Document:

Exhibit 10.1

                               HBOA HOLDINGS, INC.
                         5200 NW 33rd Avenue, Suite 215
                            Ft. Lauderdale, FL 33309

                                  June 6, 2003

Don Kirshner
c/o Pollack & Rosen, P.A.
800 Douglas Road, Suite 450
Coral Gables, FL 33134

                  Re:  HBOA Holdings, Inc. (HBOA)
                       --------------------------

Dear Don:

         We are delighted that you will be joining our company as the President
of Kirshner Entertainment, Inc. ("KEI"), a company which will be a subsidiary of
HBOA. You and HBOA have agreed the following terms and conditions which set
forth your relationship with KEI.

         1. You will be the President of KEI for a period of two years (the
"Term") after the date of this letter agreement (the "Agreement"). You shall
also serve as a member of HBOA's Board of Directors during the Term. KEI will
(i) develop music performance talent, (ii) acquire master rights in performances
and other content, (iii) engage in the music publishing and record industry
business, (iv) engage in the film and television industry and (v) engage in all
aspects of the entertainment industry as shall, be determined by the HBOA's
Board of Directors, from time to time, (collectively, the "Business"). HBOA and
KEI acknowledge and agree that you shall be entitled, without restriction to
participate in the following activities: (i) a Broadway production stage,
theatrical or television production based upon your life, (ii) books based upon
your life and other related subjects, (iii) speaking engagements related to your
musical career and (iv) serving as a spokesman from a product or service that is
not related to the entertainment industry (collectively, the "Excluded
Activities"). You will be entitled to any and all compensation that is derived
from the Excluded Activities.

         2. You will receive a salary equal to $150,000 per year, plus a bonus
of $60,000 per year or 50% of the Net Profit of KEI as defined below, whichever
is greater. During your first three months as President of KEI, we will advance
$20,000 to you each month, an aggregate of $60,000 over three months. These
advances will be deducted against Net Profits that are generated from the
Projects and distributed to you under Section 3 hereof. During your second year
as President, you will receive a salary equal to $250,000 per year, paid in
advance. You agree that HBOA shall have the option to extend your Agreement for
an additional third year, by providing you with written notice at least 30 days
before the end of your second year. If the Agreement is extended, "Term" shall
refer to the additional third year of the Agreement. If we extend your Agreement
for a third year, you will receive a salary equal to $350,000 per year, paid in

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advance. HBOA agrees that it will create an employee stock option plan for the
employees of KEI, reserving 1 million shares of HBOA common stock. You shall
have the right to designate the employees and the number of options that will be
granted to each employee under the plan.

         3. You acknowledge and agree that all projects and activities that you
enter into during the Term of this Agreement shall constitute the sole and
exclusive property of HBOA, except for the Excluded Activities. You acknowledge
and agree that HBOA shall have all rights to any business ventures or ideas that
are created by you during the Term, including but not limited to recording
agreements, music publishing, television and film projects, Internet related
projects and entertainment related endorsements, merchandising or licensing
agreements (individually, a "Project" and collectively, the "Projects"). You
agree that you will notify HBOA in writing of any potential Project that has
been offered to you, in your individual capacity or to HBOA during the Term. If
HBOA funds or elects to participate in Project that you have presented to it or
HBOA presents you with a Project and you agree to work on the Project, you will
receive a bonus based on performance of the Project. Your performance bonus will
equal 50% of the Net Profits from the Project. Net Profits shall be defined by
generally accepted accounting principles ("GAAP") and will be determined on a
stand-alone basis for KEI . Net Profits shall be measured by subtracting all
KEI's expenses, included but not limited to operating expenses, taxes and
extraordinary items, from all KEI revenues during a fiscal year. Furthermore,
although Net Profits will be determined on a basis consistent with GAAP, only
50% of the Net Profits that are actually received by KEI on a cash basis, will
be distributed to you as your performance-based bonus. If HBOA decides that it
does not want to fund or participate in a Project by sending you written notice,
you will be allowed to pursue that Project on your own ("Self Directed
Projects"). You will receive 90% of the Net Profits and HBOA will receive 10% of
the Net Profits from each Self Directed Project. Net Profits on Self-Directed
Projects will be determined on a stand-alone basis by subtracting all expenses
from all revenues and will be determined on a cash accounting basis.

         4. You acknowledge that HBOA and KEI shall have the right to use and
allow others to use your name, signature and likeness to promote KEI's business
during the Term. KEI has the right to terminate your employment as President of
KEI if you exercise bad faith in the performance of your duties as an officer or
director of KEI ("for cause"). You represent that you are free to enter into
this Agreement and have not entered into any agreements (whether oral or
written) which conflict with this Agreement. You acknowledge and agree that your
services are unique and extraordinary and that you can not assign or delegate
any of your rights under this Agreement. HBOA agrees that all entertainment
related projects will be conducted in KEI and that it will not form a separate
subsidiary to handle entertainment related projects. If HBOA presents you with a
Project and you chose not to participate in the Project, you will still be
entitled to a performance bonus, but it will equal 10% of the Net Profits from
the Project. If you are not terminated for cause during the Term, HBOA agrees
that it will pay you 50% of any royalties that it receives on music publishing
projects developed during your Term for the life of the copyright.

<PAGE>

         5. You acknowledge and agree that all inventions and ideas, sound
recordings, musical compositions, lyrics, copyrights, processes, design and
intellectual property of any type, whether or not patentable, created or first
reduced to practice during the Term (collectively, the "Inventions") shall be
the sole and exclusive property of HBOA and where applicable, such Inventions
shall be deemed to be works made for hire. You hereby agree to assign and
transfer all of your right, title and interest in the Inventions to HBOA that
you may have as the author, inventor, producer or in any other capacity, without
any additional consideration and agree to execute all documents to effect said
assignment. You also irrevocably designate and appoint HBOA has your
attorney-in-fact, which appointment, is coupled with an interest, to take all
acts to protect the Inventions.

         6. If you resign from your position as President of KEI or as a
director of HBOA before serving in these positions for one year, you agree that
you will not engage in, represent in any way, or be connected with any business
(such business being referred to as "Competing Business") which competes, in
whole or in part with the Business of KEI, whether as an officer, director,
owner, employee, consultant, agent, independent contractor, shareholder,
partner, joint venturer or any other form or participation in any Competing
Business. You agree that the geographic area covered by this covenant not to
compete is the world and it shall be constructed broadly to prevent competition
in any country, nation, kingdom, province or other form of governmental
organization whatsoever in the world during a one-year period after you resign.
"Competing Business" shall mean any business that is similar to the Business
conducted by KEI at the present date or at any time in the future. You
understand that the restrictions contained in this Section 6 may limit your
ability to earn livelihood in a business similar to the Business of KEI, but you
believe that you have received and will receive sufficient consideration to
justify such restrictions. You also agree that the restrictions are reasonable
in scope and duration and are necessary to protect HBOA and KEI after the
execution of this Agreement.

         If you agree to the following terms and conditions, please sign on the
line marked for your signature.

                                                       Sincerely,

                                                       HBOA Holdings, Inc.

                                                       /s/ Gary Verdier
                                                       -----------------------
                                                       Gary Verdier, President

Acknowledged and Agreed to:

Don Kirshner
----------------<PAGE>

                                                                   Exhibit 10.13

                         TECHNOLOGY PARTNERSHIPS CANADA

                            TPC PROJECT NO:720-122412

                DEVELOPMENT OF THE "ALX-0600" RECOMBINANT PEPTIDE
               FOR THE TREATMENT OF VARIOUS INTESTINAL DISORDERS.

               This Agreement made this 9th day of November, 1999

Between:    HER MAJESTY THE QUEEN IN RIGHT OF CANADA as represented by the
            Minister of Industry (hereinafter referred to as "the Minister")

And:        ALLELIX BIOPHARMACEUTICALS INC. a corporation duly incorporated
            under the laws of Canada, (hereinafter referred to as "Allelix" or,
            "the Recipient")

[Logo]
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Technology Partnerships                    Partenariat technologique
Canada                                     Canada
10th floor, 300 Slater Street              10e etage, 300, rue Slater    [Logo]
OTTAWA Ontario KIA 0C8                     OTTAWA (Ontario) KIA 0C8      Canada

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                                      -2-
TABLE OF CONTENTS
------------------
INTRODUCTION

     1.0           The Agreement
     1.1           Deadline for Signature
     1.2           Entire Agreement
     1.3           Definitions
     2.0           The Project
     2.1           Conduct of Project
     2.2           Time frame of Project
     2.3           Material Changes
     2.4           Disposal of Material Assets
     2.5           Disposal of Special-Purpose Equipment
     2.6           Transfer of Special Purpose Equipment to Production
     3.0           The Contribution
     3.1           Sharing Ratio and Contribution Ceiling
     3.2           Annual Contribution Disbursement Limits
     3.3           Eligible Cost Period
     3.4           Project Financing and Progress
     3.5           Environmental Protection Measures
     3.6           Annual Environmental Compliance Certification
     3.7           Set-off Rights of Minister
     4.0           Claims for Payment
     4.1           Claim Procedures
     4.2           Hold-Back Rights
     4.3           Final Claim
     4.4           Certification of Claims
     4.5           Overpayment by Minister
     5.0           Royalty Payments
     5.1           Principles and Rate
     5.2           Statements and Payments
     5.3           Late Payments
     5.4           Dividend Restriction
     5.5           No Accelerated Royalty Payment
     5.6           Payment Date
     6.0           Intellectual Property
     6.1           Ownership of Technology
     6.2           Commitment to Exploitation in Canada
     6.3           Limitation on Transfer of Technology
     6.4           Patent Protection
     7.0           Monitoring and Reporting
     7.1           Annual Financial Statements
     7.2           Minister's Right to Audit Accounts and Records
     7.3           Access to Project
     7.4           Access to Third-Party Information
     7.5           Project Progress Reports
     7.6           Commercial Exploitation Reports
     8.0           Special Conditions
     8.1           Licence Prerequisite
     8.2           Exploitation in Canada
     8.3           Alternative Benefits
     8.4           Insurance Coverage
     8.5           Work Performance
     8.6           Project Economic Impact
     8.7           Reporting
     8.8           Background Intellectual Property
     8.9           Renewal of Representations
     8.10          Other Agreements
     8.11          Flow-down of Obligations to Subcontractors
     8.12          Reports
     8.13          Consent
     8.14          Use of Agreement
     8.15          Mergers, Amalgamations and Reorganizations
     8.16          Resulting Products
     8.17          30 Day Notice
     8.18          First Claim
     9.0           Representations, Warranties and Undertakings
     9.1           Power and Authority of Recipient
     9.2           Authorized Signatories
     9.3           Binding Obligations
     9.4           No Pending Suits or Actions
     9.5           No Gifts or Inducements
     9.6           Compliance with Environmental Protection Requirements
     10.0          Other Government Assistance
     10.1          Disclosure
     10.2          Continuing Disclosure Obligation
     11.0          Dispute Resolution
     11.1          Optional Mediation or Arbitration
     12.0          Default and Recovery
     12.1          Events of Default
     12.2          Remedies on Default
     12.3          Remedies Cumulative
     12.4          No Waiver
     12.5          Remedies Fair and Reasonable
     12.6          Liquidated Damages
     12.7          Share Determination
     13.0          Force Majeure
     13.1          Event of Force Majeure
     13.2          Definition of Force Majeure
     14.0          Announcements
     14.1          Consent to Public Announcement
     14.2          Confidentiality Obligation
     15.0          Notice
     15.1          Form and Timing of Notice
     15.2          Change of Address
     15.3          Addresses
     16.0          Term of Agreement
     16.1          Agreement termination date.
     17.0          General Conditions
     17.1          Compliance with Laws
     17.2          Members of the House of Commons or the Senate
     17.3          Annual Appropriations
     17.4          Confidentiality
     17.5          No Assignment of Agreement
     17.6          Compliance with Post-Employment Provisions
     17.7          No Partnership Created
     17.8          Binding Agreement
     17.9          Severability
     17.10         Signature in Counterparts
     17.11         Language of Agreement
     Schedules
     Schedule A -  Statement of Work
     Schedule Al-  Special Purpose Equipment List
     Schedule B -  Report on Estimated & Actual Project Benefits and Results
     Schedule C -  Report on Estimated & Actual Sales and Royalty Payments
     Schedule D -  TPC Project Cost Principles
     Schedule E -  Project Fact Sheet for News Release
     Schedule F -  Legal Opinion

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                                      -3-

INTRODUCTION

(i.)     The Minister is charged with certain duties and functions which the
         Minister is required to carry out with the public policy objectives of
         strengthening the national economy, promoting sustainable development,
         increasing the international competitiveness of Canadian industry,
         goods and services, and encouraging the fullest and most efficient
         development and use of science and technology;

(ii.)    The Minister is responsible for the Technology Partnerships Canada
         Program, a discretionary source of funding, designed to promote
         economic growth and create jobs in Canada, in knowledge-intensive
         sectors of the economy, by strategically focussing its funding in
         results-oriented, near-market projects that involve activities that
         foster innovation, rapid commercialization and value-added production;
         and

  (iii.) Allelix has requested a financial contribution from the Minister under
         the Technology Partnerships Canada Program to develop the "ALX-0600"
         recombinant peptide for the treatment of various intestinal disorders,
         and to perform phase 1 and phase 2 clinical testing thereof, with the
         specific intent of having the Project results commercially exploited.

In consideration of their respective obligations, which are set out below, the
parties agree as follows:

1.0   The Agreement

1.1   Deadline for Signature
      This Agreement must be signed by Allelix and received by the Minister on
      or before 09 November 1999, failing which it will be null and void.

1.2   Entire Agreement
      This Agreement is made pursuant to the Technology Partnership Canada
      Program, constitutes the entire agreement between the parties and
      supersedes all previous documents, negotiations, arrangements,
      undertakings and understandings related to its subject matter. In the
      event of conflict, the order of precedence amongst the Agreement and the
      schedules attached hereto shall be: this Agreement, the Statement of Work,
      the TPC Project Cost Principles and any other document specified in this
      Agreement.

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                                      -4-

1.3   Definitions
      For the purposes of this Agreement,

            (a)   "Agreement" means this agreement, including:

                  Schedule A - Statement of Work
                  Schedule Al- Special Purpose Equipment List
                  Schedule B - Report on Estimated & Actual Project Benefits
                               and Results
                  Schedule C - Report on Estimated & Actual Sales and Royalty
                               Payments
                  Schedule D - TPC Project Cost Principles
                  Schedule E - Project Fact Sheet for News Release
                  Schedule F - Legal Opinion

            (b)   "Contribution" means the funding, in Canadian dollars,
                  provided by the Minister under this Agreement.

            (c)   "Completion Date" means 31 December 2002, which is the date by
                  which the Project must be completed.

            (d)   "Effective Date" means 1 September 1998, which is the earliest
                  date on which Eligible Costs may be incurred.

            (e)   "Eligible Costs" means those costs incurred and paid, by the
                  Recipient, with respect to the activities set out in Schedule
                  A (Statement of Work) and in accordance with Schedule D (TPC
                  Project Cost Principles).

            (f)   "Fiscal Year" means the federal government fiscal year
                  beginning on April 1 and ending on the following March 31.

            (g)   "Gross Project Revenues" means all sales, revenues, receipts,
                  monies and considerations made, earned or received by any
                  person, including Allelix, directly or indirectly attributable
                  to the sale, lease or other transfer of the Resulting
                  Products, whether received in cash, or by way of benefit,
                  advantage, or concession, net of any returns or discounts
                  actually credited and any sales, excise, ad valorem or similar
                  taxes paid but without deduction for bad debts or doubtful
                  accounts. A Resulting Product will be deemed sold, leased or
                  transferred at the time the transaction is recorded in the
                  books, in accordance with generally accepted accounting
                  principles, applied on a consistent basis. Transactions with
                  related persons (as that term is defined in the Income Tax
                  Act) will be deemed made in an amount equal to the highest
                  price obtained for a similar product in the preceding calendar
                  year.

<PAGE>
                                      -5-

            (h)   "Interest Rate" means the Bank Rate, as defined in the
                  Interest And Administrative Charges Regulations, in effect
                  on the due date plus 300 basis points, compounded monthly.

            (i)   "Intellectual Property" means all intellectual property rights
                  in the Project Technology, including, without limitation, all
                  patents, copyrights, industrial designs, design patents,
                  trade-marks, and any registrations or applications for
                  registration of the same.

            (j)   "Project" means the development of the compound, including any
                  formulation thereof, of the "ALX-0600", a peptide analog of
                  human glucagon-like peptide2[GLP-2], for the treatment of
                  various intestinal disorders, including phase 1 and 2 clinical
                  testing thereof, as more fully described in the Statement of
                  Work (Schedule A).

            (k)   "Project Technology" means all technology and technical data
                  conceived, produced, developed or reduced to practice in
                  carrying out the Project, including, without limitation, all
                  designs, formulations, specifications, software, data,
                  drawings, plans, reports, patterns, models, prototypes, pilot
                  plants, practices, inventions, methods, processes or other
                  information.

            (1)   "Resulting Products" means

                  (i.)   The ALX 0600 compound as well as formulations thereof,
                         a peptide analog of human glucagon-like
                         peptide-2[GLP-2] for the treatment of various
                         intestinal disorders for the treatment of any disease
                         and other applications, approved by any regulatory
                         authorities, worldwide;

                  (ii.)  all other commercial applications which incorporate
                         results of the Project; and

                  (iii.) all other commercial applications which are made using
                         Project Technology, Intellectual Property,
                         Special-Purpose Equipment, equipment, machinery and any
                         item of Project tooling.

            (m)   "Sharing Ratio" means the percentage set out in subsection
                  3.1(a).

            (n)   "Special-Purpose Equipment" means equipment, including
                  ancillary systems, instrumentation, special test equipment,
                  prototypes and pilot plants to develop and demonstrate the
                  product, service, process or system to be commercialized, but
                  excluding jigs, tools, dies and fixtures, that is purchased,
                  leased, manufactured or otherwise acquired for the purposes of
                  the Project, the item cost of which exceeds $250,000 (except
                  for prototypes and pilot plants where no minimum cost
                  applies).

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                                      -6-

            (o)   "Start Date" means 1 September 1998, which is the date by
                  which the Project must be commenced.

2.0   The Project

2.1   Conduct of Project
      Allelix will carry out the Project in a diligent and professional manner
      using qualified personnel.

2.2   Time frame of Project
      Allelix will:

      (a)   commence the Project on or before the Start Date; and

      (b)   complete the Project in accordance with the Statement of Work
            (Schedule A) on or before the Completion Date.

2.3   Material Changes
      No material changes will be made to the estimated total scope, nature, or
      financing of any element of the Project or the ownership, without the
      prior written consent of the Minister. Without limiting the generality of
      the foregoing provision, a material change will have occurred if:

      (a)   a Project performance milestone described in the Statement of Work
            is not expected to be achieved within three months of the projected
            completion date for that element;

      (b)   the estimated Eligible Costs for the Project described in the
            Statement of Work are expected to be exceeded by 20% or more; or

      (c)   the Project is not carried out in Canada unless otherwise stated in
            the Statement of Work.

2.4   Disposal of Material Assets
      Allelix will not, without the prior written consent of the Minister, sell,
      transfer or otherwise dispose of, nor cease to use for the purposes of the
      Project, nor remove nor relocate nor transfer to a use other than the
      Project, any material asset acquired for the Project including any
      scientific, test, quality control equipment and any item of machinery and
      tooling, the cost of which has been contributed to by the Minister, under
      this Agreement.

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                                      -7-

2.5   Disposal of Special-Purpose Equipment
      Except in the situation described in section 2.6, if Allelix transfers to
      commercial production, transfers outside of Canada, sells, leases, ceases
      to use or otherwise disposes of any Special-Purpose Equipment, Allelix
      will pay to the Minister the greater of an amount equal to that of:

      (a)  multiplying the proceeds of disposal of the Special-Purpose
           Equipment by the Sharing Ratio; and

      (b)  multiplying the fair market value of the Special-Purpose Equipment
           on the date of the transfer to commercial production, transfer
           outside of Canada, sale, lease, cessation of use or other disposal
           by the Sharing Ratio,

      but in no event will the amount payable exceed the amount of the
      Contribution paid by the Minister under this Agreement. Allelix will
      make such payment within 30 days of the transfer to commercial
      production, transfer outside of Canada, sale, lease, or other disposal
      of the Special-Purpose Equipment.

2.6   Transfer of Special Purpose Equipment to Production
      If the estimated cost as set out in Schedule A ( Statement of Work) of all
      of the items of Special-Purpose Equipment, other than prototypes and pilot
      plants, is 30% or less of the total estimated Eligible Costs of the
      Project, Allelix will not be obligated to pay the Minister for those items
      of Special-Purpose Equipment which are transferred to commercial
      production in Canada by Allelix.

3.0   The Contribution

3.1   Sharing Ratio and Contribution Ceiling
      Subject to all the other provisions of this Agreement, the Minister will
      make a repayable Contribution to Allelix, with respect to the Project, of
      the lesser of

      (a) 30% of the Eligible Costs; and

      (b) $ 8,365,511.

      Irrespective of the limitation on the Minister's Contribution under this
      Agreement, Allelix shall remain obligated to perform the whole of the
      Project, as described in the Statement of Work.

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                                      -8-

3.2   Annual Contribution Disbursement Limits
      The disbursement of the Contribution will not exceed the following
      amounts, in each of the following Fiscal Years:

      1999-2000   $2,971,155
      2000-2001   $2,769,976
      2001-2002   $1,826,568
      2002-2003   $  797,812

      and the Minister will have no obligation to pay any amount in any other
      Fiscal Year. No portion of these maximum annual amounts will be rolled
      over to previous or subsequent Fiscal Years, without the consent of the
      Minister, who will consider any such requests on a case-by-case basis.

3.3   Eligible Cost Period
      The Minister will not contribute to any Eligible Costs incurred by Allelix
      prior to the Effective Date nor after the Completion Date.

3.4   Project Financing and Progress
      The Minister will have no obligation to make all or part of the
      Contribution unless the Minister remains satisfied with the overall
      financing of the Project and the progress of the Project.

3.5   Environmental Protection Measures
      The Minister, being satisfied that any potentially adverse environmental
      effects that may be caused by the Project are insignificant, will have no
      obligation to make all or part of the Contribution unless Allelix has
      incorporated and utilized environmental protection measures in relation to
      the Project that satisfy the requirements of all regulatory bodies having
      jurisdiction over Allelix or the Project, or both, and certifies to the
      Minister that it has done so.

3.6   Annual Environmental Compliance Certification
      Any certification required pursuant to section 3.5 must be provided
      together with the first claim for payment under this Agreement, and
      subsequent certifications must be provided annually.

3.7   Set-off Rights of Minister
      The Minister may set off against the Contribution, any amounts owed by
      Allelix to Her Majesty in Right of Canada, including amounts pursuant to
      any other agreement for which the Minister is responsible.

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                                      -9-

4.0   Claims for Payment

4.1   Claim Procedures
      The Minister will pay the Contribution to Allelix in respect of eligible
      costs incurred on the basis of itemized claims which will:

      (a)   be submitted in writing, quarterly;

      (b)   be certified by a senior officer of Allelix;

      (c)   be accompanied by details of all costs being claimed, substantiated
            by such documents as may be required by the Minister, and presented
            in accordance with the major elements identified in Schedule A
            (Statement of Work);

      (d)   be accompanied by a brief technical report on work completed and
            confirmation of any Statement of Work milestones attained during the
            claim period; and

      (e)   include a deduction for any Eligible Costs included in previous
            claims which have not been paid.

4.2   Hold-Back Rights
      The Minister will have no obligation to pay more than 90% of the
      Contribution prior to the date on which the Minister has approved the
      final claim referred to in section 4.3.

4.3   Final Claim
      Within 90 days of the Completion Date, the final claim for payment will be
      submitted by Allelix, accompanied by:

      (a)   an itemized statement of all Eligible Costs incurred and paid in
            performance of the Project;

      (b)   certification by a senior officer of Allelix that the Eligible Costs
            referred to in the itemized statement:

            (i.)   have been incurred and paid;

            (ii.)  are related to the activities described in the Statement of
                   Work (Schedule A); and

            (iii.) are in compliance with the requirements set out in the TPC
                   Project Cost Principles and its Addendum (Schedule D); and

      (c)   a final report of the Project in accordance with section 7.5.

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                                      -10-

      Upon approval by the Minister of the final claim, the Minister will pay
      any outstanding amount of the Contribution.

4.4   Certification of Claims
      The Minister may require that any claim submitted for payment be certified
      by Allelix's auditor or chief financial officer or by an auditor approved
      by the Minister, at the Recipient's expense.

4.5   Overpayment by Minister
      Where for any reason:

      (a)   Allelix is not entitled to the Contribution; or

      (b)   the Minister determines that the amount of the Contribution
            disbursed exceeds the amount to which Allelix is entitled,

      Allelix will repay to the Minister, promptly and no later than 30 days
      from notice from the Minister, the amount of the Contribution disbursed or
      the amount of the overpayment, as the case may be, together with interest
      at the Interest Rate from the date of the notice to the day of repayment
      to the Minister in full. Any such amount is a debt due to Her Majesty in
      Right of Canada and is recoverable as such.

5.0   Royalty Payments

5.1   Principles and Rate
      Allelix, in consideration of the payment of the Contribution, hereby
      agrees to:

      (a)   pay to the Minister a 10% royalty on amounts received directly or
            indirectly by Allelix in respect of the Resulting Products, or on
            its behalf, from any licensee or Project partner (Royalty Payment);

      (b)   apply the royalty rate to the aggregate of all licencing fees,
            milestone payments and royalty streams received directly or
            indirectly by Allelix or on its behalf, resulting from the
            exploitation of the Resulting Products, as further detailed in
            Schedule C;

      (c)   notwithstanding subsections (a) and (b), exclude from the
            application of the royalty rate the following revenues:

            (i.)  any amount received as an equity investment in Allelix by a
                  licensee or a Project partner;

<PAGE>
                                      -11-

            (ii.)  specific R&D work performed by Allelix related to the
                   Resulting Products and paid for by any third party; and

            (iii.) sales of the Resulting Products at cost to a Project partner
                   or licensee for clinical trials;

      (d)   make to the Minister the Royalty Payments for a period extending
            from 1 January 2002 to 31 December 2008, subject to the following
            conditions: if, by 31 December 2008, cumulative Royalty Payments
            paid or payable are equal to or greater than $23,900,000, Royalty
            Payments shall cease to accrue as of that date; if cumulative
            Royalty Payments paid or payable have not reached $23,900,000 by 31
            December 2008, Royalty Payments shall continue until that total has
            been reached or until 31 December 2017, whichever occurs first;

      (e)   make Royalty Payments to the Minister 45 days after 31 December of
            any applicable royalty year, except as follows: the first payment
            being due for the years 2002 and 2003 will accrue and be payable,
            without interest, by 14 February 2004;

      (f)   where Allelix produces and distributes itself the Resulting Products
            on a commercial basis, Allelix agrees to pay to the Minister a
            royalty amounting to the equivalent of the sum that would be owed to
            the Minister under subsection (a) above if the Resulting Products
            were produced and distributed by a third party.

5.2   Statements and Payments
      Allelix shall provide to the Minister a statement, certified by Allelix's
      external auditor or senior financial officer of any revenues applicable to
      the Royalty Payment, as per provisions and according to the time periods
      specified in Section 5.1 and in Schedule C. The statement, in the form of
      a signed copy of Schedule C, along with any applicable payment, shall be
      provided to the Minister, annually, within the time delays specified in
      Section 5.1 and in Schedule C. Signed annual statements shall be provided
      by Allelix, whether or not revenues have been generated during the
      applicable yearly period.

5.3   Late Payments
      Allelix will pay interest calculated and compounded monthly on overdue
      payments, at the Interest Rate from the date on which the Royalty Payment
      is due, until payment in full is received by the Minister. Such interest
      is payable without notice to Allelix, and in addition to any remedies of
      the Minister for default by Allelix, as set out in article 12.0 of this
      Agreement.

5.4   Dividend Restriction
      Allelix will not make any dividend payments or other shareholder
      distributions that would prevent it from implementing the Project or that
      would prevent it from making the Royalty Payments required in this
      Agreement.

<PAGE>
                                      -12-

5.5   No Accelerated Royalty Payment
      The payment of Royalty Payments will take place in accordance with the
      timetable and method specified in this article 5.0 and Allelix shall not
      accelerate the rate of Royalty Payment, in any way.

5.6   Payment Date
      Whenever any payment date under this article 5.0 occurs on a Saturday,
      Sunday or statutory holiday, such payment shall be made on the next day
      following which is not a Saturday, Sunday or holiday.

6.0   Intellectual Property

6.1   Ownership of Technology
      Allelix will obtain and retain title to all Intellectual Property and
      Project Technology.

6.2   Commitment to Exploitation in Canada
      Allelix will exploit the Intellectual Property and Project Technology
      developed under this Project through the production of the Resulting
      Products in Canada and through the promotion, distribution and sale of the
      Resulting Products, in Canada and elsewhere.

      Allelix will ensure that follow-on production of the Resulting Products,
      and of their variants and derivatives, occurs within Canada, unless the
      Minister agrees in advance, in writing, to the contrary.

6.3   Limitation on Transfer of Technology

      (a)   General Allelix will not, without the prior written consent of the
            Minister:

            (i.)   grant any right in or transfer title to the Project
                   Technology, Intellectual Property, or in any applicable
                   technology incorporated in Special-Purpose Equipment,
                   including the assignment, sale, licence and lease to any
                   person; or

            (ii.)  transfer electronically any software developed during the
                   course of the Project; or

            (iii.) make use of the Project Technology, Intellectual Property,
                   Special-Purpose Equipment, and other Project machinery and
                   equipment, of any kind, or any part thereof,

            for the purpose of producing or manufacturing outside Canada any of
            the Resulting Products or any product that is substantially the same
            as any of the Resulting Products and is made using Project
            Technology or Intellectual Property.

<PAGE>
                                      -13-

      (b)   Patent Disclosures

            Notwithstanding subsection (a), Allelix does not require the consent
            of the Minister to make any disclosure of information required by
            law for the purpose of obtaining a patent.

      (c)   Licence for Use Only

            Notwithstanding subsection (a) or any provision to that effect in
            article 8.0 of this Agreement, Allelix does not require the consent
            of the Minister to licence or sub-licence, for use only, any of the
            Project Technology or Intellectual Property, in conjunction with the
            sale of any of the Resulting Products.

      (d)   Compliance by Licensees

            Allelix will impose the restriction on transfer, outlined in
            subsection (a), on all licensees, and on other transferees of title
            to or any right-to-use any of the Project Technology or Intellectual
            Property.

      (e)   Sub-Contractors and Consultants

            Allelix will ensure that no sub-contractor or consultant acquires
            any rights to the Project Technology, Intellectual Property and
            Special-Purpose Equipment without the prior written consent of the
            Minister.

6.4   Patent Protection
      (a)   Allelix will apply for appropriate patent protection for any
            inventions resulting from the Project.

      (b)   If Allelix elects not to apply for appropriate patent protection in
            respect of inventions resulting from the Project, Allelix will

            (i.)  so advise the Minister forthwith; and

            (ii.) if so requested by the Minister, assign the invention to Her
                  Majesty the Queen in Right of Canada, together with all
                  patents, patent applications and rights to obtain patents
                  therefor.

7.0   Monitoring and Reporting

7.1   Annual Financial Statements
      Allelix will provide the Minister with a copy of its annual financial
      statements within one hundred and twenty (120) days of the end of each of
      Allelix's fiscal years.

<PAGE>
                                      -14-

7.2   Minister's Right to Audit Accounts and Records
      Allelix will, at its own expense, preserve and make available for audit
      and examination by the Minister or the Minister's representatives the
      books, accounts and records of the Project and of the information
      necessary to ensure compliance with the terms and conditions of this
      Agreement, including Royalty Payments. The Minister will have the right to
      conduct such additional audits at the Minister's expense as may be
      considered necessary using the audit staff of the Minister, the Audit
      Services Group of Consulting and Audit Canada, an independent auditing
      firm or Allelix's external auditors. Any licence agreement for the
      production of the Resulting Products between Allelix and a third party
      shall contain similar provisions to permit the Minister to audit the
      calculation of Royalty Payments or other payments payable to the Minister
      under this Agreement.

7.3   Access to Project
      Allelix will provide the representatives of the Minister reasonable access
      to Allelix's premises to inspect and assess the progress of the Project or
      any element thereof and supply promptly on request such data as the
      Minister may reasonably require for statistical or project evaluation
      purposes.

7.4   Access to Third-Party Information
      Allelix will, to the extent practicable, assist the Minister with the
      implementation of this Agreement and facilitate access by the Minister to
      information from third parties, relating to this Project. .

7.5   Project Progress Reports
      Allelix will provide the Minister with semi-annual progress reports (or as
      otherwise specified in the Statement of Work) commencing on 30 November
      1999 and ending with the final report within 60 days following the
      Completion Date. The reports will include:

      (a)   a description of the progress in completion of the Project, in
            comparison with the milestones contained in the Statement of Work
            and the related Project expenditures for that segment of Project
            activities;

      (b)   sufficient information to enable the Minister to assess the
            Project's contribution to jobs and economic growth, as set out in
            Schedule B;

      (c)   an update of the Project cost estimates;

      (d)   an indication of any delay in completing the Project and the reasons
            for such delay;

      (e)   an update of the projected market and any changes in the projected
            revenues and Royalty Payments, as set out in Schedule C;

      (f)   a cumulative list summarizing any acquisition and current holdings
            of Special Purpose Equipment as set out in Schedule A1; and

<PAGE>
                                      -15-

      (g)   an indication of any planned transfer to commercial production,
            transfer outside of Canada, sale, lease or other disposal of
            Special-Purpose Equipment.

7.6   Commercial Exploitation Reports
      From the Completion Date until the termination of the Agreement, Allelix
      will continue to provide annual reports to the Minister, within forty-five
      (45) days of the end of each of Allelix's fiscal years, which will
      indicate:

      (a)   whether the Project is achieving its projected commercial and
            economic objectives including job creation, as set out in Schedule
            B;

      (b)   an update of the projected market and any changes in the projected
            revenues and Royalty Payment amounts, as set out in Schedule C; and

      (c)   an indication of any completed or planned transfer to commercial
            production, transfer outside of Canada, sale, lease or other
            disposal of Special-Purpose Equipment.

8.0   Special Conditions

8.1   Licence Prerequisite
      Allelix will not enter into any licencing agreement for the further
      development, production and marketing of the Resulting Products, or amend
      same in any substantive fashion, without the prior written consent of the
      Minister.

8.2   Exploitation in Canada
      In the context of article 6.0, and for greater clarity, Allelix represents
      and undertakes to:

      (a)   carry out the production in Canada, together with a Canadian based
            company, of ALX-0600 formulations for use in Phase II trials and
            ensure that commercial marketing of ALX-0600 takes place from
            Canada; and

      (b)   without compromizing the commercial success of the Project,
            demonstration of which rests with the Recipient,

            (i.)   enter into a licencing arrangement with a pharmaceutical
                   manufacturer operating in Canada for the conduct of Phase III
                   trials and ultimate commercialization of the Resulting
                   Products;

            (ii.)  promote the maximum participation of individuals, companies
                   and institutions operating in Canada in Phase III trials;

<PAGE>
                                      -16-

            (iii.) ensure that the commercial production and distribution of the
                   Resulting Products, for Canada, takes place in Canada; and

            (iv.)  ensure that commercial bulk production of the Resulting
                   Products for worldwide use takes place in Canada

8.3   Alternative Benefits
      To the extent that Allelix is unable to perform or have performed any of
      the activities referred to in section 8.2 in Canada, Allelix may petition
      the Minister to provide relief from any of the above undertakings; any
      decision by the Minister will take into account, amongst other things, the
      following considerations:

      (a)   the corporate capability and availability which exists within Canada
            to undertake such activities;

      (b)   the extent to which Allelix has used best efforts to find a suitable
            partner operating in Canada;

      (c)   if proposing an entity not operating in Canada as a licencing
            partner. the extent to which Allelix intends to negotiate the
            inclusion of significant participation in downstream commercial
            activities by entities operating in Canada (including Allelix);

      (d)   the extent to which the commercial terms available from potential
            licencing partners operating in Canada are comparable with those
            available from entities not operating in Canada; and

      (e)   the initiatives Allelix proposes to offset the unmaterialized
            socio-economic benefits to result from the Project in Canada.

8.4   Insurance Coverage
      Allelix

      (a)   represents that it has obtained and maintained commercial general
            liability insurance consistent with best practices in the area of
            drug testing on humans for all clinical trials of ALX-0600 up to the
            date of execution of this Agreement; and

      (b)   undertakes to maintain such insurance coverage, as a minimum, until
            the termination of thus Agreement.

<PAGE>
                                      -17-

8.5   Work Performance
      Allelix will

      (a)   perform the work itself, unless otherwise specified in Schedule A-
            Statement of Work; and

      (b)   notwithstanding sections 6.1 and 6.3, retain exclusive title to and
            ownership of the Intellectual Property and the Project Technology
            unless otherwise stated in the Statement of Work (Schedule A), with
            the exception of subsection 6.4 (b) respecting Dr. Drucker's and
            1149336 Ontario Inc.'s rights of first refusal for patent
            applications.

8.6   Project Economic Impact
      Allelix represents that after Phase II, should the R&D be successful and
      the sales of the Resulting Product meet the projections reflected in the
      schedules to this Agreement and used as a basis for the calculation of the
      Royalty Payments, the Project will create the following main
      socio-economic benefits:

      (a)   production of ALX-0600 for Phase III testing and after: 30
            person-years of employment per year from the date of the appropriate
            milestone until 31 December 2008;

      (b)   commercial scale manufacturing facility ($60M investment): 60
            person-years of employment per year from the date of the appropriate
            milestone until 31 December 2008;

      (c)   marketing and selling related person-years in Canada assuming
            operations are directed from Canada: 10 person-years of employment
            per year from the date of the appropriate milestone until 31
            December 2008.

8.7   Reporting
      Allelix will report to the Minister within 45 days of the end of each
      calendar year, beginning in year 2000, any amount or benefit earned by or
      on behalf of Allelix in connection with the Project and that does not fall
      within the purview of article 5 above.

<PAGE>
                                      -18-

8.8   Background Intellectual Property
      Notwithstanding section 6.1, Allelix represents to the Minister that:

      (a)   Allelix holds exclusive, worldwide, transferable intellectual
            property rights required to fully perform the Project through a
            license agreement entered into with Dr. Daniel J. Drucker, M.D. and
            1149336 Ontario Inc. on 5 September 1995, and has sub-licensing
            rights;

      (b)   to the best of Allelix's knowledge, there is no broad third party
            patents that would block the use of the technology developed under
            this Agreement;

      (c)   nothing in the above referred to licencing agreement would prevent
            Allelix from fulfilling its obligations under this Agreement and
            marketing the Resulting Product as represented to the Minister and
            in accordance with the Sales and Royalty Payments Projections
            (Schedule C) with the exception of subsection 6.4 (b) respecting Dr.
            Drucker's and 1149336 Ontario Inc.'s rights of first refusal for
            patent applications.

8.9   Renewal of Representations
      Allelix

      (a)   renews its representations to the Minister every time a claim for
            payment is submitted; and

      (b)   where a representation is not true anymore, informs the Minister
            accordingly.

8.10  Other Agreements
      Allelix undertakes not to enter any other agreement that would prevent
      Allelix's full implementation of the Project without the Minister's prior
      written consent.

8.11  Flow-down of Obligations to Subcontractors
      For any goods or services subcontracted by Allelix in implementing the
      Project, Allelix will ensure that the agreements with the subcontractors
      include provisions ensuring that the terms and conditions of this
      Agreement are enforceable.

8.12  Reports
      In addition to the reports listed in sections 7.5 and 7.6, Allelix agrees
      to provide the following information on a yearly basis, within 45 days of
      its fiscal year end:

      (a)   results of any Phase III clinical trials undertaken; and

      (b)   regulatory filings made, status thereof and approvals received.

<PAGE>
                                      -19-

8.13  Consent
      For greater certainty, where ever the Minister's consent is required in
      this Agreement, such consent will not be unreasonably withheld.

8.14  Use of Agreement
      Notwithstanding sections 14.2 and 17.4, the Minister hereby allows Allelix
      to show this Agreement for the purposes of securing additional financing
      or licensing for commercial exploitation. Any person shown this Agreement
      must have executed a non-disclosure agreement with Allelix before the
      disclosure; Allelix will be responsible for the enforcement of this
      requirement.

8.15  Mergers, Amalgamations and Reorganizations
      For greater clarity, it is understood that no merger, amalgamation or bona
      fide corporate restructuring of Allelix would fall within the purview. of
      subsection 12.1 (b).

8.16  Resulting Products
      For greater certainty, the phrase "or any product that is substantially
      the same as any of the Resulting Products" in subsection 6.3 (a) means,
      and is limited to, the products described in subsection 1.3 (1).

8.17  30 Day Notice
      With respect to section 12.1 in fine, the Minister hereby agrees to give
      Allelix a 30 day period after notice for a default pursuant to subsection
      12.1 (d), to be applied in the same way as for defaults and notices
      pursuant to subsections 12.1(c), (e) or (f).

8.18  First Claim
      The Minister will withhold all payments pursuant to article 4.0 of this
      Agreement until the legal opinion, in a form and content satisfactory to
      the Minister, forming Schedule F, is received by the Minister.

9.0   Representations, Warranties and Undertakings

9.1   Power and Authority of Recipient
      Allelix represents and warrants that it is duly incorporated and validly
      existing and in good standing under the laws of Canada and has the power
      and authority to carry on its business, to hold property and to enter into
      this Agreement and undertakes to take all necessary action to maintain
      itself in good standing and to preserve its legal capacity.

9.2   Authorized Signatories
      Allelix represents and warrants that the signatories to this Agreement
      have been duly authorized to execute and deliver this Agreement on its
      behalf.

<PAGE>
                                      -20-

9.3   Binding Obligations
      Allelix represents and warrants that the execution, delivery and
      performance of this Agreement have been duly and validly authorized and
      that when executed and delivered, this Agreement will constitute a legal,
      valid and binding obligation of Allelix enforceable in accordance with its
      terms.

9.4   No Pending Suits or Actions
      Allelix warrants that it is under no obligation or prohibition, nor is it
      subject to or threatened by any actions, suits or proceedings which could
      or would prevent compliance with the Agreement, and will advise the
      Minister forthwith of any such occurrence during the term of this
      Agreement.

9.5   No Gifts or Inducements
      Allelix represents and warrants that it has not, nor has any person
      offered or promised to any official or employee of Her Majesty the Queen
      in Right of Canada, for or with a view to obtaining this Agreement, any
      bribe, gift or other inducement, and it has not nor has any person on its
      behalf employed any person to solicit this Agreement for a commission,
      contingency fee or any other consideration dependant upon the execution of
      this Agreement.

9.6   Compliance with Environmental Protection Requirements
      Allelix warrants and undertakes that it will maintain environmental
      protection measures in relation to the Project that satisfy the
      requirements of all regulatory bodies having jurisdiction over Allelix or
      the Project and certify to the Minister annually its compliance with such
      requirements.

10.0  Other Government Assistance

10.1  Disclosure
      Allelix hereby acknowledges that for the purposes of this Agreement,
      except for scientific research and experimental development tax credits,
      no other federal, provincial or municipal government financial assistance
      has been requested or received by Allelix for the costs of this Project.

10.2  Continuing Disclosure Obligation
      Allelix will inform the Minister promptly in writing of any other federal,
      provincial or municipal government assistance (except for scientific
      research and experimental development tax credits) to be received for
      Eligible Costs of the Project and the Minister will have the right to
      reduce the Contribution under this Agreement to the extent of any such
      assistance.

<PAGE>
                                      -21-

11.0  Dispute Resolution

11.1  Optional Mediation or Arbitration
      If a dispute arises concerning the application or interpretation of this
      Agreement, the parties will attempt to resolve the matter through good
      faith negotiation, and may, if necessary and the parties consent in
      writing, resolve the matter through mediation by a mutually acceptable
      mediator or arbitration in accordance with the Commercial Arbitration Code
      set out in the schedule to the Commercial Arbitration Act (Canada), and
      all regulations made pursuant to that Act.

12.0  Default and Recovery

12.1  Events of Default
      The Minister may declare an event of default has occurred if:

      (a)   Allelix becomes insolvent or is adjudged or declared bankrupt or if
            it goes into receivership or takes the benefit of any statute from
            time to time in force relating to bankrupt or insolvent debtors;

      (b)   an order is made which is not being contested or appealed by Allelix
            or a resolution is passed for the winding-up of Allelix or it is
            dissolved;

      (c)   Allelix has intentionally submitted false or misleading information
            to the Minister or made a false or misleading representation;

      (d)   in the opinion of the Minister, acting reasonably, a material
            adverse change in risk affecting the performance of the terms and
            conditions of this Agreement has occurred;

      (e)   any term, condition or undertaking in this Agreement is not complied
            with in any material respect; or

      (f)   Allelix neglects or fails to pay to the Minister any amount due in
            accordance with this Agreement;

      provided that the Minister will not declare an event of default has
      occurred by reason of subsections (c), (e) or (f) unless the Minister has
      given notice to Allelix of the condition or event which, in the Minister's
      opinion, constitutes an event of default and Allelix has failed, within 30
      days of receipt of the notice, to demonstrate to the satisfaction of the
      Minister that it has either corrected the condition or event complained of
      or demonstrated that it has taken such steps as are necessary to correct
      the condition or event and so notified the Minister.

<PAGE>
                                      -22-

12.2  Remedies on Default
      If the Minister declares that an event of default has occurred, the
      Minister may exercise one or more of the following remedies:

      (a)   suspend any obligation of the Minister to contribute or continue to
            contribute to the Eligible Costs of the Project including any
            obligation to pay any amount owing prior to the date of such
            suspension;

      (b)   terminate any obligation of the Minister to contribute or continue
            to contribute to the Eligible Costs of the Project, including any
            obligation to pay any amount owing prior to the date of such
            termination;

      (c)   require Allelix to repay to the Minister all or part of the
            Contribution which has been paid by the Minister to Allelix,
            together with interest from the date of demand at the Interest Rate;

      (d)   require Allelix to pay to the Minister all or part of the Royalty
            Payments and other amounts due under this Agreement together with
            interest from the date of demand at the Interest Rate;

      (e)   if an event of default has occurred in relation to subsection
            12.1(a), (b) or (c), or as a result of the failure default Allelix
            to produce, or have produced, the Resulting Products in Canada
            without the Minister's prior written consent, direct Allelix, and
            Allelix will immediately comply, to transfer and deliver to the
            Minister, at no cost to the Minister, title to, possession of, and
            all rights of Allelix in the Intellectual Property; and

      (f)   direct Allelix and Allelix will immediately comply, to transfer and
            deliver to the Minister, at no cost to the Minister, title to,
            possession of, and all rights of Allelix in the Special-Purpose
            Equipment.

12.3  Remedies Cumulative
      The Minister may exercise any or all of the remedies set out in section
      12.2, provided that in exercising any remedy in accordance with subsection
      12.2 (c ) or (d), in respect of any default other than a breach of
      subsection 12.1(0, the Minister will credit Allelix for any Royalty
      Payments paid to the Minister under this Agreement.

12.4  No Waiver
      The fact that the Minister refrains from exercising a remedy he is
      entitled to exercise under this Agreement will not constitute a waiver of
      such right and any partial exercise of a right will not prevent the
      Minister in any way from later exercising any other right or remedy under
      this Agreement or other applicable law.

<PAGE>
                                      -23-

12.5  Remedies Fair and Reasonable
      Allelix acknowledges that in view of the public policy objectives served
      by the Minister's agreement to make the Contribution, the fact that the
      Contribution comes from public monies, and that the amount of damages or
      loss sustained by the Crown in the event of default is difficult to
      ascertain, that it is fair and reasonable that the Minister be entitled to
      exercise any or all of the remedies provided for in this Agreement and to
      do so in the manner provided for in this Agreement if an event of default
      occurs.

12.6  Liquidated Damages
      Notwithstanding other provisions of this article, if a default has occured
      under sections 5.1, 6.1, 6.2, 6.3, 8.1, 8.2 (insofar as it is not already
      covered by subsection 12.2 (e)), 8.3, 8.5 or 8.8,

      (a)   the Minister may exercise all the remedies listed in section 12.2,
            subject to the following provision;

      (b)   Allelix may offer, and the Minister must accept, subject to the last
            sentence of this section, as an alternative to claiming the transfer
            of the title to, possession of, and all rights of Allelix in the
            Intellectual Property, or any other remedy referred to in this
            article 12.0 or to availing himself of any remedy available under
            Common Law or contract law (including the Civil Code in the province
            of Quebec), the payment of an amount equal to one of the
            following, and Allelix agrees to pay to the Minister, within 30 days
            of notification:

            (i.)   2 times the minimum cumulative Royalty Payment amount as
                   stated in subsection 5.1 (d);

            (ii.)  the estimated loss to the Canadian economy as follows:

                   o    the socio-economic benefits to Canada; plus

                   o    the minimum cumulative Royalty Payment amount stated in
                        subsection 5.1(d).

                   For the purposes of this subsection, socio-economic benefits
                   are limited to all projected total person-years, as outlined
                   in section 8.6, for the, full duration of the commercial
                   exploitation phase, multiplied by $20,000.

            (iii.) the equivalent value of the Adjusted Imputed Number of
                   Minister Shares, as calculated in accordance with section
                   12.7.

<PAGE>
                                      -24-

            The Minister will determine which above subsection will be
            used to calculate the appropriate liquidated damages.

12.7  Share Determination
      For the purposes of calculating the amount owed in accordance with
      subsection 12.6 (b) (iii.),

      (a)   the following words and phrases mean:

            "Liquidated Damages", the Adjusted Imputed Number of Minister Shares
            multiplied by the Market Price;

            "Imputed Number of Minister Shares", the number of identifiable
            Allelix shares currently in existence which, when multiplied by.
            their Market Price, is equal to the maximum Contribution amount
            identified in subsection 3.1 (b);

            "Interceding Events", all those events that can have a bearing on
            the number and type of shares owned by a shareholder: these include,
            but are not limited to, stock splits, stock swaps, stock conversions
            and reinvested dividends;

            "Adjusted Imputed Number of TPC Shares" is equal to the number of
            identifiable shares at the time of Default, which is equal to the
            Imputed Number of Minister Shares after adjustments are made for all
            Interceding Events since the time of the signing of this Agreement;

            "Market Price",

            (i.)  as long as Allelix remains a publicly traded entity, the price
                  per share equal to the average price of the closing prices for
                  the shares on The Toronto Stock Exchange during the 10
                  consecutive trading days ending immediately before the
                  particular date (or, if there is no closing price on any such
                  day, the average of the last bid and last ask prices on that
                  day) or, if the shares are not then listed on The Toronto
                  Stock Exchange, on such other stock exchange on which such
                  shares are listed; or

            (ii.) if such shares are no longer listed on any stock exchange,
                  then the price per share will be an amount determined by an
                  arbitrator.

      (b)   Allelix agrees to provide, within 30 days of the signing of this
            Agreement, an affidavit indicating the Imputed Number of Minister
            Shares and their Market Price.

<PAGE>
                                      -25-

13.0  Force Majeure

13.1  Event of Force Majeure
      Allelix will not be in default by reason only of any failure in
      performance of the Project in accordance with the Statement of Work if
      such failure arises without the fault or negligence of Allelix and is
      caused by any event of force majeure.

13.2  Definition of Force Majeure
      Force majeure means any cause which is unavoidable or beyond the
      reasonable control of Allelix, including war, riot, insurrection, orders
      of government, strikes or any Act of God or other similar circumstance
      which is beyond Allelix's control, and which could not have been
      reasonably circumvented by Allelix without incurring unreasonable cost.

14.0  Announcements

14.1  Consent to Public Announcements
      Allelix hereby consents to public announcements by or on behalf of the
      Minister containing any of the information in the documents attached
      hereto as Schedule E (Project Fact Sheet for News Release).

14.2  Confidentiality Obligation
      The Minister will inform Allelix of the date on which the first public
      announcement is to be made and Allelix will not disclose the existence of
      this Agreement until such date.

15.0  Notice

15.1  Form and Timing of Notice
      Any notice, information or document provided for under this Agreement
      shall be effectively given if delivered or sent by letter or facsimile,
      postage or other charges prepaid. Any notice that is delivered shall have
      been received on delivery; any notice sent by facsimile shall be deemed to
      have been received one working day after having been sent, and any notice
      mailed shall be deemed to have been received eight (8) calendar days after
      being mailed.

15.2  Change of Address
      Allelix or the Minister may change the address which they have stipulated
      in this Agreement by notifying the other of the new address.

<PAGE>
                                      -26-

15.3  Addresses
      Any notice to the Minister will be addressed to:

            Director, Enabling Technologies
            Technology Partnerships Canada
            10th Floor
            300 Slater Street
            Ottawa, Ontario KlA OC8
            Fax No: (613) 954-9117

      Any notice to Allelix will be addressed to:

            The President
            Allelix Biopharmaceuticals Inc.
            6850 Goreway Drive
            Mississauga
            Ontario L4V 1V7
            Fax No: 905-677-1037

16.0  Term of Agreement

16.1  Agreement Termination Date.
      This Agreement will terminate on the later date of the following:

      (a)   payment to the Minister by Allelix of all amounts due pursuant to
            this Agreement; and

      (b)   31 December 2017.

17.0  General Conditions

17.1  Compliance with Laws
      Allelix will comply with all federal, provincial and municipal laws
      governing Allelix or the Project, including but not limited to statutes,
      regulations, by-laws and ordinances.

17.2  Members of the House of Commons or the Senate
      No member of the House of Commons or the Senate, either directly nor
      indirectly, shall be admitted to any share or part of this Agreement or to
      any benefit to arise therefrom.

17.3  Annual Appropriations
      Any payment by the Minister under this Agreement is subject to there being
      an appropriation for the Fiscal Year in which the payment is to be made.

<PAGE>
                                      -27-

17.4  Confidentiality
      Subject to article 14.0 and to applicable laws, including the Access to
      Information Act, the parties shall keep confidential and shall not
      disclose the contents of this Agreement nor the transactions contemplated
      hereby without the consent of all parties.

17.5  No Assignment of Agreement
      Neither this Agreement, nor any part thereof nor any amount thereunder
      shall be assigned by Allelix without the prior written consent of the
      Minister.

17.6  Compliance with Post-Employment Provisions
      Allelix confirms that no individual for whom the post-employment
      provisions of the Conflict of Interest and Post-Employment Code for Public
      Office Holders or the Conflict of Interest and Post-Employment Code for
      the Public Service apply, will derive a direct benefit from this Agreement
      unless that individual is in compliance with the applicable
      post-employment provisions.

17.7  No Partnership Created
      The parties declare that nothing in this Agreement shall be construed as
      creating a partnership, joint venture or agency relationship between the
      Minister and Allelix.

17.8  Binding Agreement
      This Agreement is binding on the parties and their successors and
      permitted assigns.

17.9  Severability
      Any provision of this Agreement prohibited by law or otherwise ineffective
      will be ineffective only to the extent of such prohibition or
      ineffectiveness and will be severable without invalidating or otherwise
      affecting the remaining provisions of the Agreement.

<PAGE>
                                      -28-

17.10 Signature in Counterparts
      This Agreement may be signed in counterparts, each of which when taken
      together, will constitute an original Agreement.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first above written.

                                    HER MAJESTY THE QUEEN IN RIGHT OF CANADA,
                                    as represented by the Minister of Industry

                                    Per:  /s/ [ILLEGIBLE]
                                        ---------------------------------------
                                        Technology Partnerships Canada  3/11/99

                                    ALLELIX BIOPHARMACEUTICALS INC.

                                    Per:  /s/ [ILLEGIBLE]
                                        ---------------------------------------

                                    Title:    [ILLEGIBLE]
                                          -------------------------------------

                                    Per:  /s/ [ILLEGIBLE]
                                        ---------------------------------------

                                    Title: SVP & CFO [ILLEGIBLE]
                                          -------------------------------------

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