  successors and assigns and
Purchasers and their successors and registered  assigns.  The provisions  hereof
which are for Purchasers' benefit as purchasers or holders of the Notes are also
for the benefit of, and enforceable by, any subsequent registered holder of such
Notes.

                  13.3. Notices.  All notices,  demands and other communications
to be given or delivered  under or by reason of the provisions of this Agreement
shall be in writing  and shall be deemed to have been given  personally  or when
mailed by certified or registered  mail,  return  receipt  requested and postage
prepaid,  and  addressed to the  addresses of the  respective  parties set forth
below or to such  changed  addresses  as such  parties may have fixed by notice;
provided,  however, that any notice of change of address shall be effective only
upon receipt:

                           If to the Company:

                           Hybridon, Inc.
                           155 Fortune Boulevard
                           Milford, MA  01757
                           Attn: E. Andrews Grinstead, III

                           If to Secured Party or Purchasers:

                           c/o Pillar
                           28 Avenue de Messine
                           75008 Paris, France; and


                                       19
<PAGE>

                           c/o Pecks Management
                           1 Rockefeller Plaza, Suite 900
                           Attn: Art Berry
                           New York, NY  10020; and

                           c/o Forum Capital Markets
                           53 Forest Avenue
                           Old Greenwich, CT  06870
                           Attn: Hal Purkey

                  13.4. Governing Law. The validity,  performance,  construction
and effect of this Agreement shall be governed by the internal laws of the State
of Massachusetts without giving effect to such State's principles of conflict of
laws.

                  13.5.  Counterparts.  This  Agreement  may be  executed in any
number of  counterparts  and,  notwithstanding  that any of the  parties did not
execute the same  counterpart,  each of such  counterparts  (or facsimile copies
thereof)  shall,  for  all  purposes,  be  deemed  an  original,  and  all  such
counterparts  shall constitute one and the same instrument binding on all of the
parties hereto.  Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be as effective as delivery of a manually executed
counterpart of a signature page of this Agreement.

                  13.6.  Headings.  The  headings  of the  Sections  hereof  are
inserted as a matter of convenience and for reference only and in no way define,
limit or describe the scope of this  Agreement  or the meaning of any  provision
hereof.

                  13.7.  Severability.  In the event that any  provision of this
Agreement or the application of any provision  hereof is declared to be illegal,
invalid or otherwise  unenforceable  by a court of competent  jurisdiction,  the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal,  invalid or unenforceable provision unless the provision
held invalid shall substantially  impair the benefit of the remaining portion of
this Agreement.

                  13.8.    Exculpation   Among   Purchasers.    Each   Purchaser
acknowledges and agrees that it is not relying upon any other Purchaser,  or any
officer, director, employee partner or affiliate of any such other Purchaser, in
making its investment or decision to invest in the Company or in monitoring such
investment.  Each Purchaser agrees that no Purchaser nor any controlling person,
officer,  director,  stockholder,  partner,  agent or employee of any  Purchaser
shall be liable for any action  heretofore  or hereafter  taken or omitted to be
taken  by any of them  relating  to or in  connection  with the  Company  or the
securities, or both.

                  13.9. Actions by Purchasers. Any actions permitted to be taken
by the Secured  Party and any  consents  required  to be obtained  from the same
under this Agreement, may be taken or given only by the Secured Party and if the
Secured  Party  takes any action or grants any  consent,  such action or consent
shall be deemed given or taken by all holders or Purchasers'  who

                                       20
<PAGE>

shall be bound by the decision or action taken by the Secured  Party without any
liability  on the part of the  Secured  Party to any  holder  or  Purchasers  of
securities hereunder.

                  13.10. Additional Purchasers.  Upon the execution and delivery
by any Person of this Agreement  after the date hereof with the written  consent
of the Company,  such Person shall be referred to as an Additional Purchaser and
shall become a Purchaser,  and each  reference in this  Agreement to "Purchaser"
shall also mean and be a reference to such Additional Purchaser.

                  14.      Confidential Investor Questionnaire.

                  14.1.  Each Purchaser  represents and warrants that he, she or
it comes within one of category A through H below.  ALL  INFORMATION IN RESPONSE
TO THIS SECTION WILL BE KEPT STRICTLY  CONFIDENTIAL.  The undersigned  agrees to
furnish any additional information which the Company deems necessary in order to
verify the answers set forth below.

Category A:              The  undersigned  is an individual  (not a partnership,
                         corporation, etc.) whose individual net worth, or joint
                         net worth  with his or her  spouse,  presently  exceeds
                         $1,000,000.

                                    Explanation.  In  calculating  net worth you
                                    may include equity in personal  property and
                                    real  estate,   including   your   principal
                                    residence,   cash,  short-term  investments,
                                    stock and  securities.  Equity  in  personal
                                    property and real estate  should be based on
                                    the fair market value of such  property less
                                    debt secured by such property.

Category B:              The  undersigned  is an individual  (not a partnership,
                         corporation,  etc.)  who had an  individual  income  in
                         excess  of  $200,000  in each of the  two  most  recent
                         years, or joint income with his or her spouse in excess
                         of  $300,000  in each of  those  years  (in  each  case
                         including  foreign  income,  tax exempt income and full
                         amount of capital  gains and losses but  excluding  any
                         income  of  other  family  members  and any  unrealized
                         capital appreciation) and has a reasonable  expectation
                         of reaching the same income level in the current year.

Category C:              The  undersigned is a director or executive  officer of
                         the Company which is issuing and selling the Notes.

Category D:              The   undersigned   is  a  bank;  a  savings  and  loan
                         association;  insurance company;  registered investment
                         company;   registered  business   development  company;
                         licensed small business investment company ("SBIC"); or
                         employee  benefit plan within the meaning of Title 1 of
                         ERISA and (a) the investment decision is made by a plan
                         fiduciary  which  is  either a bank,  savings  and loan
                         association, insurance company or registered investment
                         advisor,  or (b) the plan has total assets in excess of
                         $5,000,000 or is a self  directed plan with  investment
                         decisions  made solely by persons  that are  accredited
                         investors.

                                       21
<PAGE>

Category                 E: The  undersigned is a private  business  development
                         company  as  defined  in  section   202(a)(22)  of  the
                         Investment Advisors Act of 1940.


Category                 F:   The   undersigned   is   either   a   corporation,
                         partnership,    Massachusetts    business   trust,   or
                         non-profit  organization  within the meaning of Section
                         501(c)(3) of the Internal  Revenue  Code,  in each case
                         not formed for the specific  purpose of  acquiring  the
                         Notes and with total assets in excess of $5,000,000.

Category                 G: The  undersigned  is a trust  with  total  assets in
                         excess  of  $5,000,000,  not  formed  for the  specific
                         purpose of acquiring  the Notes,  where the purchase is
                         directed  by a  "sophisticated  person"  as  defined in
                         Regulation 506(b)(2)(ii) under the Securities Act.

Category                 H: The  undersigned  is an entity  (other than a trust)
                         all  the  equity   owners  of  which  are   "accredited
                         investors"  within one or more of the above categories.
                         If relying upon this Category alone,  each equity owner
                         must complete a separate copy of this Agreement.

The undersigned  agrees that the undersigned will notify the Company at any time
on or prior to the Final Closing Date in the event that the  representations and
warranties in this Agreement shall cease to be true, accurate and complete.

                  14.2.    Manner in Which Title Is To Be Held. (circle one)

                           (a)      Individual Ownership
                           (b)      Community Property
                           (c)      Joint Tenant with Right of
                                    Survivorship (both parties
                                    must sign)
                           (d)      Partnership*
                           (e)      Tenants in Common
                           (f)      Company*
                           (g)      Trust*
                           (h)      Other

         *If  Notes  are  being  subscribed  for  by  an  entity,  the  attached
Certificate of Signatory must also be completed.

                  14.3.    NASD Affiliation.

Are you affiliated or associated with an NASD member firm (please check one):

Yes _________              No __________

If Yes, please describe:

_______________________________________________


                                       22
<PAGE>
_______________________________________________

_______________________________________________

*If Purchaser is a Registered  Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:

The undersigned NASD member firm acknowledges  receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.


__________________________________
Name of NASD Member Firm

By: ______________________________
         Authorized Officer

Date: ____________________________

                  14.4.  Reliance on Confidential  Investor  Questionnaire.  The
undersigned  is informed  of the  significance  to the Company of the  foregoing
representations and answers contained in the Confidential Investor Questionnaire
contained  in this  Article 14 and such  answers  have been  provided  under the
assumption that the Company will rely on them.


                                       23
<PAGE>


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

                                             [Signature Page for each Purchaser]

$_____________  principal  amount of Notes,  at face value,  for an aggregate of
$___________ (the "Purchase Price")

By its execution and delivery of this signature page, the undersigned  Purchaser
hereby  joins in and  agrees  to be bound by the  terms  and  conditions  of the
Subscription  Agreement (the "Purchase  Agreement") by and among Hybridon,  Inc.
(the  "Company") and the Purchasers  (as defined  therein),  as to the aggregate
principal  amount of Notes set forth above and authorizes this signature page to
be attached to the Purchase Agreement or counterparts thereof.

--------------------------------         ---------------------------------
Signature                                Signature (if purchasing jointly)

--------------------------------         ---------------------------------
Name Typed or Printed                    Name Typed or Printed

--------------------------------         ---------------------------------
Entity Name                              Entity Name

--------------------------------         ---------------------------------
Address                                  Address

--------------------------------         ---------------------------------
City, State and Zip Code                 City, State and Zip Code

--------------------------------         ---------------------------------
Telephone-Business                       Telephone--Business

--------------------------------         ---------------------------------
Telephone-Residence                      Telephone--Residence

--------------------------------         ---------------------------------
Facsimile-Business                       Facsimile--Business

--------------------------------         ---------------------------------
Facsimile-Residence                      Facsimile--Residence

--------------------------------         ---------------------------------
Tax ID # or Social Security #            Tax ID # or Social Security #

Dated: ___________ _____, ___

                  This   Agreement   is   agreed   to   and   accepted   as   of
___________________, ____.

                                               HYBRIDON, INC.

                                               By:__________________________
                                                  Name:
                                                  Title:


                                       24
<PAGE>

                            CERTIFICATE OF SIGNATORY


                          (To be completed if Notes are
                       being subscribed for by an entity)


                  I,   ___________________,   am   the   ________________   (the
"Entity").  I certify that I am empowered  and duly  authorized by the Entity to
execute and carry out the terms of the Subscription Agreement, dated as of , and
to  purchase  and hold the Notes,  and  certify  further  that the  Subscription
Agreement  has been  duly and  validly  executed  on behalf  of the  Entity  and
constitutes a legal and binding obligation of the Entity.

                  IN  WITNESS  WHEREOF,  I have  set my hand  this  ____  day of
_________________, ____.


     ______________________________
     (Signature)


                                       25
<PAGE>