Document:

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                                                                   Exhibit 10.16

                              DIGITAL IMPACT, INC.

                            1999 DIRECTOR EQUITY PLAN

                             STOCK OPTION AGREEMENT

      Unless otherwise defined herein, the terms defined in the 1999 Director
Equity Plan (the "PLAN") shall have the same defined meanings in this stock
option agreement (this "OPTION AGREEMENT").

I. NOTICE OF STOCK OPTION GRANT

      You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

Date of Grant
Exercise Price per Share
Total Number of Shares Granted
Total Exercise Price
Type of Option:
Term/Expiration Date:

Vesting:

      This Option (as defined below) shall become exercisable as to 25% percent
of the shares subject to this Option on each anniversary of its date of grant,
provided that you continue to be a director of the Company on such dates.

Termination Period:

      This Option may be exercised for three (3) months after you cease to be a
director of the Company. This Option may be exercised for up to one (1) year
following your death or Disability. In no event shall this Option be exercised
later than the Term/Expiration Date as provided above.

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II. AGREEMENT

      1. Grant of Option. The Company hereby grants to you an option (this
"OPTION") to purchase the number of Shares, as set forth in the Notice of Grant,
at the exercise price per share set forth in the Notice of Grant, subject to the
terms and conditions of the Plan, which is incorporated herein by reference. In
the event of a conflict between the terms and conditions of the Plan and the
terms and conditions of this Option Agreement, the terms and conditions of the
Plan shall govern.

      2. Method of Exercise. Payment of the exercise price shall be by any of
the following, or a combination thereof:

            (a) Cash or check;

            (b) Previously-owned Shares; or

            (c) Cashless exercise or same-day sale.

      3. Limited Transferability of Option. This Option may be transferred (i)
to one or more or your Family Members (as defined below) or (ii) under a
domestic relations order in settlement of marital property rights. "FAMILY
Member" includes any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing your household (other than
a tenant or employee), a trust in which these persons have more than fifty
percent of the beneficial interest, a foundation in which these persons (or you)
control the management of assets, and any other entity in which these persons
(or you) own more than fifty percent of the voting interests.

      4. Term of Option. This Option may be exercised only during the Term set
forth in the Notice of Grant, and may be exercised only in accordance with the
Plan and the terms of this Option Agreement.

      5. Tax Consequences. Some of the federal tax consequences relating to this
Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.

            (a) Exercising the Option. You may incur regular federal income tax
liability upon exercise of the Option. You will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the shares underlying the exercised portion
of the Option on the date of exercise over their aggregate exercise price.

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            (b) Disposition of Shares. If you hold the shares for at least one
year, any gain realized on disposition of the shares will be treated as
long-term capital gain for federal income tax purposes.

      6. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and you with
respect to the subject matter hereof, and may not be modified adversely to your
interest except by means of a writing signed by the Company and you. This
agreement is governed by the internal substantive laws, but not the choice of
law rules, of California.

      By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. You have reviewed
the Plan and this Option Agreement in their entirety, have had an opportunity to
obtain the advice of counsel prior to executing this Option Agreement and fully
understand all provisions of the Plan and Option Agreement. You hereby agree to
accept as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions relating to the Plan and Option Agreement. You
further agree to notify the Company upon any change in the residence address
indicated below.

OPTIONEE:                                 DIGITAL IMPACT, INC.
------------------------------            --------------------------------------
                                          William C. Park
                                          Chairman & Chief Executive Officer

Residence Address:

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                                                                    EXHIBIT 10.1

                                 HYBRIDON, INC.
                                345 Vassar Street
                         Cambridge, Massachusetts 02139

                                 August 27, 2004

Pillar Investments Limited
St. James' Chambers
Douglas
Isle of Man

Gentlemen:

       This letter sets forth the terms and conditions of the engagement of
Pillar Investments Limited (the "Advisor") as a non-exclusive financial advisor
to Hybridon, Inc. (the "Company") in connection with the arrangement and
negotiation of a private placement of the Company's securities outside of the
United States (the "Transaction"). The Advisor, in its capacity as financial
advisor to the Company, has identified and will identify potential non-U.S.
investors and, subject to the Company's prior written approval, has contacted or
will contact such potential investors on behalf of the Company and has provided
and will provide such other services in connection with the Transaction as the
Company may from time to time reasonably request.

       The Advisor has not contacted or initiated and shall not contact or
initiate any discussions with any party or prospective investor without first
identifying such party or prospective investor to the Company and obtaining the
Company's prior written approval to make such contact or initiate such
discussions (such parties and prospective investors that are approved by the
Company are referred to herein as the "Approved Investors"). The Advisor shall
not have authority under this letter to bind the Company in any way to any
party, and nothing contained in this letter shall require the Company to accept
the terms of any proposal or undertake any other action that would result in the
receipt by the Advisor of a fee hereunder.

       The Advisor represents, warrants and covenants to the Company that:

              (a)    It has not offered, offered to sell or sold and shall not
       offer, offer to sell or sell any securities of the Company on the basis
       of any written communications or documents relating to the Company or its
       business other than written materials furnished by the Company or
       previously approved by the Company in writing, including without
       limitation the Company's filings under the Securities Exchange Act of
       1934, as amended (the "Offering Materials"). No communications (whether
       oral or written) or documents relating to the Company or its business
       made or delivered by the Advisor have been or shall be inconsistent with
       the Offering Materials.

              (b)    It has not offered, offered to sell or sold and shall not
       offer, offer to sell or sell any securities of the Company to any
       investor in the United States or to any United States person outside the
       United States.

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              (c)    It has not engaged and shall not engage in any form of
       general solicitation or general advertising which is prohibited by
       Regulation D ("Regulation D") promulgated under the Securities Act of
       1933, as amended (the "Securities Act"), in connection with the
       Transaction or any directed selling efforts in the United States (as such
       term is defined in Regulation S ("Regulation S") promulgated under the
       Securities Act). In addition, such Advisor has not taken and shall not
       take any action that might reasonably be expected to jeopardize the
       availability for the Transaction of the exemption from registration
       provided by Regulation S or the qualification of securities of the
       Company for offer and sale under any applicable foreign securities laws.

              (d)    It shall make reasonable inquiry to determine that each
       investor is acquiring the securities of the Company for his or its own
       account for investment.

              (e)    In the performance of its services hereunder, it has
       complied and shall comply with the U.S. securities laws and the
       securities laws in effect in any jurisdiction in which securities of the
       Company are offered by it and the rules, regulations and orders of any
       securities administrator existing or adopted thereunder.

              (f)    It shall not receive, directly or indirectly, any
       remuneration in respect of any issuance and sale by the Company of its
       securities in the United States or to any U.S. person.

       In the event a Transaction with Approved Investors is completed during
the term of this letter, the Company will (i) pay the Advisor a fee in an amount
equal to 7% of the Aggregate Value (as defined below) of the Transaction
received from Approved Investors less $6,000 and (ii) issue to the Advisor a
warrant or warrants (in the form issued to Approved Investors in the
Transaction, if applicable, and in any event including antidilution protection
for stock splits and other similar events and other customary provisions as
agreed by the Company and the Advisor; provided that the term of the warrant or
warrants shall not exceed five years) to purchase such number of shares of
common stock of the Company (the "Warrant Shares") as is equal to 10% of the
Issued Shares (as defined below) at an exercise price per share equal to the
exercise price of the warrants issued to Approved Investors in the Transaction,
if applicable.

       For the purposes of this letter, (i) the term "Aggregate Value" shall
mean the total amount of cash and the fair market value of all other property
paid by Approved Investors to the Company in consideration for the securities of
the Company to be issued in the Transaction (excluding, however, any payment
made in connection with the exercise of any warrants issued to the investors in
the Transaction), and (ii) the term "Issued Shares" shall mean the total number
of shares of common stock of the Company issued to the Approved Investors, who
were introduced to the Company by the Advisor, in the Transaction (excluding any
shares issued upon exercise of any warrants issued to the investors in the
Transaction and excluding any shares issued to any affiliate of the Advisor or
Youssef El-Zein, including without limitation Optima Life Sciences Limited).

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       The Advisor recognizes that the Company is subject to the rules of the
American Stock Exchange, including Section 711 of the American Stock Exchange
Company Guide. Accordingly, the Advisor agrees that notwithstanding the
foregoing the Company shall have no obligation hereunder to pay any fees or
issue any Warrants to the Advisor that would not comply with the rules of the
American Stock Exchange or that would require the Company to obtain stockholder
approval. In the event of such a conflict, the Company and the Advisor agree to
negotiate in good faith new compensation terms for the Advisor.

       In addition to any fees payable to the Advisor under the terms of this
letter, the Company agrees to reimburse the Advisor for its reasonable
out-of-pocket expenses incurred in connection with the Advisor's activities
under this letter, which shall not exceed $35,000, in the aggregate, without the
Company's prior approval.

       The Company agrees to indemnify the Advisor and its affiliates,
directors, officers, employees, agents and controlling persons (each such person
being an "Indemnified Party") from and against any and all losses, claims,
damages and liabilities, joint or several, to which such Indemnified Party may
become subject under any applicable federal or state law, or otherwise, related
to or arising out of the engagement of the Advisor pursuant to, and the
performance by the Advisor of the services contemplated by, this letter and
will, subject to the limitation set forth below, reimburse any Indemnified Party
for all expenses (including reasonable counsel fees and expenses, whether
incurred in connection with third party claims or direct claims against the
Company) as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party.
The Company will not be liable under the foregoing indemnification provision to
the extent that any loss, claim, damage, liability or expense is found in a
final judgment by a court of competent jurisdiction to have resulted from an
Indemnified Party's breach of this letter, bad faith, willful misfeasance, gross
negligence or reckless disregard of its obligations or duties. No Indemnified
Party shall settle any claim for which indemnification may be sought by him or
it hereunder without the prior written consent of the Company. The Company's
obligations to indemnify pursuant hereto shall be limited to the Indemnified
Party's actual liabilities, losses, damages or expenses incurred and shall not
include any consequential damages or damages for loss of business or reputation.

       The Company will have the right, at its option, to assume the defense of
any litigation or proceeding in respect of which indemnity may be sought
hereunder, including the employment of counsel reasonably satisfactory to the
Advisor (the Advisor hereby agrees that Wilmer Cutler Pickering Hale and Dorr
LLP is satisfactory to the Advisor) and the payment of the fees and expenses of
such counsel, in which event, except as provided below, the Company shall not be
liable for the fees and expenses of any other counsel retained by any
Indemnified Person in connection with such litigation or proceeding. In any such
litigation or proceeding the defense of which the Company shall have so assumed,
any Indemnified Person shall have the right to participate in such litigation or
proceeding and to retain its own counsel.

       Upon receipt by an Indemnified Person of actual notice of a claim, action
or proceeding against such Indemnified Person in respect of which indemnity may
be sought hereunder, such Indemnified Person shall promptly notify the Company
with respect thereto. In addition, an

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Indemnified Person shall promptly notify the Company after any action is
commenced (by the way of service with a summons or other legal process giving
information as to the nature and basis of the claim) against such Indemnified
Person in respect of which indemnity may be sought hereunder. In any event,
failure to notify the Company shall not relieve the Company from any liability
which the Company may have on account of this indemnity or otherwise, except to
the extent the Company shall have been prejudiced by such failure.

       In the course of its services, the Advisor has had and will have access
to Confidential Information (as defined below) concerning the Company. The
Advisor agrees that all Confidential Information has been and will be treated by
the Advisor as confidential in all respects. The term "Confidential Information"
shall mean all information, whether written or oral, which is disclosed by the
Company or its affiliates, agents or representatives to the Advisor or is
otherwise learned of by the Advisor in connection with its role as financial
advisor to the Company which information is not in the public domain, but shall
not include: (i) information which, prior to disclosure to the Advisor, was
already in the Advisor's possession and was not otherwise subject to an
obligation of confidentiality; (ii) information which is publicly disclosed
other than by the Advisor in violation of this letter; (iii) information which
is obtained by the Advisor from a third party that (x) the Advisor does not know
to have violated, or to have obtained such information in violation of, any
obligation to the Company or its affiliates with respect to such information,
and (y) does not require the Advisor to refrain from disclosing such
information; and (iv) information which is required to be disclosed by the
Advisor or its outside counsel under compulsion of law (whether by oral
question, interrogatory, subpoena, civil investigative demand or otherwise) or
by order of any court or governmental or regulatory body to whose supervisory
authority the Advisor is subject; provided that, in such circumstance, the
Advisor will give the Company prior written notice of such disclosure and
cooperate with the Company to minimize the scope of any such disclosure. Each
Advisor's obligation under this paragraph shall survive the expiration,
termination or completion of this letter or the Advisor's engagement hereunder.

       The Advisor's engagement hereunder and this letter shall terminate on the
earlier of (i) December 31, 2004 or (ii) written notice of termination by the
Company to the Advisor or by the Advisor to the Company, it being understood
that the provisions relating to confidentiality and indemnification will survive
any such termination.

       This letter shall be construed and interpreted in accordance with the
laws of the Commonwealth of Massachusetts. This letter constitutes the entire
agreement of the parties with respect to the subject matter hereof.

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       If the foregoing is in accordance with your understanding, please confirm
acceptance by signing and returning to us the duplicate of this letter attached
herewith.

                                                Sincerely,

                                                HYBRIDON, INC.

                                                By: /s/ R. Andersen
                                                    ----------------------------
                                                    Name: R.G. Andersen
                                                    Title: CFO

AGREED AND ACCEPTED AS OF
THE DATE SET FORTH ABOVE BY:

PILLAR INVESTMENTS LIMITED

By : /s / Youssef El Zein
     ---------------------------------------
     Youssef El Zein
     Title: Director

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