Document:

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                                                                     Exhibit 4.1

                                    RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                                 HYBRIDON, INC.

         Hybridon, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, does hereby
certify as follows:

         1. The Corporation filed its original Certificate of Incorporation with
the Secretary of State of Delaware on May 25, 1989, which Certificate of
Incorporation was amended by a Certificate of Amendment of Certificate of
Incorporation filed on February 21, 1990, and amended and restated by a Restated
Certificate of Incorporation filed on June 5, 1990. A Restated Certificate of
Incorporation was filed with the Secretary of State of the State of Delaware on
November 20, 1990, which Restated Certificate of Incorporation was amended by a
Certificate of Amendment of Restated Certificate of Incorporation filed on
October 16, 1991, a Certificate of Amendment of Restated Certificate of
Incorporation filed on March 3, 1992, a Certificate of Amendment of Restated
Certificate of Incorporation filed on March 23, 1992, a Certificate of Amendment
of Restated Certificate of Incorporation filed on October 23, 1992, a
Certificate of Amendment of Restated Certificate of Incorporation filed on
February 12, 1993, a Certificate of Amendment of Restated Certificate of
Incorporation filed on June 17, 1993, a Certificate
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of Amendment of Restated Certificate of Incorporation filed on July 13, 1993, a
Certificate of Amendment of Restated Certificate of Incorporation filed on
September 9, 1994, a Certificate of Amendment of Restated Certificate of
Incorporation filed on July 7, 1995, a Certificate of Amendment of Restated
Certificate of Incorporation filed on December 19, 1995, and a Certificate of
Retirement of Stock filed on even date herewith.

         2. At a meeting of the Board of Directors of the Corporation, a
resolution was duly adopted, pursuant to Sections 141(f) and 245 of the General
Corporation Law of the State of Delaware, setting forth a Restated Certificate
of Incorporation of the Corporation and declaring said Restated Certificate of
Incorporation advisable. The resolution setting forth the Restated Certificate
of Incorporation is as follows:

         RESOLVED: That the Restated Certificate of Incorporation of the
Corporation, as amended, be and hereby is amended and restated in its entirety
so that the same shall read as follows:

         FIRST. The name of the Corporation is:

                  Hybridon, Inc.

         SECOND. The address of its registered office in the State of Delaware
         is Corporation Trust Center, 1209 Orange Street, in the City of
         Wilmington, County of New Castle. The name of its registered agent at
         such address is The Corporation Trust Company.

         THIRD. The nature of the business or purposes to be conducted or
         promoted by the Corporation is as follows:

         To engage in any lawful act or activity for which corporations may be
         organized under the General Corporation Law of Delaware.

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         FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issues is One Hundred Million (100,000,000)
shares of Common Stock, $.001 par value per share ("Common Stock"), and (ii)
Five Million ($5,000,000)shares of Preferred Stock, $.01 par value per share
("Preferred Stock"), which may be issued from time to time in one or more series
as set forth in Part B of this Articles FOURTH.

         The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.

A. COMMON STOCK.

         1. GENERAL. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.

         2. VOTING. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.

         The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of the
General Corporation Law of Delaware.

         3. DIVIDENDS. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.

         4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.

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B. PREFERRED STOCK.

         Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided.

         Authority is hereby expressly granted to the Board of Directors from
time to time to issue the Preferred Stock in one or more series, and in
connection with the creation of any such series, by resolution or resolutions
providing for the issue of the shares thereof, to determine and fix such voting
powers, full or limited, or no voting powers, and such designations, preferences
and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, including without
limitation thereof, dividend rights, conversion rights, redemption privileges
and liquidation preferences, as shall be stated and expressed in such
resolutions, all to the full extent now or hereafter permitted by the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
the resolutions providing for issuance of any series of Preferred Stock may
provide that such series shall be superior or rank equally or be junior to the
Preferred Stock of any other series to the extent permitted by law. Except as
otherwise specifically provided in this Certificate of Incorporation, no vote of
the holders of the Preferred Stock or Common Stock shall be a prerequisite to
the issuance of any shares of any series of the Preferred Stock authorized by
and complying with the conditions of the Certificate of Incorporation, the right
to have such vote being expressly waived by all present and future holders of
the capital stock of the Corporation.

         FIFTH. The name and mailing address of the sole incorporator are as
follows:
<TABLE>
<CAPTION>
             NAME                           MAILING ADDRESS
             ----                           ---------------
         <S>                                <C>
         David P. Johst                     60 State Street
                                            Boston, MA  02109
</TABLE>

SIXTH. In furtherance of and not in limitation of powers conferred by statute,
it is further provided:

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                  1. Election of directors need not be by written ballot.

                  2. The Board of Directors is expressly authorized to adopt,
amend or repeal the By-Laws of the Corporation.

         SEVENTH. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any promise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.

         EIGHTH. Except to the extent that the General Corporation Law of the
State of Delaware prohibits the elimination or limitation of liability of
directors for breaches of fiduciary duty, no director of the Corporation shall
be personally liable to the Corporation or its stockholders for monetary damages
for any breach of fiduciary duty as a director, notwithstanding any provision of
law imposing such liability. No amendment to or repeal of this provision shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.

         NINTH. 1. ACTION, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT
OF THE CORPORATION. The Corporation shall indemnify each person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was, or has

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agreed to become, a director or officer of the Corporation, or is or was
serving, or has agreed to serve, at the request of the Corporation, as a
director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise (including
any employee benefit plan) (all such persons being referred to hereafter as an
"Indemnitee"), or by reason of any action alleged to have been taken or omitted
in such capacity, against all expenses (including attorneys' fees) judgment,
fines and amounts paid in settlement actually and reasonably incurred by him or
on his behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in, or not
opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful. Notwithstanding anything to the contrary in this Article, except
as set forth in Section 6 below, the Corporation shall not indemnify an
Indemnitee seeking indemnification in connection with a proceeding (or part
thereof) initiated by the Indemnitee unless the initiation thereof was approved
by the Board of Directors of the Corporation.

         2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan), or by reason of any
action alleged to have been taken or omitted in such capacity, against all
expenses (including attorneys' fees) and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action, suit
or proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or

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the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of such liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses (including attorneys' fees) which the Court of
Chancery of Delaware or such other court shall deem proper.

         3. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding
the other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, or on appeal from any such action, suit or
proceeding, he shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith. Without limiting the foregoing, if any action, suit or proceeding is
disposed of, on the merits or otherwise (including a disposition without
prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an
adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of
guilty or NOLO CONTENDERE by the Indemnitee, (iv) an adjudication that the
Indemnitee did not act in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and (v) with
respect to any criminal proceeding, an adjudication that the Indemnitee had
reasonable cause to believe his conduct was unlawful, the Indemnitee shall be
considered for the purposes hereof to have been wholly successful with respect
thereto.

         4. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to his
right to be indemnified, the Indemnitee must notify the Corporation in writing
as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 4. The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a

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conflict of interest or position on any significant issue between the
Corporation and the Indemnitee in the conduct of the defense of such action or
(iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of counsel
for the Indemnitee shall be at the expense of the Corporation, except as
otherwise expressly provided by this Article. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.

         5. ADVANCE OF EXPENSES. Subject to the provisions of Section 6 below,
in the event that the Corporation does not assume the defense pursuant to
Section 4 of this Article of any action, suit, proceeding or investigation of
which the Corporation receives notice under this Article, any expenses
(including attorneys' fees) incurred by an Indemnitee in defending a civil or
criminal action, suit, proceeding or investigation or any appeal therefrom shall
be paid by the Corporation in advance of the final disposition of such matter,
PROVIDED, HOWEVER, that the payment of such expense incurred by an Indemnitee in
advance of the final disposition of such matter shall be made only upon receipt
of an undertaking by or on behalf of the Indemnitee to repay all amounts so
advanced in the event that it shall ultimately be determined that the Indemnitee
is not entitled to be indemnified by the Corporation as authorized in this
Article. Such undertaking may be accepted without reference to the financial
ability of such person to make such repayment.

         6. PROCEDURE FOR INDEMNIFICATION. In order to obtain indemnification or
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the
Indemnitee shall submit to the Corporation a written request, including in such
request such documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification or advancement of expenses. Any
such indemnification or advancement of expenses shall be made promptly, and in
any event within 60 days after receipt by the Corporation of the written request
of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the
Corporation determines, by clear and convincing evidence, within such 60-day
period that the Indemnitee did not meet the applicable standard of conduct set
forth in Section 1 or 2, as the case may be. Such determination shall be made in
each instance by (a) a majority vote of a quorum of the directors of the
Corporation consisting of persons who are not at that time parties to the
action, suit or proceeding in question ("disinterested directors'), (b) if no
such quorum is obtainable, a majority vote of a committee of two or more
disinterested directors,

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(c) a majority vote of a quorum of the outstanding shares of stock of all
classes entitled to vote for directors, voting as a single class, which quorum
shall consist of stockholders who are not at that time parties to the action,
suit or proceeding in question, (d) independent legal counsel (who may be
regular legal counsel to the Corporation), or (e) a court of competent
jurisdiction.

         7. REMEDIES. The right to indemnification or advances as granted by
this Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise provided by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advanced of expenses under this
Article shall be on the Corporation. Neither the failure of the Corporation to
have made a determination prior to the commencement of such action that
indemnification is proper in the circumstances because the Indemnitee has met
the applicable standard of conduct, nor an actual determination by the
Corporation pursuant to Section 6 that the Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the Indemnitee has not met the applicable standard of conduct.
The Indemnitee's expenses (including attorneys' fees) incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such proceeding shall also be indemnified by the Corporation.

         8. SUBSEQUENT AMENDMENT. No amendment, termination or repeal of this
Article or of the relevant provisions of the General Corporation Law of Delaware
or any other applicable laws shall affect or diminish in any way the rights of
any Indemnitee to indemnification under the provisions hereof with respect to
any action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or repeal.

         9. OTHER RIGHTS. The indemnification and advancement of expenses
provided by this Article shall not be deemed exclusive of any other rights to
which an Indemnitee seeking indemnification or advancement of expenses may be
entitled under any law (common or statutory), agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in any other capacity while holding office for the
Corporation, and shall continue as to an Indemnitee who has ceased to be a
director or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of the Indemnitee. Nothing contained in this
Article shall be deemed to prohibit, and the Corporation is specifically
authorized to enter into, agreements with officers and directors providing

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indemnification rights and procedures different from those set forth in this
Article. In addition, the Corporation may, to the extent authorized from time to
time by its Board of Directors, grant indemnification rights to other employees
or agents of the Corporation or other persons serving the Corporation and such
rights may be equivalent to, or greater or less than, those set forth in this
Article.

         10. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal,
therefrom but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.

         11. INSURANCE. The Corporation may purchase and maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) against any expense,
liability or loss incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
such person against such expense, liability or loss under the General
Corporation law of Delaware.

         12. MERGER OR CONSOLIDATION. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article with respect to any action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or facts
occurring prior to the date of such merger or consolidation.

         13. SAVINGS CLAUSE. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees) judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest extent permitted
by applicable law.

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         14. DEFINITIONS. Terms used herein and defined in Section 145(h) and
Section 145(i) of the General Corporation Law of Delaware shall have the
respective meanings assigned to such terms in such Section 145(h) and Section
145(i).

         15. SUBSEQUENT LEGISLATION. If the General Corporation Law of Delaware
is amended after adoption of this Article to expand further the indemnification
permitted to Indemnitees, then the Corporation shall indemnify such persons to
the fullest extent permitted by the General Corporation Law of Delaware, as so
amended.

         TENTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute and this Restated Certificate
of Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.

         ELEVENTH. This Article is inserted for the management of the business
and for the conduct of the affairs of the Corporation and shall not become
effective until the closing of the sale of shares of Common Stock in an
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, resulting in at least $10,000,000
of gross proceeds to the Corporation (a "Public Offering").

1. NUMBER OF DIRECTORS. The number of directors of the Corporation shall not be
less than three. The exact number of directors within the limitations specified
in the preceding sentence shall be fixed from time to time by, or in the manner
provided in, the Corporation's By-Laws.

         2. CLASSES OF DIRECTORS. The Board of Directors shall be and is divided
into three classes: Class I, Class II and Class III. No one class shall have
more than one director more than any other class. If a fraction is contained in
the quotient arrived at by dividing the designated number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class II, and if such fraction is two-thirds, one of the extra directors shall
be a member of Class I and one of the extra directors shall be a member of Class
II, unless otherwise provided from time to time by resolution adopted by the
Board of Directors.

         3. ELECTION OF DIRECTORS. Elections of directors need not be by written
ballot except as and to the extent provided in the By-Laws of the Corporation.

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         4. TERMS OF OFFICE. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
director was elected; PROVIDED, that each initial director in Class I shall
serve for a term ending on the date of the annual meeting in 1996; each initial
director in Class II shall serve for a term ending on the date of the annual
meeting in 1997; and each initial director in Class III shall serve for a term
ending on the date of the annual meeting in 1998; and PROVIDED FURTHER, that the
term of each director shall be subject to the election and qualification of his
successor and to his earlier death, resignation or removal.

         5. ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR
DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease
in the authorized number of directors, (i) each director then serving as such
shall nevertheless continue as a director of the class of which he is a member
and (ii) the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the Board of Directors among the
three classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent possible, consistent with the
foregoing rule, any newly created directorships shall be added to those classes
whose terms of office are to expire at the latest dates following such
allocation, and any newly eliminated

directorships shall be subtracted from those classes whose terms of offices are
to expire at the earliest dates following such allocation, unless otherwise
provided from time to time by resolution adopted by the Board of Directors.

         6. QUORUM; ACTION AT MEETING. A majority of the directors at any time
in office shall constitute a quorum for the transaction of business. In the
event one or more of the directors shall be disqualified to vote at any meeting,
then the required quorum shall be reduced by one for each director so
disqualified, provided that in no case shall less than one-third of the number
of directors fixed pursuant to Section 1 above constitute a quorum. If at any
meeting of the Board of Directors there shall be less than such a quorum, a
majority of those present may adjourn the meeting from time to time. Every act
or decision done or made by a majority of the directors present at a meeting
duly held at which a quorum is present shall be regarded as the act of the Board
of Directors unless a greater number is required by law, by the By-Laws of the
Corporation or by this Restated Certificate of Incorporation.

         7. REMOVAL. Directors of the Corporation may be removed only for cause
by the affirmative vote of the holders of at least two-thirds of the shares of
the capital stock of the Corporation issued and outstanding and entitled to
vote.

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         8. VACANCIES. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the board, shall be filled
only by a vote of a majority of the directors then in office, although less than
a quorum, or by a sole remaining director. A director elected to fill a vacancy
shall be elected to hold office until the next election of the class for which
such director shall have been chosen, subject to the election and qualification
of his successor and to his earlier death, resignation or removal.

         9. STOCKHOLDER NOMINATIONS AND INTRODUCTION OF BUSINESS, ETC. Advance
notice of stockholder nominations for election of directors and other business
to be brought by stockholders before a meeting of stockholders shall be given in
the manner provided by the By-Laws of the Corporation.

         10. AMENDMENTS TO ARTICLE. Notwithstanding any other provisions of law,
this Restated Certificate of Incorporation or the By-Laws of the Corporation,
and notwithstanding the fact that a lesser percentage may be specified by law,
the affirmative vote

of the holders of at least seventy-five percent (75%) of the shares of capital
stock of the Corporation issued and outstanding and entitled to vote shall be
required to amend or repeal, or to adopt any provision inconsistent with, this
Article ELEVENTH.

         TWELFTH. Until the closing of a Public Offering, any action which is
required to be taken or which may be taken at any annual or special meeting of
stockholders of the Corporation may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, is signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote on such action were present
and voted. Effective upon the closing of a Public Offering, stockholders of the
Corporation may not take any action by written consent in lieu of a meeting.
Notwithstanding any other provisions of law, the Restated Certificate of
Incorporation or the By-Laws of the Corporation, and notwithstanding the fact
that a lesser percentage may be specified by law, the affirmative vote of the
holders of at least seventy-five percent (75%) of the shares of capital stock of
the Corporation issued and outstanding and entitled to vote shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article
TWELFTH.

         THIRTEENTH. Effective upon the closing of a Public Offering, special
meetings of stockholders may be called at any time by only the Chief Executive
Officer (or if there is no Chief Executive Officer, the President) or the Board
of Directors. Business transacted at any special meeting of stockholders shall
be limited

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to matters relating to the purpose or purposes stated in the notice of meeting.
Notwithstanding any other provision of law, this Restated Certificate of
Incorporation or the By-Laws of the Corporation, as amended, and notwithstanding
the fact that a lesser percentage may be specified by law, the affirmative vote
of the holders of at least seventy-five percent (75%) of the shares of capital
stock of the Corporation issued and outstanding and entitled to vote shall be
required to amend or repeal, or to adopt any provision inconsistent with this
Article THIRTEENTH.

         IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Restated Certificate of Incorporation to be signed by
its Chairman this 28TH March, 1996.

                                        HYBRIDON, INC.

                                        By: /s/ E. Andrews Grinstead, III
                                            ----------------------------------
                                            Chairman

[Corporate Seal]

                                      -14-
<PAGE>
                            CERTIFICATE OF AMENDMENT
                                       OF
                                    RESTATED
                          CERTIFICATE OF INCORPORATION
                                OF HYBRIDON, INC.

                     Pursuant to Section 242 of the General
                    Corporation Law of the State of Delaware
         --------------------------------------------------------------
         HYBRIDON, INC. (the "Corporation"), organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, does hereby
certify as follows:

         By written action of the Board of Directors of the Corporation, dated
October 20, 1997, the Board of Directors duly adopted resolutions pursuant to
Sections 141(f) and 242 of the General Corporation Law of the State of Delaware
setting forth an amendment to the Restated Certificate of Incorporation of the
Corporation, as amended, and declaring said amendment to be advisable. The
stockholders of the Corporation duly approved, pursuant to said Section 242,
said proposed amendment at a Special Meeting of Stockholders held on November
18, 1997. The resolution setting forth the amendment to the Restated Certificate
of Incorporation is as follows:

RESOLVED:         That, subject to stockholder approval, the following paragraph
                  be inserted prior to the first paragraph of Article FOURTH of
                  the Certificate of Incorporation:

                           "That upon the filing date of the Certificate of
                  Amendment of Restated Certificate of Incorporation of the
                  Corporation (the "Effective Date"), a one-for-five reverse
                  split of the Corporation's Common Stock (as defined below)
                  shall become effective, such that each five shares of Common
                  Stock outstanding and held of record by each stockholder of
                  the Corporation (including treasury shares)
<PAGE>
                  immediately prior to the Effective Date shall represent one
                  share of Common Stock from and after the Effective Date."

         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed by its Chairman of the Board of Directors, President
and Chief Executive Officer this 10th day of December, 1997.

                                   HYBRIDON, INC.

                                   By: /s/  E. Andrews Grinstead, III
                                       --------------------------------------
                                        E. Andrews Grinstead, III
                                        Chairman of the Board of Directors,
                                        President and Chief Executive Officer

                                      -2-
<PAGE>
                           CERTIFICATE OF DESIGNATION

                                       for

                      SERIES A CONVERTIBLE PREFERRED STOCK

                                       of

                                 HYBRIDON, INC.

                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware

                  HYBRIDON INC., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), does hereby certify that
pursuant to the authority conferred on the board of directors of the Corporation
(the "Board of Directors") by the Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation") of the Corporation and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors adopted the following resolution establishing a
series of 1,500,000 shares of preferred stock of the Corporation designated as
"Series A Convertible Preferred Stock":

                  RESOLVED, that pursuant to the authority conferred on the
         Board of Directors by the Certificate of Incorporation, a series of
         preferred stock, par value $.01 per share, of the Corporation is hereby
         established and created, and that the designation and number of shares
         thereof and the voting and other powers, preferences and relative
         participating, optional or other special rights of, the shares of such
         series and the qualifications, limitations and restrictions thereof are
         as follows:

                      Series A Convertible Preferred Stock

                  1. Designation and Amount and Definitions. (a) There shall be
a series of Preferred Stock designated as "Series A Convertible Preferred Stock"
and the number of shares constituting such series shall be 1,500,000. Such
series is referred to herein as the "Series A Preferred Stock". Notwithstanding
any other provision in this Certificate of Designation of the Series A Preferred
Stock (the "Certificate of Designation") to the contrary, such series shall be
senior to the common stock, par value $.001 per share of the Corporation (the
"Common Stock") with respect to dividends and the distribution of assets upon
liquidation, dissolution or winding up. Such number of shares may be increased
or decreased by resolution of the Board of Directors, subject to the provisions
of Section 7 hereof; provided, however, that no decrease shall reduce the number
of shares of Series A Preferred Stock to fewer than the number of shares then
issued and outstanding.

                  (b) As used in this Certificate of Designation, except as
otherwise provided in Subsection 4(c), the following terms shall have the
following meanings:
<PAGE>
                           (i) The "Closing Bid Price" for any security for each
                  trading day shall be the reported per share closing bid price
                  of such security regular way on the Stock Market on such
                  trading day, or, if there were no transactions on such trading
                  day, the average of the reported closing bid and asked prices,
                  regular way, of such security on the relevant Stock Market on
                  such trading day.

                           (ii) "Fair Market Value" of any asset (including any
                  security) means the fair market value thereof as mutually
                  determined by the Corporation and the holders of a majority of
                  the Series A Preferred Stock then outstanding. If the
                  Corporation and the holders of a majority of the Series A
                  Preferred Stock then outstanding are unable to reach agreement
                  on any valuation matter, such valuation shall be submitted to
                  and determined by a nationally recognized independent
                  investment bank selected by the Board of Directors and the
                  holders of a majority of the Series A Preferred Stock then
                  outstanding (or, if such selection cannot be agreed upon
                  promptly, or in any event within ten days, then such valuation
                  shall be made by a nationally recognized independent
                  investment banking firm selected by the American Arbitration
                  Association in New York City in accordance with its rules),
                  the costs of which valuation shall be paid for by the
                  Corporation.

                           (iii) "Market Price" shall mean the average Closing
                  Bid Price for twenty (20) consecutive trading days, ending
                  with the trading day prior to the date as of which the Market
                  Price is being determined (with appropriate adjustments for
                  subdivisions or combinations of shares effected during such
                  period), provided that if the prices referred to in the
                  definition of Closing Bid Price cannot be determined on any
                  trading day, the Closing Bid Price for such trading day will
                  be deemed to equal Fair Market Value of such security on such
                  trading day.

                           (iv) "Registered Holders" shall mean, at any time,
                  the holders of record of the Series A Preferred Stock.

                           (v) The "Stock Market" shall mean, with respect to
                  any security, the principal national securities exchange on
                  which such security is listed or admitted to trading or, if
                  such security is not listed or admitted to trading on any
                  national securities exchange, shall mean The Nasdaq National
                  Market System ("NNM") or The Nasdaq SmallCap Market ("SCM"
                  and, together with NNM, "Nasdaq") or, if such security is not
                  quoted on Nasdaq, shall mean the OTC Bulletin Board or, if
                  such security is not quoted on the OTC Bulletin Board, shall
                  mean the over-the-counter market as furnished by any NASD
                  member firm selected from time to time by the Corporation for
                  that purpose.

                           (vi) A "trading day" shall mean a day on which the
                  relevant Stock Market is open for the transaction of business.

                  2. Dividends and Distributions. (a) The holders, as of the
Dividend Record Date (as defined below), of the Series A Preferred Stock shall
be entitled to receive semi-annual dividends on their respective shares of
Series A Preferred Stock (aggregating, for this purpose,
<PAGE>
all shares of Series A Preferred Stock held of record or, to the Corporation's
knowledge, beneficially by such holder), payable, at the option of the
Corporation, in cash or additional shares of Series A Preferred Stock, at the
rate of 6.5% per annum (computed on the basis of a 360-day year of twelve 30 day
months) of the Dividend Base Amount (as defined below), payable semi-annually in
arrears; provided that, to the extent the declaration or payment of such
dividend is prohibited by applicable law, such dividend need not be paid but
shall nevertheless accrue and shall be paid promptly when applicable law
permits. Such dividends shall accrue from the date of issuance of such share and
shall be paid semi-annually on April 1 and October 1 of each year or, if any
such day is not a business day, on the next succeeding business day. Such
dividends shall be paid, at the election of the Corporation, either in cash or
additional duly authorized, fully paid and non assessable shares of Series A
Preferred Stock. In calculating the number of shares of Series A Preferred Stock
to be paid with respect to each dividend, the Series A Preferred Stock shall be
valued at $100.00 per share (subject to appropriate adjustment to reflect any
stock split, combination, reclassification or reorganization of the Series A
Preferred Stock). Notwithstanding the foregoing, the Corporation shall not be
required to issue fractional shares of Series A Preferred Stock; the Corporation
may elect, in its sole discretion, independently for each holder, whether such
number of shares (on an aggregated basis) will be rounded to the nearest whole
share (with .5 of a share rounded upward) or whether such holder will be given
cash in lieu of any fractional shares. The "Dividend Base Amount" of a share of
Series A Preferred Stock shall be $100.00 plus all accrued but unpaid dividends
(subject to appropriate adjustment to reflect any stock split, combination,
reclassification or reorganization of the Series A Preferred Stock). The
"Dividend Record Date" shall mean, for each semi-annual dividend, the March 15
or September 15, as the case may be, immediately preceding the dividend payment
date.

                  (b) In addition to the foregoing, subject to the rights of the
holders of any shares of any series or class of capital stock ranking prior, and
superior to, or pari passu with, the shares of Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred Stock shall be
entitled to receive, as, when and if declared by the Board of Directors, out of
assets legally available for that purpose, dividends or distributions in cash,
stock or otherwise.

                  (c) The Corporation shall not declare any dividend or
distribution on any Junior Stock (as defined below) of the Corporation unless
all dividends required by Section 2(a) have been or contemporaneously are
declared and paid, or declared and a sum sufficient for the payment thereof set
apart for such payment, on the Series A Preferred Stock.

                  (d) [Reserved]

                  (e) All dividends or distributions declared upon the Series A
Preferred Stock shall be declared pro rata per share.

                  (f) Any reference to "distribution" contained in this Section
2 shall not be deemed to include any distribution made in connection with or in
lieu of any Liquidation Event (as defined below).
<PAGE>
                  (g) No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series A Preferred
Stock which may be in arrears (it being understood that this provision does not
alter the Corporation's obligations under Section 2(a)).

                  (h) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on any class or series of
stock of the Corporation ranking, as to dividends, on a parity with the Series A
Preferred Stock, for any period unless all dividends have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof set apart for such payment, on the Series A Preferred Stock.
When dividends are not paid in full or a sum sufficient for such payment is not
set apart, as aforesaid, upon the shares of the Series A Preferred Stock and any
other class or series of stock ranking on a parity as to dividends with the
Series A Preferred Stock, all dividends declared upon such other stock shall be
declared pro rata so that the amounts of dividends per share declared on the
Series A Preferred Stock and such other stock shall in all cases bear to each
other the same ratio that accrued dividends per share on the shares of the
Series A Preferred Stock and on such other stock bear to each other.

                  (i) So long as any shares of the Series A Preferred Stock are
outstanding, no other stock of the Corporation ranking on a parity with the
Series A Preferred Stock as to dividends or upon liquidation, dissolution or
winding up shall be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund or
otherwise for the purchase or redemption of any shares of any such stock) by the
Corporation unless the dividends, if any, accrued on all outstanding shares of
the Series A Preferred Stock shall have been paid or set apart for payment.

                  (j) "Junior Stock" shall mean the Common Stock and any shares
of preferred stock of any series or class of the Corporation, whether presently
outstanding or hereafter issued, which are junior to the shares of Series A
Preferred Stock with respect to (i) the distribution of assets on any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, (ii)
dividends or (iii) voting.

                  3. Liquidation Preference. (a) In the event of a (i)
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, (ii) a sale or other disposition of all or substantially all of the
assets of the Corporation or (iii) any consolidation, merger, combination,
reorganization or other transaction in which the Corporation is not the
surviving entity or shares of Common Stock constituting in excess of 50% of the
voting power of the Corporation are exchanged for or changed into stock or
securities of another entity, cash and/or any other property (a "Merger
Transaction") (items (i), (ii) and (iii) of this sentence being collectively
referred to as a "Liquidation Event"), after payment or provision for payment of
debts and other liabilities of the Corporation, the holders of the Series A
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, whether such
assets are capital, surplus, or earnings, before any payment or declaration and
setting apart for payment of any amount shall be made in respect of any Junior
Stock of the Corporation, an amount equal to the Dividend Base Amount at such
<PAGE>
time; provided, however, in the case of a Merger Transaction, such payment may
be made in cash, property (valued as provided in Subsection 3(b)) and/or
securities (valued as provided in Subsection 3(b)) of the entity surviving such
Merger Transaction. In the case of property or in the event that any such
securities are subject to an investment letter or other similar restriction on
transferability, the value of such property or securities shall be determined by
agreement between the Corporation and the holders of a majority of the Series A
Preferred Stock then outstanding. If upon any Liquidation Event, whether
voluntary or involuntary, the assets to be distributed to the holders of the
Series A Preferred Stock shall be insufficient to permit the payment to such
shareholders of the full preferential amounts aforesaid, then all of the assets
of the Corporation to be distributed shall be so distributed ratably to the
holders of the Series A Preferred Stock on the basis of the number of shares of
Series A Preferred Stock held. Notwithstanding item (iii) of the first sentence
of this Subsection 3(a), any consolidation, merger, combination, reorganization
or other transaction in which the Corporation is not the surviving entity but
the stockholders of the Corporation immediately prior to such transaction own in
excess of 50% of the voting power of the corporation surviving such transaction
and own amongst themselves such interest in substantially the same proportions
as prior to such transaction, shall not be considered a Liquidation Event
provided that the surviving corporation shall make appropriate provisions to
ensure that the terms of this Certificate of Designation survive any such
transaction. All shares of Series A Preferred Stock shall rank as to payment
upon the occurrence of any Liquidation Event senior to the Common Stock and,
unless the terms of such series shall provide otherwise, senior to all other
series of the Corporation's preferred stock.

                  (b) Any securities or other property to be delivered to the
holders of the Series A Preferred Stock pursuant to Subsection 3(a) hereof shall
be valued as follows:

                           (i) Securities not subject to an investment letter or
                  other similar restriction on free marketability:

                                    (A) If actively traded on a Stock Market,
                           the per share value shall be deemed to be the Market
                           Price of such securities as of the third day prior to
                           the date of valuation.

                                    (B) If not actively traded on a Stock
                           Market, the value shall be the Fair Market Value of
                           such securities.

                           (ii) For securities for which there is an active
                  public market but which are subject to an investment letter or
                  other restrictions on free marketability, the value shall be
                  the Fair Market Value thereof, determined by discounting
                  appropriately the per share Market Price thereof.

                           (iii) For all other securities, the value shall be
                  the Fair Market Value thereof.

                  4. Conversion.
<PAGE>
                  (a) Right of Conversion. Commencing after the expiration of 12
months following the Alternative Equity Closing Date (as hereinafter defined),
but not prior thereto, the shares of Series A Preferred Stock shall be
convertible, in whole or in part, at the option of the holder thereof and upon
notice to the Corporation as set forth in Subsection 4(b), into fully paid and
nonassessable shares of Common Stock and such other securities and property as
hereinafter provided. The initial conversion price per share of Common Stock
(the "Conversion Price"), shall be equal to the product of 2.125 multiplied by
the per share price (the "Stated Common Price") of Common Stock sold by the
Corporation in connection with the Alternative Equity Offering (as such term is
defined in the Corporation's Offer to Exchange dated February 6, 1998 (the
"Original Offer to Exchange"), as amended by the Amendment thereto (the
"Amendment") dated March 30, 1998 (collectively, the "Offer to Exchange")) and
shall be subject to adjustment as provided herein. The rate at which each share
Series A Preferred Stock is convertible at any time into Common Stock (the
"Conversion Rate") shall be determined by dividing the then existing Conversion
Price (determined in accordance with this Section 4, including the last
paragraph hereof) into the Dividend Base Amount.

                  The Corporation shall prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Corporation setting forth the
Conversion Rate as of the date of the closing of the Alternative Equity Offering
(the "Alternative Equity Closing Date"), showing in reasonable detail the facts
upon which such Conversion Rate is based, and such certificate shall forthwith
be filed with the transfer agent of the Series A Preferred Stock.

                  (b) Conversion Procedures. Any holder of shares of Series A
Preferred Stock desiring to convert such shares into Common Stock shall
surrender the certificate or certificates evidencing such shares of Series A
Preferred Stock at the office of the transfer agent for the Series A Preferred
Stock, which certificate or certificates, if the Corporation shall so require,
shall be duly endorsed to the Corporation or in blank, or accompanied by proper
instruments of transfer to the Corporation or in blank, accompanied by
irrevocable written notice to the Corporation that the holder elects so to
convert such shares of Series A Preferred Stock and specifying the name or names
(with address) in which a certificate or certificates evidencing shares of
Common Stock are to be issued. The Corporation need not deem a notice of
conversion to be received unless the holder complies with all the provisions
hereof. The Corporation will instruct the transfer agent (which may be the
Corporation) to make a notation of the date that a notice of conversion is
received, which date of receipt shall be deemed to be the date of receipt for
purposes hereof.

                  The Corporation shall, as soon as practicable after such
deposit of certificates evidencing shares of Series A Preferred Stock
accompanied by the written notice and compliance with any other conditions
herein contained, deliver at such office of such transfer agent to the person
for whose account such shares of Series A Preferred Stock were so surrendered,
or to the nominee or nominees of such person, certificates evidencing the number
of full shares of Common Stock to which such person shall be entitled as
aforesaid, subject to Section 4(d). Subject to the following provisions of this
paragraph, such conversion shall be deemed to have been made as of the date of
such surrender of the shares of Series A Preferred Stock to be converted, and
the person or persons entitled to receive the Common Stock deliverable upon
<PAGE>
conversion of such Series A Preferred Stock shall be treated for all purposes as
the record holder or holders of such Common Stock on such date; provided,
however, that the Corporation shall not be required to convert any shares of
Series A Preferred Stock while the stock transfer books of the Corporation are
closed for any purpose, but the surrender of Series A Preferred Stock for
conversion during any period while such books are so closed shall become
effective for conversion immediately upon the reopening of such books as if the
surrender had been made on the date of such reopening, and the conversion shall
be at the conversion rate in effect on such date. No adjustments in respect of
any dividends on shares surrendered for conversion or any dividend on the Common
Stock issued upon conversion shall be made upon the conversion of any shares of
Series A Preferred Stock.

                  The Corporation shall at all times, reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of Series A Preferred Stock,
such number of shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding shares of the Series A Preferred
Stock.

                  All notices of conversion shall be irrevocable; provided,
however, that if the Corporation has sent notice of an event pursuant to
Subsection 4(g) hereof, a holder of Series A Preferred Stock may, at its
election, provide in its notice of conversion that the conversion of its shares
of Series A Preferred Stock shall be contingent upon the occurrence of the
record date or effectiveness of such event (as specified by such holder),
provided that such notice of conversion is received by the Corporation prior to
such record date or effective date, as the case may be.

                  (c) Adjustment of Conversion Rate and Conversion Price.

                           (i) As used in this Subsection 4(c), the following
                  terms shall have the following meanings:

                           "Capital Stock" of any Person means the Common Stock
                  or Preferred Stock of such Person. Unless otherwise stated
                  herein or the context otherwise requires, "Capital Stock"
                  means Capital Stock of the Corporation;

                           "Common Stock" of any Person other than the
                  Corporation means the common equity (however designated),
                  including, without limitation, common stock or partnership or
                  membership interests of, or participation or interests in such
                  Person (or equivalents thereof). "Common Stock" of the
                  Corporation means the Common Stock, par value $.001 per share,
                  of the Corporation, any successor class or classes of common
                  equity (however designated) of the Corporation into or for
                  which such Common Stock may hereafter be converted, exchanged
                  or reclassified and any class or classes of common equity
                  (however designated) of the Corporation which may be
                  distributed or issued with respect to such Common Stock or
                  successor class of classes to holders thereof generally.
                  Unless otherwise stated herein or the context requires
                  otherwise, "Common Stock" means Common Stock of the
                  Corporation;
<PAGE>
                           "Current Market Price" means, when used with respect
                  to any security as of any date, the last sale price, regular
                  way, or, in case no such sale takes place on such date, the
                  average of the closing bid and asked prices, regular way, of
                  such security in either case as reported for consolidated
                  transactions on the New York Stock Exchange or, if such
                  security is not listed or admitted to trading on the New York
                  Stock Exchange, as reported for consolidated transactions with
                  respect to securities listed on the principal national
                  securities exchange on which such security is listed or
                  admitted to trading or, if such security is not listed or
                  admitted to trading on any national securities exchange, as
                  reported on the Nasdaq National Market, or, if such security
                  is not listed or admitted to trading on the Nasdaq National
                  Market, as reported on the Nasdaq SmallCap Market, or if such
                  security is not listed or admitted to trading on any national
                  securities exchange or the Nasdaq National Market or the
                  Nasdaq SmallCap Market, the average of the high bid and low
                  asked prices of such security in the over-the-counter market,
                  as reported by the National Association of Securities Dealers,
                  Inc. Automated Quotations System or such other system then in
                  use or, if such security is not quoted by any such
                  organization, the average of the closing bid and asked prices
                  of such security furnished by an NASD member firm selected by
                  the Corporation. If such security is not quoted by any such
                  organization and no such NASD member firm is able to provide
                  such prices, the Current Market Price of such security shall
                  be the Fair Market Value thereof;

                           "Fair Market Value" means, at any date as to any
                  asset, Property or right (including without limitation,
                  Capital Stock of any Person, evidence of indebtedness or other
                  securities, but excluding cash), the fair market value of such
                  item as determined in good faith by the Board of Directors,
                  whose determination shall be conclusive; provided, however,
                  that such determination is described in an Officers'
                  Certificate filed with the transfer agent and that, if there
                  is a Current Market Price for such item on such date, "Fair
                  Market Value" means such Current Market Price (without giving
                  effect to the last sentence of the definition thereof);

                           "GAAP" means, as of any date, generally accepted
                  accounting principles in the United States and does not
                  include any interpretations or regulations that have been
                  proposed but that have not become effective;

                           "Officer" means, with respect to any Person, the
                  Chairman of the Board, the Chief Executive Officer, the
                  President, the Chief Operating Officer, the Chief Financial
                  Officer, the Treasurer, any Assistant Treasurer, the
                  Controller, the Secretary, any Assistant Secretary or any Vice
                  President of such Person;

                           "Officers' Certificate" means a certificate signed on
                  behalf of the Corporation by two Officers, one of whom must be
                  the Chairman of the Board, the President, the Treasurer or a
                  Vice-President of the Corporation;

                           "Person" means any individual, corporation,
                  partnership, association, trust
<PAGE>
                  or any other entity or organization, including a government or
                  political subdivision or any agency or instrumentality
                  thereof;

                           "Preferred Stock" of any Person means the class or
                  classes of equity, ownership or participation interests
                  (however designated) in such Person, including, without
                  limitation, stock, share, partnership and membership
                  interests, which are preferred as to the payment of dividends
                  or distributions by, or as to the distribution of assets upon
                  any voluntary or involuntary liquidation or dissolution of,
                  such Person (or equivalent thereof) over interests of any
                  other class of interests of such Person. Unless otherwise
                  stated herein or the context otherwise requires, "Preferred
                  Stock" means Preferred Stock of the Corporation;

                           "Property" of any Person means any and all types of
                  real, personal, tangible, intangible or mixed property owned
                  by such Person whether or not included on the most recent
                  consolidated balance sheet of such Person in accordance with
                  GAAP;

                           "Subsidiary" of a Person on any date means any other
                  Person of whom such Person owns, directly or indirectly
                  through a Subsidiary or Subsidiaries of such Person, Capital
                  Stock with voting power, acting independently and under
                  ordinary circumstances, entitling such person to elect a
                  majority of the board of directors or other governing body of
                  such other Person. Unless otherwise stated herein or the
                  context otherwise requires, "Subsidiary" means a Subsidiary of
                  the Corporation.

                           (ii) If the Corporation shall (i) pay a dividend or
                  other distribution, in Common Stock, on any class of Capital
                  Stock of the Corporation, (ii) subdivide the outstanding
                  Common Stock into a greater number of shares by any means or
                  (iii) combine the outstanding Common Stock into a smaller
                  number of shares by any means including, without limitation, a
                  reverse stock split), then in each such case the Conversion
                  Price in effect immediately prior thereto shall be adjusted so
                  that the Registered Holder of any shares of Series A Preferred
                  Stock thereafter surrendered for conversion shall be entitled
                  to receive the number of shares of Common Stock that such
                  Registered Holder would have owned or have been entitled to
                  receive upon the happening of such event had such Series A
                  Preferred Stock been converted immediately prior to the
                  relevant record date or, if there is no such record date, the
                  effective date of such event. An adjustment made pursuant to
                  this Paragraph 4(c)(ii) shall become effective immediately
                  after the record date for the determination of stockholders
                  entitled to receive such dividend or distribution and shall
                  become effective immediately after the effective date of such
                  subdivision or combination, as the case may be.

                           (iii) If the Corporation shall (i) issue or
                  distribute (at a price per share less than the Current Market
                  Price per share of such Capital Stock on the date of such
                  issuance or distribution) Capital Stock generally to holders
                  of Common Stock or to holders of any class or series of
                  Capital Stock which is convertible
<PAGE>
                  into or exchangeable or exercisable for Common Stock
                  (excluding an issuance or distribution of Common Stock
                  described in Paragraph 4(c)(ii)) or (ii) issue or distribute
                  generally to such holders rights, warrants, options or
                  convertible or exchangeable securities entitling the holder
                  thereof to subscribe for, purchase, convert into or exchange
                  for Capital Stock at a price per share less than the Current
                  Market Price per share of such Capital Stock on the date of
                  issuance or distribution, then, in each such case, at the
                  earliest of (A) the date the Corporation enters into a firm
                  contract for such issuance or distribution, (B) the record
                  date for the determination of stockholders entitled to receive
                  any such Capital Stock or any such rights, warrants, options
                  or convertible or exchangeable securities or (C) the date of
                  actual issuance or distribution of any such Capital Stock or
                  any such rights, warrants, options or convertible or
                  exchangeable securities, the Conversion Price shall be reduced
                  by multiplying the Conversion Price in effect immediately
                  prior to such earliest date by:

                                    (A) if such Capital Stock is Common Stock, a
                           fraction the numerator of which is the number of
                           shares of Common Stock outstanding, on such earliest
                           date plus the number of shares of Common Stock which
                           could be purchased at the Current Market Price per
                           share of Common Stock on the date of such issuance or
                           distribution with the aggregate consideration (based
                           on the Fair Market Value thereof) received or
                           receivable by the Corporation either (A) in
                           connection with such issuance or distribution or (B)
                           upon the conversion, exchange, purchase or
                           subscription of all such rights, warrants, options or
                           convertible or exchangeable securities (the
                           "Aggregate Consideration"), and the denominator of
                           which is the number of shares of Common Stock
                           outstanding on such earliest date plus the number of
                           shares of Common Stock to be so issued or distributed
                           or to be issued upon the conversion, exchange,
                           purchase or subscription of all such rights,
                           warrants, options or convertible or exchangeable
                           securities; or

                                    (B) if such Capital Stock is other than
                           Common Stock, a fraction the numerator of which is
                           the Current Market Price per share of Common Stock on
                           such earliest date minus an amount equal to (A) the
                           difference between (1) the Current Market Price per
                           share of such Capital Stock multiplied by the number
                           of shares of such Capital Stock to be so issued and
                           (2) the Aggregate Consideration, divided by (B) the
                           number of shares of Common Stock outstanding on such
                           date, and the denominator of which is the Current
                           Market Price per share of Common Stock on such
                           earliest date.

                           Such adjustment shall be made successively whenever
                  any such Capital Stock, rights, warrants, options or
                  convertible or exchangeable securities are so issued or
                  distributed. In determining whether any rights, warrants,
                  options or convertible or exchangeable securities entitle the
                  holders thereof to subscribe for, purchase, convert into or
                  exchange for shares of such Capital Stock at less than such
                  Current Market Price, there
<PAGE>
                  shall be taken into account the Fair Market Value of any
                  consideration received or receivable by the Corporation for
                  such rights, warrants, options or convertible or exchangeable
                  securities. If any right, warrant,option or convertible or
                  exchangeable security, the issuance of which resulted in an
                  adjustment in the Conversion Price pursuant to this Paragraph
                  4(c)(iii), shall expire and shall not have been exercised, the
                  Conversion Price shall immediately upon such expiration be
                  recomputed to the Conversion Price which would have been in
                  effect if such right, warrant, option or convertible or
                  exchangeable securities had never been distributed or issued.
                  Notwithstanding anything contained in this paragraph to the
                  contrary, (i) the issuance of Capital Stock upon the exercise
                  of such rights, warrants or options or the conversion or
                  exchange of such convertible or exchangeable securities will
                  not cause an adjustment in the Conversion Price if no such
                  adjustment would have been required at the time such right,
                  warrant, option or convertible or exchangeable security was
                  issued or distributed; provided, however, that, if the
                  consideration payable upon such exercise, conversion or
                  exchange and/or the Capital Stock receivable thereupon are
                  changed after the time of the issuance or distribution of such
                  right, warrant, option or convertible or exchangeable security
                  then such change shall be deemed to be the expiration thereof
                  without having been exercised and the issuance or distribution
                  of new options, rights, warrants or convertible or
                  exchangeable securities and (ii) the issuance of convertible
                  preferred stock of the Corporation as a dividend on
                  convertible preferred stock of the Corporation will not cause
                  an adjustment in the Conversion Price if no such adjustment
                  would have been required at the time such underlying
                  convertible preferred stock was issued (or as a result of any
                  subsequent modification to the terms thereof) and the
                  conversion provisions of such convertible stock so issued as a
                  dividend are the same as in such underlying convertible
                  preferred stock.

                           Notwithstanding any contained in this Certificate of
                  Designation to the contrary, options, rights or warrants
                  issued or distributed by the Corporation, including options,
                  rights or warrants distributed prior to the date of filing of
                  this Certificate of Designation, to holders of Common Stock
                  generally which, until the occurrence of a specified event or
                  events (a "Trigger Event"), (i) are deemed to be transferred
                  with Common Stock, (ii) are not exercisable and (iii) are also
                  issued on a pro rata basis with respect to future issuances of
                  Common Stock, shall be deemed not to have been issued or
                  distributed for purposes of this Subsection 4(c) (and no
                  adjustment to the Conversion Price under this Subsection 4(c)
                  will be required) until the occurrence of the earliest Trigger
                  Event. Upon the occurrence of a Trigger Event, such options,
                  rights or warrants shall continue to be deemed not to have
                  been issued or distributed for purposes of this Subsection
                  4(c) (and no adjustment to the Conversion Price under this
                  Subsection 4(c) will be required) if and for so long as each
                  Registered Holder who thereafter converts such Registered
                  Holder's Series A Preferred Stock shall be entitled to receive
                  upon such conversion, in addition to the shares of Common
                  Stock issuable upon such conversion, a number of such options,
                  rights or warrants, as the case may be, equal to the number of
                  options, rights or warrants to which a holder of the number of
                  shares of
<PAGE>
                  Common Stock equal to the number of shares of Common Stock
                  issuable upon conversion of such Registered Holder's Series A
                  Preferred Stock is entitled to receive at the time of such
                  conversion in accordance with the terms and provisions of, and
                  applicable to, such options, rights or warrants. Upon the
                  expiration of any such options, rights or warrants or at such
                  time, if any, as a Registered Holder is not entitled to
                  receive such options, rights or warrants upon conversion of
                  such Registered Holder's Series A Preferred Stock, an
                  adjustment (if any is required) to the Conversion Price shall
                  be made in accordance with this Paragraph 4(c)(iii) with
                  respect to the issuance of all such options, rights and
                  warrants as of the date of issuance thereof, but subject to
                  the provisions of the preceding paragraph, if any such option,
                  right or warrant, including any such options right or warrants
                  distributed prior to the date of filing of this Certificate of
                  Designation, are subject to events, upon the occurrence of
                  which such options, rights or warrants become exercisable to
                  purchase different securities, evidence of indebtedness, cash,
                  Properties or other assets or different amounts thereof, then,
                  subject to the preceding provision of this paragraph, the date
                  of the occurrence of any and each such event shall be deemed
                  to be the date of distribution and record date with respect to
                  new options, right or warrants with such new purchase rights
                  (and a termination or expiration of the existing options,
                  rights or warrants without exercise thereof). In addition, in
                  the event of any distribution (or deemed distribution) of
                  options, rights or warrants, or any Trigger Event or other
                  event of the type described in the preceding sentence, that
                  required (or would have required but for the provisions of
                  Paragraph 4(c)(vi) or this paragraph) an adjustment to the
                  Conversion Price under this Subsection 4(c) and such options,
                  rights or warrants shall thereafter have been redeemed or
                  repurchased without having been exercised, then the Conversion
                  Price shall be adjusted upon such redemption or repurchase to
                  give effect to such distribution, Trigger Event or other
                  event, as the case may, as though it had instead been a cash
                  distribution, equal on a per share basis to the result of the
                  aggregate redemption or repurchase price received by holders
                  of such options, rights or warrants divided by the number of
                  shares of Common Stock outstanding as of the date of such
                  repurchase or redemption, made to holders of Common Stock
                  generally as of the date of such redemption or repurchase.

                           (iv) If the Corporation shall pay or distribute, as a
                  dividend or otherwise, generally to holders of Common Stock or
                  any class or series of Capital Stock which is convertible into
                  or exercisable or exchangeable for Common Stock any assets,
                  Properties or rights (including, without limitation, evidences
                  of indebtedness of the Corporation, any Subsidiary or any
                  other Person, cash or Capital Stock or other securities of the
                  Corporation, any Subsidiary or any other Person, but excluding
                  payments and distributions as described in Paragraphs 4(c)(ii)
                  or (iii), dividends and distributions in connection with a
                  Liquidation Event and distributions consisting solely of cash
                  described in Paragraph 4(c)(v)), then in each such case the
                  Conversion Price shall be reduced by multiplying the
                  Conversion Price in effect immediately prior to the date of
                  such payment or distribution by a fraction, the numerator of
                  which is the Current Market Price per share of Common Stock on
                  the record
<PAGE>
                  date for the determination of stockholders entitled to receive
                  such payment or distribution less the Fair Market Value per
                  share of Common Stock on such record date of the assets,
                  Properties or rights so paid or distributed, and the
                  denominator of which is the Current Market Price per share of
                  Common Stock on such record date. Such adjustment shall become
                  effective immediately after such record date. For purposes of
                  this Paragraph 4(c)(iv), such Fair Market Value per share
                  shall equal the aggregate Fair Market Value on such record
                  date of the assets, Properties or rights so paid or
                  distributed divided by the number of shares of Common Stock
                  outstanding on such record date. For all purposes of this
                  Certificate of Designation, adjustments to any security's
                  conversion or exercise price pursuant to such security's
                  original terms shall not be deemed a distribution or dividend
                  to holders thereof.

                           (v) If the Corporation shall, by dividend or
                  otherwise, make a distribution (other than in connection with
                  the liquidation, dissolution or winding up of the Corporation
                  in its entirety), generally to holders of Common Stock or any
                  class or series of Capital Stock which is convertible into or
                  exercisable or exchangeable for Common Stock, consisting
                  solely of cash where (x) the sum of (i) the aggregate amount
                  for such cash plus (ii) the aggregate amount of all cash so
                  distributed (by dividend or otherwise) to such holders within
                  the 12-month period ending on the record date for determining
                  stockholder entitled to receive such distribution with respect
                  to which no adjustment has been made to the Conversion Price
                  pursuant to this Paragraph 4(c)(v) exceeds (y) 10% of the
                  result of the multiplication of (1) the Current Market Price
                  per share of Common Stock on such record date times (2) the
                  number of shares of Common Stock outstanding on such record
                  date, then the Conversion Price shall be reduced, effective
                  immediately prior to the opening of business on the day
                  following such record date, by multiplying the Conversion
                  Price in effect immediately prior to the close of business on
                  the day prior to such record date by a fraction, the numerator
                  of which is the Current Market Price per share of Common Stock
                  on such record date less the aggregate amount of cash per
                  share so distributed and the denominator of which is such
                  Current Market Price; provided, however, that, if the
                  aggregate amount of cash per share is equal to or greater than
                  such Current Market Price, then, in lieu of the foregoing
                  adjustment, adequate provisions shall be made so that each
                  Registered Holder shall have the right to receive upon
                  conversion (with respect to each share of Common Stock issued
                  upon such conversion and in addition to the Common Stock
                  issuable upon conversion) the aggregate amount of cash per
                  share such Registered Holder would have received had such
                  Registered Holder's Series A Preferred Stock been converted
                  immediately prior to such record date. In no event shall the
                  Conversion Price be increased pursuant to this Paragraph
                  4(c)(v); provided, however, that if such distribution is not
                  so made, the Conversion Price shall be adjusted to be the
                  Conversion Price which would have been in effect if such
                  distribution had not been declared. For purposes of this
                  Paragraph 4(c)(v), such aggregate amount of cash per share
                  shall equal such sum divided by the number of shares of Common
                  Stock outstanding on such record date.
<PAGE>
                           (vi) The provisions of this Subsection 4(c) shall
                  similarly apply to all successive events of the type described
                  in this Subsection 4(c). Notwithstanding anything contained
                  herein to the contrary, no adjustment in the Conversion Price
                  shall be required unless such adjustment would require an
                  increase or decrease of at least 1% in the Conversion Price
                  then in effect; provided, however, that any adjustments which
                  by reason of this Paragraph 4(c)(vi) are not required to be
                  made shall be carried forward and taken into account in any
                  subsequent adjustment. All calculations under this Section 4
                  shall be made by the Corporation and shall be made to the
                  nearest cent or to the nearest one hundredth of a share, as
                  the case may be, and the transfer agent shall be entitled to
                  rely conclusively thereon. Except as provided in this Section
                  4, no adjustment in the Conversion Price will be made for the
                  issuance of Common Stock or any securities convertible into or
                  exchangeable for Common Stock or carrying the right to
                  purchase Common Stock or any securities so convertible or
                  exchangeable.

                           (vii) Whenever the Conversion Price is adjusted as
                  provided herein, the Corporation shall promptly file with the
                  transfer agent an Officers' Certificate setting forth the
                  Conversion Price in effect after such adjustment and setting
                  forth a brief statement of the facts requiring such
                  adjustment. Promptly after delivery of such Officers'
                  Certificate, the Corporation shall give or cause to be given
                  to each Registered Holder a notice of such adjustment of the
                  Conversion Price setting forth the adjusted Conversion Price
                  and the date on which such adjustment becomes effective.

                           (viii) Notwithstanding anything contained herein to
                  the contrary, in any case in which this Subsection 4(c)
                  provides that an adjustment in the Conversion Price shall
                  become effective immediately after a record date for an event,
                  the Corporation may defer until the occurrence of such event
                  (i) issuing to the Registered Holder of any Series A Preferred
                  Stock converted after such record date and before the
                  occurrence of such event the additional shares of Common Stock
                  issuable upon such conversion by reason of the adjustment
                  required by such event over and above the number of shares of
                  Common Stock issuable upon such conversion before giving
                  effect to such adjustment and (ii) paying to such Registered
                  Holder any amount in cash in lieu of any fractional share of
                  Common Stock pursuant to Subsection 4(d).

                  (ix) Notwithstanding any other provision hereof, no adjustment
                  to the Conversion Price shall be made upon the issuance or
                  exercise or conversion of (1) options or warrants to purchase,
                  in the aggregate, up to 25% of the securities sold in the
                  offerings of securities of the Corporation described in the
                  Original Offer to Exchange or any options or warrants
                  described in the Amendment in respect of the Alternative
                  Equity Offering, in each case issued to (or to the designee
                  of) any placement agent or financial advisor (such options or
                  warrants, the "Offering Warrants"), (2) any equity securities
                  or warrants of the Corporation (including, without limitation,
                  the Series A Preferred Stock, warrants and equity securities
                  underlying warrants) issued in exchange for 9% Convertible
                  Subordinated
<PAGE>
                  Notes due 2004 (the "9% Notes") of the Corporation or accrued
                  interest thereon or pursuant to the conversion or exercise
                  provisions thereof, (3) any warrants issued in connection with
                  the offerings described in the Original Offer to Exchange or
                  the Amendment (collectively, the "Offering"), (4) any warrants
                  issued to Forum Capital Markets, LLC ("Forum") in exchange for
                  or in addition to, or any amendment to, any warrants held by
                  Forum, in each case, pursuant to a letter agreement dated
                  January 5, 1998, between the Corporation and Forum, and any
                  other warrants to purchase Common Stock or shares of Common
                  Stock issued to Forum or its designee, (5) any Series A
                  Preferred Stock issued in the Offering, (6) any Capital Stock
                  issued or cash paid as dividends on the Series A Preferred
                  Stock or (7) any Capital Stock issued or cash paid upon the
                  mandatory conversion or redemption of any Series A Preferred
                  Stock in accordance with Section 5 of this Certificate of
                  Designation.

                  (d) No Fractional Shares. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon conversion
of Series A Preferred Stock. If more than one certificate evidencing shares of
Series A Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock so surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of such aggregate number of shares
of Series A Preferred Stock, the Corporation may elect, in its sole discretion,
independently for each holder, whether such number of shares of Common Stock
will be rounded to the nearest whole share (with a .5 of a share rounded upward)
or whether such holder will be given cash, in lieu of any fractional share, in
an amount equal to the same fraction of the Market Price of the Common Stock as
of the close of business on the day of conversion.

                  (e) [Reserved]

                  (f) Reservation of Shares; Transfer Taxes, Etc. The
Corporation shall at all times reserve and keep available, out of its authorized
and unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the Series A Preferred Stock, such number of shares of its Common
Stock free of preemptive rights as shall be sufficient to effect the conversion
of all shares of Series A Preferred Stock from time to time outstanding. The
Corporation shall use its best efforts from time to time, in accordance with the
laws of the State of Delaware to increase the authorized number of shares of
Common Stock if at any time the number of shares of authorized, unissued and
unreserved Common Stock shall not be sufficient to permit the conversion of all
the then-outstanding shares of Series A Preferred Stock.

                  The Corporation shall pay any and all issue or other taxes
(excluding any income taxes) that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of the Series A Preferred
Stock. The Corporation shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue or delivery of
Common Stock (or other securities or assets) in a name other than that in which
the shares of Series A Preferred Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount
<PAGE>
of such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid or need not be paid.

                  (g) Prior Notice of Certain Events. In case:

                           (i) the Corporation shall declare any dividend (or
                  any other distribution); or

                           (ii) the Corporation shall authorize the granting to
                  the holders of Common Stock of rights or warrants to subscribe
                  for or purchase any shares of stock of any class or of any
                  other rights or warrants; or

                           (iii) of any reclassification of Common Stock (other
                  than a subdivision or combination of the outstanding Common
                  Stock, or a change in par value, or from par value to no par
                  value, or from no par value to par value); or

                           (iv) of any consolidation or merger to which the
                  Corporation is a party and for which approval of any
                  stockholders of the Corporation shall be required, or of the
                  sale or transfer of all or substantially all of the assets of
                  the Corporation or of any compulsory share exchange whereby
                  the Common Stock is converted into other securities, cash or
                  other property; or

                           (v) of any Liquidation Event;

then the Corporation shall cause to be filed with the transfer agent for the
Series A Preferred Stock, and shall cause to be mailed to the Registered
Holders, at their last addresses as they shall appear upon the stock transfer
books of the Corporation, at least 20 days prior to the applicable record date
hereinafter specified, a notice stating (x) the date on which a record (if any)
is to be taken for the purpose of such dividend. distribution or granting of
rights or warrants or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
rights or warrants are to be determined and a description of the cash,
securities or other property to be received by such holders upon such dividend,
distribution or granting of rights or warrants or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange or
Liquidation Event is expected to become effective, the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such exchange or Liquidation Event and the consideration, including securities
or other property, to be received by such holders upon such exchange; provided,
however, that no failure to mail such notice or any defect therein or in the
mailing thereof shall affect the validity of the corporate action required to be
specified in such notice.

                  (h) Other Changes in Conversion Rate. The Corporation from
time to time may increase the Conversion Rate by any amount for any period of
time if the period is at least 20 days and if the increase is irrevocable during
the period. Whenever the Conversion Rate is so increased, the Corporation shall
mail to the Registered Holders a notice of the increase at least 15 days before
the date the increased Conversion Rate takes effect, and such notice shall
<PAGE>
state the increased Conversion Rate and the period it will be in effect.

                  The Corporation may make such increases in the Conversion
Rate, in addition to those required or allowed by this Section 4, as shall be
determined by it, as evidenced by a resolution of the Board of Directors, to be
advisable in order to avoid or diminish any income tax to holders of Common
Stock resulting from any dividend or distribution of stock or issuance of rights
or warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes.

                  Notwithstanding anything to the contrary herein, in no case
shall the Conversion Price be adjusted to an amount less than $.001 per share,
the current par value of the Common Stock into which the Series A Preferred
Stock is convertible.

                  (i) Ambiguities/Errors. The Board of Directors of the
Corporation shall have the power to resolve any ambiguity or correct any error
in the provisions relating to the convertibility of the Series A Preferred
Stock, and its actions in so doing shall be final and conclusive.

                  5. Mandatory Conversion and Redemption. (a) At any time after
the expiration of 12 months after the Alternative Equity Closing Date, the
Corporation at its option, may cause the Series A Preferred Stock to be
converted in whole or in part, on a pro rata basis, into fully paid and
nonassessable shares of Common Stock using a conversion price equal to 200% of
the Stated Common Price if the Closing Bid Price (or, if the price referenced in
the definition of Closing Bid Price cannot be determined, the Fair Market Value)
of the Common Stock shall have equalled or exceeded 250% of the Conversion Price
for at least 20 trading days in any 30 consecutive trading day period ending
three days prior to the date of notice of conversion (such event, the "Market
Trigger"). Any shares of Series A

Preferred Stock so converted shall be treated as having been surrendered by the
holder thereof for conversion pursuant to Section 4 on the date of such
mandatory conversion (unless previously converted at the option of the holder).

                  (b) At any time after April 1, 2000, the Corporation, at its
option, may redeem the Series A Preferred Stock for cash equal to the Dividend
Base Amount at such time, if the Market Trigger has occurred in the period
ending three days prior to the date of notice of redemption (unless previously
converted at the option of the holder).

                  (c) No greater than 60 nor fewer than 20 days prior to the
date of any such mandatory conversion or redemption, notice by first class mail,
postage prepaid, shall be given to the holders of record of the Series A
Preferred Stock to be converted or redeemed, addressed to such holders at their
last addresses as shown on the stock transfer books of the Corporation. Each
such notice shall specify the date fixed for conversion or redemption, the place
or places for surrender of shares of Series A Preferred Stock and the then
effective Conversion Rate pursuant to Section 4.

                  Any notice which is mailed as herein provided shall be
conclusively presumed to have been duly given by the Corporation on the date
deposited in the mail, whether or not
<PAGE>
the holder of the Series A Preferred Stock receives such notice; and failure
properly to give such notice by mail, or any defect in such notice, to the
holders of the shares to be converted or redeemed shall not affect the validity
of the proceedings for the conversion or redemption of any other shares of
Series A Preferred Stock. On or after the date fixed for conversion or
redemption (the "Take-Out Date") as stated in such notice, each holder of shares
called to be converted or redeemed shall surrender the certificate evidencing
such shares to the Corporation at the place designated in such notice for
conversion or redemption. After the mailing of such notice, but before the
Take-Out Date as stated therein, all rights whatsoever with respect to the
shares so called for conversion or redemption (except the right of the holders
to convert such shares pursuant to Section 4 and to have such shares converted
or redeemed, as the case may be, upon surrender of their certificates therefor,
pursuant to this Section 5) shall terminate. On or after the Take-Out Date,
notwithstanding that the certificates evidencing any shares properly called for
conversion or redemption shall not have been surrendered, such shares shall no
longer be deemed outstanding and all rights whatsoever with respect to the
shares so called for conversion or redemption (except the right of the holders
to have such shares converted or redeemed, as the case may be, upon surrender of
their certificates therefor, pursuant to this Section 5) shall terminate.

                  6. Outstanding Shares. For purposes of this Certificate of
Designation, a share of Series A Preferred Stock, when issued, shall be deemed
outstanding except (i) from the date, or the deemed date, of surrender of
certificates evidencing shares of Series A Preferred Stock, all shares of Series
A Preferred Stock converted into Common Stock or redeemed pursuant to Section 5
and (ii) from the date of registration of transfer, all shares of Series A
Preferred Stock held of record by the Corporation or any subsidiary of the
Corporation.

                  7. Class Voting Rights. The Corporation shall not, without the
affirmative vote or consent of the holders of at least 50% of all outstanding
Series A Preferred Stock, voting separately as a class, (i) amend, alter or
repeal any provision of the Certificate of Incorporation or the Bylaws of the
Corporation so as adversely to affect the relative rights, preferences,
qualifications, limitations or restrictions of the Series A Preferred Stock (it
being understood that the issuance of securities ranking prior to, or pari passu
with, the Series A Preferred Stock (A) upon a Liquidation Event or (B) with
respect to the payment of dividends or distributions shall not be considered
adversely to affect such relative rights, preferences, qualifications,
limitations or restrictions); or (ii) authorize or issue, or increase the
authorized amount of, Series A Preferred Stock, other than Series A Preferred
Stock issuable in connection with the

Offering, issuable in exchange for 9% Notes or accrued interest thereon or
issuable as dividends on Series A Preferred Stock.

                  8. Status of Acquired Shares. Shares of Series A Preferred
Stock received upon conversion or redemption pursuant to Section 4 or Section 5
or otherwise acquired by the Corporation will be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
class, and may thereafter be issued, but not as shares of Series A Preferred
Stock.

                  9. Preemptive Rights. The Series A Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any securities
of the Corporation.
<PAGE>
                  10. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such changes as
shall be necessary to render the provision in question effective and valid under
applicable law.

                  11. Restrictions on Change of Control. Notwithstanding
anything to the contrary contained in this Certificate of Designation, without
the prior written consent of the Corporation, so long as any 9% Notes remain
outstanding under that certain Indenture dated as of March 26, 1997 (as amended,
the "Indenture") in respect of the 9% Notes, no holder of Series A Preferred
Stock shall have voting rights granted hereunder, be entitled to receive any
voting securities of the Corporation pursuant hereto or be entitled to exercise
any of the conversion rights set forth herein (each, a "Restricted Event"), to
the extent that any such Restricted Event could, in the Corporation's reasonable
judgment, either alone or in conjunction with other issuances or holdings of
capital stock, warrants or convertible securities of the Corporation, result in
a Change of Control (as defined in the Indenture).

                            [Signature page follows]
<PAGE>
                  IN WITNESS WHEREOF, E. Andrews Grinstead, III, President and
Chief Executive Officer of the Corporation, acting for and on behalf of the
Corporation, has hereunto subscribed his name this 5th day of May, 1998.

                                 HYBRIDON, INC.

                                 By: /s/ E. Andrews Grinstead, III
                                    ------------------------------------------
                                 Name:    E. Andrews Grinstead, III
                                 Title:  President and Chief Executive Officer
<PAGE>
        CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                                 HYBRIDON, INC.

It is hereby certified that:

         1. The name of the corporation (hereinafter called the "Corporation")
is Hybridon, Inc.

         2. The Certificate of Incorporation of the Corporation is hereby
amended by inserting a new sentence at the end of paragraph 4 of Subsection A of
Articles FOURTH thereof so that said paragraph as so amended shall read as
follows:

                  "4. LIQUIDATION. Upon the dissolution or liquidation of the
         Corporation, whether voluntary or involuntary, holders of Common Stock
         will be entitled to receive all assets of the Corporation available for
         distribution to its stockholders, subject to any preferential rights of
         any then outstanding Preferred Stock. Notwithstanding the foregoing,
         and notwithstanding any amendments to, or resolutions of the Board of
         Directors in connection with, this Certificate of Incorporation, the
         transaction between the Corporation and Boston Biosystems, Inc.
         pursuant to that certain Asset Purchase Agreement of June 29, 2000,
         shall not constitute a dissolution or liquidation of the Corporation
         such as would entitle any holder of the Series A Preferred Stock to a
         preferred distribution."

3.       Paragraph 3 of the Certificate of Designation of the Corporation shall
         be amended by inserting a new sentence at the end of the paragraph such
         that said paragraph shall read as follows:

                  "3(c) Notwithstanding the foregoing, and notwithstanding any
         amendments to, or resolutions of the Board of Directors in connection
         with, this Certificate of Incorporation or Certificate of Designation,
         the transaction between the Corporation and Boston Biosystems, Inc.
         pursuant to that certain Asset Purchase Agreement dated as of June 29,
         2000, shall not constitute a Liquidation Event of the Corporation such
         as would entitle any holder of any series of Series A Preferred Stock
         to any preferred distribution."
<PAGE>
4.       Every other Article and provision in the Certificate of Incorporation
         of the Corporation remains in full force and effect.

5.       The amendment of the Certificate of Incorporation herein certified has
         been duly adopted in accordance with the provisions of Section 242 of
         the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to
be duly signed by its President this 19th day of September, 2000.

                                    HYBRIDON, INC.

                                    By:  /s/ Robert G. Andersen
                                         ---------------------------------------
                                             Robert G. Andersen, Vice President
                                             and CFO
<PAGE>
                           CERTIFICATE OF DESIGNATION
                                       for
                      SERIES B CONVERTIBLE PREFERRED STOCK
                                       of
                                 HYBRIDON, INC.

                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware

                  HYBRIDON, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), does hereby certify that
pursuant to the authority conferred on the board of directors of the Corporation
(the "Board of Directors") by the Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation") of the Corporation and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors adopted the following resolution establishing a
series of 85,000 shares of preferred stock of the Corporation designated as
"Series B Convertible Preferred Stock":

                  RESOLVED, that pursuant to the authority conferred on the
         Board of Directors by the Certificate of Incorporation, a series of
         preferred stock, par value $.01 per share, of the Corporation is hereby
         established and created, and that the designation and number of shares
         thereof and the voting and other powers, preferences and relative
         participating, optional or other special rights of, the shares of such
         series and the qualifications, limitations and restrictions thereof are
         as follows:

                      Series B Convertible Preferred Stock

                  1. Designation and Amount and Definitions. (a) There shall be
a series of Preferred Stock designated as "Series B Convertible Preferred Stock"
and the number of shares constituting such series shall be 85,000. Such series
is referred to herein as the "Series B Preferred Stock". Notwithstanding any
other provision in this Certificate of Designation of the Series B Preferred
Stock (the "Certificate of Designation") to the contrary, such series shall be
senior to the common stock, par value $.001 per share of the Corporation (the
"Common Stock"), and the Series A Convertible Preferred Stock, $.01 par value
per share, of the Corporation (the "Series A Preferred Stock"), with respect to
dividends and the distribution of assets upon liquidation, dissolution or
winding up. Such number of shares may be increased or decreased by resolution of
the Board of Directors, subject to the provisions of Section 7 hereof; provided,
however, that no decrease shall reduce the number of shares of Series B
Preferred Stock to fewer than the number of shares then issued and outstanding.
<PAGE>
                  (b) As used in this Certificate of Designation, except as
otherwise provided in Subsection 4(c), the following terms shall have the
following meanings:

                           (i) "Closing Bid Price" for any security for each
                  trading day shall be the reported per share closing bid price
                  of such security regular way on the Stock Market on such
                  trading day, or, if there were no transactions on such trading
                  day, the average of the reported closing bid and asked prices,
                  regular way, of such security on the relevant Stock Market on
                  such trading day.

                           (ii) "Fair Market Value" of any asset (including any
                  security) means the fair market value thereof as mutually
                  determined by the Corporation and the holders of a majority of
                  the Series B Preferred Stock then outstanding. If the
                  Corporation and the holders of a majority of the Series B
                  Preferred Stock then outstanding are unable to reach agreement
                  on any valuation matter, such valuation shall be submitted to
                  and determined by a nationally recognized independent
                  investment bank selected by the Board of Directors and the
                  holders of a majority of the Series B Preferred Stock then
                  outstanding (or, if such selection cannot be agreed upon
                  promptly, or in any event within ten (10) days, then such
                  valuation shall be made by a nationally recognized independent
                  investment banking firm selected by the American Arbitration
                  Association in New York City in accordance with its rules),
                  the costs of which valuation shall be paid for by the
                  Corporation.

                           (iii) "Market Price" shall mean the average Closing
                  Bid Price for twenty (20) consecutive trading days, ending
                  with the trading day prior to the date as of which the Market
                  Price is being determined (with appropriate adjustments for
                  subdivisions or combinations of shares effected during such
                  period), provided that if the prices referred to in the
                  definition of Closing Bid Price cannot be determined on any
                  trading day, the Closing Bid Price for such trading day will
                  be deemed to equal Fair Market Value of such security on such
                  trading day.

                           (iv) "Registered Holders" shall mean, at any time,
                  the holders of record of the Series B Preferred Stock.

                           (v) "Stock Market" shall mean, with respect to any
                  security, the principal national securities exchange on which
                  such security is listed or admitted to trading or, if such
                  security is not listed or admitted to trading on any national
                  securities exchange, shall mean The Nasdaq National Market
                  System ("NNM") or The Nasdaq SmallCap Market ("SCM" and,
                  together with NNM, "Nasdaq") or, if
<PAGE>
                  such security is not quoted on Nasdaq, shall mean the OTC
                  Bulletin Board or, if such security is not quoted on the OTC
                  Bulletin Board, shall mean the over-the-counter market as
                  furnished by any NASD member firm selected from time to time
                  by the Corporation for that purpose.

                           (vi) "Trading Day" shall mean a day on which the
                  relevant Stock Market is open for the transaction of business.

                  2. Dividends and Distributions. (a) The holders, as of the
Dividend Record Date (as defined below), of the Series B Preferred Stock shall
be entitled to receive semi-annual dividends on their respective shares of
Series B Preferred Stock (aggregating, for this purpose, all shares of Series B
Preferred Stock held of record or, to the Corporation's knowledge, beneficially
by such holder), payable, at the option of the Corporation, in cash or
additional shares of Series B Preferred Stock, at the rate of 8% per annum
(computed on the basis of a 360-day year of twelve 30 day months) of the
Dividend Base Amount (as defined below), payable semi-annually in arrears;
provided that, to the extent the declaration or payment of such dividend is
prohibited by applicable law, such dividend need not be paid but shall
nevertheless accrue and shall be paid promptly when applicable law permits. Such
dividends shall accrue (i) from March 6, 2001 for shares of Series B Preferred
Stock issued within thirty days of the date of the filing of this Certificate of
Designation, or (ii) from the date of issuance for shares of Series B Preferred
Stock issued after thirty days from the date of filing of this Certificate of
Designation, and shall be paid semi-annually on April 1 and October 1 of each
year or, if any such day is not a business day, on the next succeeding business
day. Such dividends shall be paid, at the election of the Corporation, either in
cash or additional duly authorized, fully paid and non assessable shares of
Series B Preferred Stock. In calculating the number of shares of Series B
Preferred Stock to be paid with respect to each dividend, the Series B Preferred
Stock shall be valued at $100.00 per share (subject to appropriate adjustment to
reflect any stock split, combination, reclassification or reorganization of the
Series B Preferred Stock). Notwithstanding the foregoing, the Corporation shall
not be required to issue fractional shares of Series B Preferred Stock; the
Corporation may elect, in its sole discretion, independently for each holder,
whether such number of shares (on an aggregated basis) will be rounded to the
nearest whole share (with .5 of a share rounded upward) or whether such holder
will be given cash in lieu of any fractional shares. The "Dividend Base Amount"
of a share of Series B Preferred Stock shall be $100.00 plus all accrued but
unpaid dividends (subject to appropriate adjustment to reflect any stock split,
combination, reclassification or reorganization of the Series B Preferred
Stock). The "Dividend Record Date" shall mean, for each semi-annual dividend,
the March 15 or September 15, as the case may be, immediately preceding the
dividend payment date.
<PAGE>
                  (b) In addition to the foregoing, subject to the rights of the
holders of any shares of any series or class of capital stock ranking prior, and
superior to, or pari passu with, the shares of Series B Preferred Stock with
respect to dividends, and prior to the rights of the holders of Common Stock,
Series A Preferred Stock and any other series or class of capital stock, the
holders of shares of Series B Preferred Stock shall be entitled to receive, as,
when and if declared by the Board of Directors, out of assets legally available
for that purpose, dividends or distributions in cash, stock or otherwise.

                  (c) The Corporation shall not declare or pay any dividend or
distribution on any Junior Stock (as defined below) of the Corporation unless
all dividends required by Section 2(a) have been or contemporaneously are
declared and paid, or declared and a sum sufficient for the payment thereof set
apart for such payment, on the Series B Preferred Stock.

                  (d) [Reserved]

                  (e) All dividends or distributions declared upon the Series B
Preferred Stock shall be declared pro rata per share.

                  (f) Any reference to "distribution" contained in this Section
2 shall not be deemed to include any distribution made in connection with or in
lieu of any Liquidation Event (as defined below).

                  (g) No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series B Preferred
Stock which may be in arrears (it being understood that this provision does not
alter the Corporation's obligations under Section 2(a)).

                  (h) So long as any shares of the Series B Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on any class or series of
stock of the Corporation ranking, as to dividends, on a parity with the Series B
Preferred Stock, for any period unless all dividends have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof set apart for such payment, on the Series B Preferred Stock.
When dividends are not paid in full or a sum sufficient for such payment is not
set apart, as aforesaid, upon the shares of the Series B Preferred Stock and any
other class or series of stock ranking on a parity as to dividends with the
Series B Preferred Stock, all dividends declared upon such other stock shall be
declared pro rata so that the amounts of dividends per share declared on the
Series B Preferred Stock and such other stock shall in all cases bear to each
other the same ratio that accrued dividends per share
<PAGE>
on the shares of the Series B Preferred Stock and on such other stock bear to
each other.

                  (i) So long as any shares of the Series B Preferred Stock are
outstanding, no other stock of the Corporation ranking on a parity with the
Series B Preferred Stock as to dividends or upon liquidation, dissolution or
winding up shall be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund or
otherwise for the purchase or redemption of any shares of any such stock) by the
Corporation unless the dividends, if any, accrued on all outstanding shares of
the Series B Preferred Stock shall have been paid or set apart for payment.

                  (j) "Junior Stock" shall mean the Common Stock, Series A
Preferred Stock, and any shares of preferred stock of any series or class of the
Corporation, whether presently outstanding or hereafter issued, which are junior
to the shares of Series B Preferred Stock with respect to (i) the distribution
of assets on any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, (ii) dividends or (iii) voting.

                  3. Liquidation Preference. (a) In the event of a (i)
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, (ii) a sale or other disposition of all or substantially all of the
assets of the Corporation or (iii) any consolidation, merger, combination,
reorganization or other transaction in which the Corporation is not the
surviving entity or shares of Common Stock constituting in excess of 50% of the
voting power of the Corporation are exchanged for or changed into stock or
securities of another entity, cash and/or any other property (a "Merger
Transaction") (items (i), (ii) and (iii) of this sentence being collectively
referred to as a "Liquidation Event"), after payment or provision for payment of
debts and other liabilities of the Corporation, the holders of the Series B
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, whether such
assets are capital, surplus, or earnings, before any payment or declaration and
setting apart for payment of any amount shall be made in respect of any Junior
Stock of the Corporation, an amount equal to the Dividend Base Amount at such
time; provided, however, in the case of a Merger Transaction, such payment may
be made in cash, property (valued as provided in Subsection 3(b)) and/or
securities (valued as provided in Subsection 3(b)) of the entity surviving such
Merger Transaction. In the case of property or in the event that any such
securities are subject to an investment letter or other similar restriction on
transferability, the value of such property or securities shall be determined by
agreement between the Corporation and the holders of a majority of the Series B
Preferred Stock then outstanding. If upon any Liquidation Event, whether
voluntary or involuntary, the assets to be distributed to the holders of the
Series B Preferred Stock shall be insufficient to
<PAGE>
permit the payment to such shareholders of the full preferential amounts
aforesaid, then all of the assets of the Corporation to be distributed shall be
so distributed ratably to the holders of the Series B Preferred Stock on the
basis of the number of shares of Series B Preferred Stock held. Notwithstanding
item (iii) of the first sentence of this Subsection 3(a), any consolidation,
merger, combination, reorganization or other transaction in which the
Corporation is not the surviving entity but the stockholders of the Corporation
immediately prior to such transaction own in excess of 50% of the voting power
of the corporation surviving such transaction and own amongst themselves such
interest in substantially the same proportions as prior to such transaction,
shall not be considered a Liquidation Event provided that the surviving
corporation shall make appropriate provisions to ensure that the terms of this
Certificate of Designation survive any such transaction. All shares of Series B
Preferred Stock shall rank as to payment upon the occurrence of any Liquidation
Event senior to the Common Stock, the Series A Preferred Stock, and, unless the
terms of such series shall provide otherwise, senior to all other series of the
Corporation's preferred stock.

                  (b) Any securities or other property to be delivered to the
holders of the Series B Preferred Stock pursuant to Subsection 3(a) hereof shall
be valued as follows:

                           (i) Securities not subject to an investment letter or
                  other similar restriction on free marketability:

                                    (A) If actively traded on a Stock Market,
                  the per share value shall be deemed to be the Market Price of
                  such securities as of the third day prior to the date of
                  valuation.

                                    (B) If not actively traded on a Stock
                  Market, the value shall be the Fair Market Value of such
                  securities.

                           (ii) For securities for which there is an active
                  public market but which are subject to an investment letter or
                  other restrictions on free marketability, the value shall be
                  the Fair Market Value thereof, determined by discounting
                  appropriately the per share Market Price thereof.

                           (iii) For all other securities, the value shall be
                  the Fair Market Value thereof.

                  4.  Conversion.
<PAGE>
                  (a) Right of Conversion. The shares of Series B Preferred
Stock are convertible, in whole or in part, at the option of the holder thereof
and upon notice to the Corporation as set forth in Subsection 4(b), into fully
paid and nonassessable shares of Common Stock and such other securities and
property as hereinafter provided. The initial conversion price per share of
Common Stock (the "Conversion Price"), shall be $.50, subject to adjustment as
provided herein. The rate at which each share of Series B Preferred Stock is
convertible at any time into Common Stock (the "Conversion Rate") shall be
determined by dividing the then existing Conversion Price (determined in
accordance with this Section 4, including the last paragraph hereof) into the
Dividend Base Amount.

                  (b) Conversion Procedures. Any holder of shares of Series B
Preferred Stock desiring to convert such shares into Common Stock shall
surrender the certificate or certificates evidencing such shares of Series B
Preferred Stock at the office of the transfer agent for the Series B Preferred
Stock, which certificate or certificates, if the Corporation shall so require,
shall be duly endorsed to the Corporation or in blank, or accompanied by proper
instruments of transfer to the Corporation or in blank, accompanied by
irrevocable written notice to the Corporation that the holder elects so to
convert such shares of Series B Preferred Stock and specifying the name or names
(with address) in which a certificate or certificates evidencing shares of
Common Stock are to be issued. The Corporation need not deem a notice of
conversion to be received unless the holder complies with all the provisions
hereof. The Corporation will instruct the transfer agent (which may be the
Corporation) to make a notation of the date that a notice of conversion is
received, which date of receipt shall be deemed to be the date of receipt for
purposes hereof.

                  The Corporation shall, as soon as practicable after such
deposit of certificates evidencing shares of Series B Preferred Stock
accompanied by the written notice and compliance with any other conditions
herein contained, deliver at such office of such transfer agent to the person
for whose account such shares of Series B Preferred Stock were so surrendered,
or to the nominee or nominees of such person, certificates evidencing the number
of full shares of Common Stock to which such person shall be entitled as
aforesaid, subject to Section 4(d). Subject to the following provisions of this
paragraph, such conversion shall be deemed to have been made as of the date of
such surrender of the shares of Series B Preferred Stock to be converted, and
the person or persons entitled to receive the Common Stock deliverable upon
conversion of such Series B Preferred Stock shall be treated for all purposes as
the record holder or holders of such Common Stock on such date; provided,
however, that the Corporation shall not be required to convert any shares of
Series B Preferred Stock while the stock transfer books of the Corporation are
closed for any purpose, but the surrender of Series B Preferred Stock for
conversion during any period while such books are so closed shall become
effective for
<PAGE>
conversion immediately upon the reopening of such books as if the surrender had
been made on the date of such reopening, and the conversion shall be at the
conversion rate in effect on such date. No adjustments in respect of any
dividends on shares surrendered for conversion or any dividend on the Common
Stock issued upon conversion shall be made upon the conversion of any shares of
Series B Preferred Stock.

                  The Corporation shall at all times, reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of Series B Preferred Stock,
such number of shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding shares of the Series B Preferred
Stock.

                  All notices of conversion shall be irrevocable; provided,
however, that if the Corporation has sent notice of an event pursuant to
Subsection 4(g) hereof, a holder of Series B Preferred Stock may, at its
election, provide in its notice of conversion that the conversion of its shares
of Series B Preferred Stock shall be contingent upon the occurrence of the
record date or effectiveness of such event (as specified by such holder),
provided that such notice of conversion is received by the Corporation prior to
such record date or effective date, as the case may be.

                  (c) Adjustment of Conversion Rate and Conversion Price.

                           (i) As used in this Subsection 4(c), the following
                  terms shall have the following meanings:

                           "Capital Stock" of any Person means the Common Stock
                  or Preferred Stock of such Person. Unless otherwise stated
                  herein or the context otherwise requires, "Capital Stock"
                  means Capital Stock of the Corporation; "Common Stock" of any
                  Person other than the Corporation means the common equity
                  (however designated), including, without limitation, common
                  stock or partnership or membership interests of, or
                  participation or interests in such Person (or equivalents
                  thereof).

                           "Common Stock" of the Corporation means the Common
                  Stock, par value $.001 per share, of the Corporation, any
                  successor class or classes of common equity (however
                  designated) of the Corporation into or for which such Common
                  Stock may hereafter be converted, exchanged or reclassified
                  and any class or classes of common equity (however designated)
                  of the Corporation which may be distributed or issued with
                  respect to such Common Stock or successor class of classes to
                  holders thereof generally. Unless otherwise stated herein or
                  the
<PAGE>
                  context requires otherwise, "Common Stock" means Common Stock
                  of the Corporation;

                           "Current Market Price" means, when used with respect
                  to any security as of any date, the last sale price, regular
                  way, or, in case no such sale takes place on such date, the
                  average of the closing bid and asked prices, regular way, of
                  such security in either case as reported for consolidated
                  transactions on the New York Stock Exchange or, if such
                  security is not listed or admitted to trading on the New York
                  Stock Exchange, as reported for consolidated transactions with
                  respect to securities listed on the principal national
                  securities exchange on which such security is listed or
                  admitted to trading or, if such security is not listed or
                  admitted to trading on any national securities exchange, as
                  reported on the Nasdaq National Market, or, if such security
                  is not listed or admitted to trading on the Nasdaq National
                  Market, as reported on the Nasdaq SmallCap Market, or if such
                  security is not listed or admitted to trading on any national
                  securities exchange or the Nasdaq National Market or the
                  Nasdaq SmallCap Market, the average of the high bid and low
                  asked prices of such security in the over-the-counter market,
                  as reported by the National Association of Securities Dealers,
                  Inc. Automated Quotations System or such other system then in
                  use or, if such security is not quoted by any such
                  organization, the average of the closing bid and asked prices
                  of such security furnished by an NASD member firm selected by
                  the Corporation. If such security is not quoted by any such
                  organization and no such NASD member firm is able to provide
                  such prices, the Current Market Price of such security shall
                  be the Fair Market Value thereof;

                           "Fair Market Value" means, at any date as to any
                  asset, Property or right (including without limitation,
                  Capital Stock of any Person, evidence of indebtedness or other
                  securities, but excluding cash), the fair market value of such
                  item as determined in good faith by the Board of Directors,
                  whose determination shall be conclusive; provided, however,
                  that such determination is described in an Officers'
                  Certificate filed with the transfer agent and that, if there
                  is a Current Market Price for such item on such date, "Fair
                  Market Value" means such Current Market Price (without giving
                  effect to the last sentence of the definition thereof);

                           "GAAP" means, as of any date, generally accepted
                  accounting principles in the United States and does not
                  include any
<PAGE>
                  interpretations or regulations that have been proposed but
                  that have not become effective;

                           "Officer" means, with respect to any Person, the
                  Chairman of the Board, the Chief Executive Officer, the
                  President, the Chief Operating Officer, the Chief Financial
                  Officer, the Treasurer, any Assistant Treasurer, the
                  Controller, the Secretary, any Assistant Secretary or any Vice
                  President of such Person;

                           "Officers' Certificate" means a certificate signed on
                  behalf of the Corporation by two Officers, one of whom must be
                  the Chairman of the Board, the President, the Treasurer or a
                  Vice-President of the Corporation;

                           "Person" means any individual, corporation,
                  partnership, association, trust or any other entity or
                  organization, including a government or political subdivision
                  or any agency or instrumentality thereof;

                           "Preferred Stock" of any Person means the class or
                  classes of equity, ownership or participation interests
                  (however designated) in such Person, including, without
                  limitation, stock, share, partnership and membership
                  interests, which are preferred as to the payment of dividends
                  or distributions by, or as to the distribution of assets upon
                  any voluntary or involuntary liquidation or dissolution of,
                  such Person (or equivalent thereof) over interests of any
                  other class of interests of such Person. Unless otherwise
                  stated herein or the context otherwise requires, "Preferred
                  Stock" means Preferred Stock of the Corporation;

                           "Property" of any Person means any and all types of
                  real, personal, tangible, intangible or mixed property owned
                  by such Person whether or not included on the most recent
                  consolidated balance sheet of such Person in accordance with
                  GAAP;

                           "Subsidiary" of a Person on any date means any other
                  Person of whom such Person owns, directly or indirectly
                  through a Subsidiary or Subsidiaries of such Person, Capital
                  Stock with voting power, acting independently and under
                  ordinary circumstances, entitling such person to elect a
                  majority of the board of directors or other governing body of
                  such other Person. Unless otherwise stated herein or the
                  context otherwise requires, "Subsidiary" means a Subsidiary of
                  the Corporation.
<PAGE>
                           (ii) If the Corporation shall (i) pay a dividend or
                  other distribution, in Common Stock, on any class of Capital
                  Stock of the Corporation, (ii) subdivide the outstanding
                  Common Stock into a greater number of shares by any means or
                  (iii) combine the outstanding Common Stock into a smaller
                  number of shares by any means including, without limitation, a
                  reverse stock split), then in each such case the Conversion
                  Price in effect immediately prior thereto shall be adjusted so
                  that the Registered Holder of any shares of Series B Preferred
                  Stock thereafter surrendered for conversion shall be entitled
                  to receive the number of shares of Common Stock that such
                  Registered Holder would have owned or have been entitled to
                  receive upon the happening of such event had such Series B
                  Preferred Stock been converted immediately prior to the
                  relevant record date or, if there is no such record date, the
                  effective date of such event. An adjustment made pursuant to
                  this Paragraph 4(c)(ii) shall become effective immediately
                  after the record date for the determination of stockholders
                  entitled to receive such dividend or distribution and shall
                  become effective immediately after the effective date of such
                  subdivision or combination, as the case may be.

                           (iii) If the Corporation shall (i) issue or
                  distribute (at a price per share less than the Current Market
                  Price per share of such Capital Stock on the date of such
                  issuance or distribution) Capital Stock generally to holders
                  of Common Stock or to holders of any class or series of
                  Capital Stock which is convertible into or exchangeable or
                  exercisable for Common Stock (excluding an issuance or
                  distribution of Common Stock described in Paragraph 4(c)(ii))
                  or (ii) issue or distribute generally to such holders rights,
                  warrants, options or convertible or exchangeable securities
                  entitling the holder thereof to subscribe for, purchase,
                  convert into or exchange for Capital Stock at a price per
                  share less than the Current Market Price per share of such
                  Capital Stock on the date of issuance or distribution, then,
                  in each such case, at the earliest of (A) the date the
                  Corporation enters into a firm contract for such issuance or
                  distribution, (B) the record date for the determination of
                  stockholders entitled to receive any such Capital Stock or any
                  such rights, warrants, options or convertible or exchangeable
                  securities or (C) the date of actual issuance or distribution
                  of any such Capital Stock or any such rights, warrants,
                  options or convertible or exchangeable securities, the
                  Conversion Price shall be reduced by multiplying the
                  Conversion Price in effect immediately prior to such earliest
                  date by:
<PAGE>
                                    (A) if such Capital Stock is Common Stock, a
                           fraction the numerator of which is the number of
                           shares of Common Stock outstanding, on such earliest
                           date plus the number of shares of Common Stock which
                           could be purchased at the Current Market Price per
                           share of Common Stock on the date of such issuance or
                           distribution with the aggregate consideration (based
                           on the Fair Market Value thereof) received or
                           receivable by the Corporation either (A) in
                           connection with such issuance or distribution or (B)
                           upon the conversion, exchange, purchase or
                           subscription of all such rights, warrants, options or
                           convertible or exchangeable securities (the
                           "Aggregate Consideration"), and the denominator of
                           which is the number of shares of Common Stock
                           outstanding on such earliest date plus the number of
                           shares of Common Stock to be so issued or distributed
                           or to be issued upon the conversion, exchange,
                           purchase or subscription of all such rights,
                           warrants, options or convertible or exchangeable
                           securities; or

                                    (B) if such Capital Stock is other than
                           Common Stock, a fraction the numerator of which is
                           the Current Market Price per share of Common Stock on
                           such earliest date minus an amount equal to (A) the
                           difference between (1) the Current Market Price per
                           share of such Capital Stock multiplied by the number
                           of shares of such Capital Stock to be so issued and
                           (2) the Aggregate Consideration, divided by (B) the
                           number of shares of Common Stock outstanding on such
                           date, and the denominator of which is the Current
                           Market Price per share of Common Stock on such
                           earliest date.

                  Such adjustment shall be made successively whenever any such
                  Capital Stock, rights, warrants, options or convertible or
                  exchangeable securities are so issued or distributed. In
                  determining whether any rights, warrants, options or
                  convertible or exchangeable securities entitle the holders
                  thereof to subscribe for, purchase, convert into or exchange
                  for shares of such Capital Stock at less than such Current
                  Market Price, there shall be taken into account the Fair
                  Market Value of any consideration received or receivable by
                  the Corporation for such rights, warrants, options or
                  convertible or exchangeable securities. If any right, warrant,
                  option or convertible or exchangeable security, the issuance
                  of which resulted in an adjustment in the Conversion Price
                  pursuant to this Paragraph 4(c)(iii), shall expire and shall
                  not have been exercised, the Conversion Price shall
                  immediately upon such expiration be recomputed to the
                  Conversion Price which would have
<PAGE>
                  been in effect if such right, warrant, option or convertible
                  or exchangeable securities had never been distributed or
                  issued. Notwithstanding anything contained in this paragraph
                  to the contrary, (i) the issuance of Capital Stock upon the
                  exercise of such rights, warrants or options or the conversion
                  or exchange of such convertible or exchangeable securities
                  will not cause an adjustment in the Conversion Price if no
                  such adjustment would have been required at the time such
                  right, warrant, option or convertible or exchangeable security
                  was issued or distributed; provided, however, that, if the
                  consideration payable upon such exercise, conversion or
                  exchange and/or the Capital Stock receivable thereupon are
                  changed after the time of the issuance or distribution of such
                  right, warrant, option or convertible or exchangeable security
                  then such change shall be deemed to be the expiration thereof
                  without having been exercised and the issuance or distribution
                  of new options, rights, warrants or convertible or
                  exchangeable securities and (ii) the issuance of convertible
                  preferred stock of the Corporation as a dividend on
                  convertible preferred stock of the Corporation will not cause
                  an adjustment in the Conversion Price if no such adjustment
                  would have been required at the time such underlying
                  convertible preferred stock was issued (or as a result of any
                  subsequent modification to the terms thereof) and the
                  conversion provisions of such convertible stock so issued as a
                  dividend are the same as in such underlying convertible
                  preferred stock.

                           Notwithstanding any contained in this Certificate of
                  Designation to the contrary, options, rights or warrants
                  issued or distributed by the Corporation, including options,
                  rights or warrants distributed prior to the date of filing of
                  this Certificate of Designation, to holders of Common Stock
                  generally which, until the occurrence of a specified event or
                  events (a "Trigger Event"), (i) are deemed to be transferred
                  with Common Stock, (ii) are not exercisable and (iii) are also
                  issued on a pro rata basis with respect to future issuances of
                  Common Stock, shall be deemed not to have been issued or
                  distributed for purposes of this Subsection 4(c) (and no
                  adjustment to the Conversion Price under this Subsection 4(c)
                  will be required) until the occurrence of the earliest Trigger
                  Event. Upon the occurrence of a Trigger Event, such options,
                  rights or warrants shall continue to be deemed not to have
                  been issued or distributed for purposes of this Subsection
                  4(c) (and no adjustment to the Conversion Price under this
                  Subsection 4(c) will be required) if and for so long as each
                  Registered Holder who thereafter converts such Registered
                  Holder's Series B Preferred Stock shall be entitled to receive
                  upon such conversion, in addition to the shares of Common
                  Stock issuable upon such conversion,
<PAGE>
                  a number of such options, rights or warrants, as the case may
                  be, equal to the number of options, rights or warrants to
                  which a holder of the number of shares of Common Stock equal
                  to the number of shares of Common Stock issuable upon
                  conversion of such Registered Holder's Series B Preferred
                  Stock is entitled to receive at the time of such conversion in
                  accordance with the terms and provisions of, and applicable
                  to, such options, rights or warrants. Upon the expiration of
                  any such options, rights or warrants or at such time, if any,
                  as a Registered Holder is not entitled to receive such
                  options, rights or warrants upon conversion of such Registered
                  Holder's Series B Preferred Stock, an adjustment (if any is
                  required) to the Conversion Price shall be made in accordance
                  with this Paragraph 4(c)(iii) with respect to the issuance of
                  all such options, rights and warrants as of the date of
                  issuance thereof, but subject to the provisions of the
                  preceding paragraph, if any such option, right or warrant,
                  including any such options right or warrants distributed prior
                  to the date of filing of this Certificate of Designation, are
                  subject to events, upon the occurrence of which such options,
                  rights or warrants become exercisable to purchase different
                  securities, evidence of indebtedness, cash, Properties or
                  other assets or different amounts thereof, then, subject to
                  the preceding provision of this paragraph, the date of the
                  occurrence of any and each such event shall be deemed to be
                  the date of distribution and record date with respect to new
                  options, right or warrants with such new purchase rights (and
                  a termination or expiration of the existing options, rights or
                  warrants without exercise thereof). In addition, in the event
                  of any distribution (or deemed distribution) of options,
                  rights or warrants, or any Trigger Event or other event of the
                  type described in the preceding sentence, that required (or
                  would have required but for the provisions of Paragraph
                  4(c)(vi) or this paragraph) an adjustment to the Conversion
                  Price under this Subsection 4(c) and such options, rights or
                  warrants shall thereafter have been redeemed or repurchased
                  without having been exercised, then the Conversion Price shall
                  be adjusted upon such redemption or repurchase to give effect
                  to such distribution, Trigger Event or other event, as the
                  case may, as though it had instead been a cash distribution,
                  equal on a per share basis to the result of the aggregate
                  redemption or repurchase price received by holders of such
                  options, rights or warrants divided by the number of shares of
                  Common Stock outstanding as of the date of such repurchase or
                  redemption, made to holders of Common Stock generally as of
                  the date of such redemption or repurchase.
<PAGE>
                           (iv) If the Corporation shall pay or distribute, as a
                  dividend or otherwise, generally to holders of Common Stock or
                  any class or series of Capital Stock which is convertible into
                  or exercisable or exchangeable for Common Stock any assets,
                  Properties or rights (including, without limitation, evidences
                  of indebtedness of the Corporation, any Subsidiary or any
                  other Person, cash or Capital Stock or other securities of the
                  Corporation, any Subsidiary or any other Person, but excluding
                  payments and distributions as described in Paragraphs 4(c)(ii)
                  or (iii), dividends and distributions in connection with a
                  Liquidation Event and distributions consisting solely of cash
                  described in Paragraph 4(c)(v)), then in each such case the
                  Conversion Price shall be reduced by multiplying the
                  Conversion Price in effect immediately prior to the date of
                  such payment or distribution by a fraction, the numerator of
                  which is the Current Market Price per share of Common Stock on
                  the record date for the determination of stockholders entitled
                  to receive such payment or distribution less the Fair Market
                  Value per share of Common Stock on such record date of the
                  assets, Properties or rights so paid or distributed, and the
                  denominator of which is the Current Market Price per share of
                  Common Stock on such record date. Such adjustment shall become
                  effective immediately after such record date. For purposes of
                  this Paragraph 4(c)(iv), such Fair Market Value per share
                  shall equal the aggregate Fair Market Value on such record
                  date of the assets, Properties or rights so paid or
                  distributed divided by the number of shares of Common Stock
                  outstanding on such record date. For all purposes of this
                  Certificate of Designation, adjustments to any security's
                  conversion or exercise price pursuant to such security's
                  original terms shall not be deemed a distribution or dividend
                  to holders thereof.

                           (v) If the Corporation shall, by dividend or
                  otherwise, make a distribution (other than in connection with
                  the liquidation, dissolution or winding up of the Corporation
                  in its entirety), generally to holders of Common Stock or any
                  class or series of Capital Stock which is convertible into or
                  exercisable or exchangeable for Common Stock, consisting
                  solely of cash where (x) the sum of (i) the aggregate amount
                  for such cash plus (ii) the aggregate amount of all cash so
                  distributed (by dividend or otherwise) to such holders within
                  the 12-month period ending on the record date for determining
                  stockholder entitled to receive such distribution with respect
                  to which no adjustment has been made to the Conversion Price
                  pursuant to this Paragraph 4(c)(v) exceeds (y) 10% of the
                  result of the multiplication of (1) the Current Market Price
                  per share of Common Stock on such record date times (2)
<PAGE>
                  the number of shares of Common Stock outstanding on such
                  record date, then the Conversion Price shall be reduced,
                  effective immediately prior to the opening of business on the
                  day following such record date, by multiplying the Conversion
                  Price in effect immediately prior to the close of business on
                  the day prior to such record date by a fraction, the numerator
                  of which is the Current Market Price per share of Common Stock
                  on such record date less the aggregate amount of cash per
                  share so distributed and the denominator of which is such
                  Current Market Price; provided, however, that, if the
                  aggregate amount of cash per share is equal to or greater than
                  such Current Market Price, then, in lieu of the foregoing
                  adjustment, adequate provisions shall be made so that each
                  Registered Holder shall have the right to receive upon
                  conversion (with respect to each share of Common Stock issued
                  upon such conversion and in addition to the Common Stock
                  issuable upon conversion) the aggregate amount of cash per
                  share such Registered Holder would have received had such
                  Registered Holder's Series B Preferred Stock been converted
                  immediately prior to such record date. In no event shall the
                  Conversion Price be increased pursuant to this Paragraph
                  4(c)(v); provided, however, that if such distribution is not
                  so made, the Conversion Price shall be adjusted to be the
                  Conversion Price which would have been in effect if such
                  distribution had not been declared. For purposes of this
                  Paragraph 4(c)(v), such aggregate amount of cash per share
                  shall equal such sum divided by the number of shares of Common
                  Stock outstanding on such record date.

                           (vi) The provisions of this Subsection 4(c) shall
                  similarly apply to all successive events of the type described
                  in this Subsection 4(c). Notwithstanding anything contained
                  herein to the contrary, no adjustment in the Conversion Price
                  shall be required unless such adjustment would require an
                  increase or decrease of at least 1% in the Conversion Price
                  then in effect; provided, however, that any adjustments which
                  by reason of this Paragraph 4(c)(vi) are not required to be
                  made shall be carried forward and taken into account in any
                  subsequent adjustment. All calculations under this Section 4
                  shall be made by the Corporation and shall be made to the
                  nearest cent or to the nearest one hundredth of a share, as
                  the case may be, and the transfer agent shall be entitled to
                  rely conclusively thereon. Except as provided in this Section
                  4, no adjustment in the Conversion Price will be made for the
                  issuance of Common Stock or any securities convertible into or
                  exchangeable for Common Stock or carrying the right to
                  purchase Common Stock or any securities so convertible or
                  exchangeable.
<PAGE>
                           (vii) Whenever the Conversion Price is adjusted as
                  provided herein, the Corporation shall promptly file with the
                  transfer agent an Officers' Certificate setting forth the
                  Conversion Price in effect after such adjustment and setting
                  forth a brief statement of the facts requiring such
                  adjustment. Promptly after delivery of such Officers'
                  Certificate, the Corporation shall give or cause to be given
                  to each Registered Holder a notice of such adjustment of the
                  Conversion Price setting forth the adjusted Conversion Price
                  and the date on which such adjustment becomes effective.

                           (viii) Notwithstanding anything contained herein to
                  the contrary, in any case in which this Subsection 4(c)
                  provides that an adjustment in the Conversion Price shall
                  become effective immediately after a record date for an event,
                  the Corporation may defer until the occurrence of such event
                  (i) issuing to the Registered Holder of any Series B Preferred
                  Stock converted after such record date and before the
                  occurrence of such event the additional shares of Common Stock
                  issuable upon such conversion by reason of the adjustment
                  required by such event over and above the number of shares of
                  Common Stock issuable upon such conversion before giving
                  effect to such adjustment and (ii) paying to such Registered
                  Holder any amount in cash in lieu of any fractional share of
                  Common Stock pursuant to Subsection 4(d).

                           (ix) Notwithstanding any other provision hereof, no
                  adjustment to the Conversion Price shall be made upon the
                  issuance or exercise or conversion of (1) any Capital Stock
                  issued or cash paid as dividends on the Series B Preferred
                  Stock, or (2) any Capital Stock issued or cash paid upon the
                  mandatory conversion or redemption of any Series B Preferred
                  Stock in accordance with Section 5 of this Certificate of
                  Designation.

                  (d) No Fractional Shares. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon conversion
of Series B Preferred Stock. If more than one certificate evidencing shares of
Series B Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series B Preferred
Stock so surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of such aggregate number of shares
of Series B Preferred Stock, the Corporation may elect, in its sole discretion,
independently for each holder, whether such number of shares of Common Stock
will be rounded to the nearest whole share (with a .5 of a share rounded upward)
or whether such holder will be given cash, in
<PAGE>
lieu of any fractional share, in an amount equal to the same fraction of the
Market Price of the Common Stock as of the close of business on the day of
conversion.

                  (e) [Reserved]

                  (f) Reservation of Shares; Transfer Taxes, Etc. The
Corporation shall at all times reserve and keep available, out of its authorized
and unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the Series B Preferred Stock, such number of shares of its Common
Stock free of preemptive rights as shall be sufficient to effect the conversion
of all shares of Series B Preferred Stock from time to time outstanding. The
Corporation shall use its best efforts from time to time, in accordance with the
laws of the State of Delaware to increase the authorized number of shares of
Common Stock if at any time the number of shares of authorized, unissued and
unreserved Common Stock shall not be sufficient to permit the conversion of all
the then-outstanding shares of Series B Preferred Stock.

                  The Corporation shall pay any and all issue or other taxes
(excluding any income taxes) that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of the Series B Preferred
Stock. The Corporation shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue or delivery of
Common Stock (or other securities or assets) in a name other than that in which
the shares of Series B Preferred Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid or need not be
paid.

                  (g) Prior Notice of Certain Events. In case:

                           (i) the Corporation shall declare any dividend (or
                  any other distribution); or

                           (ii) the Corporation shall authorize the granting to
                  the holders of Common Stock or the Series A Preferred Stock of
                  rights or warrants to subscribe for or purchase any shares of
                  stock of any class or of any other rights or warrants; or

                           (iii) of any reclassification of Common Stock (other
                  than a subdivision or combination of the outstanding Common
                  Stock, or a change in par value, or from par value to no par
                  value, or from no par value to par value); or
<PAGE>
   19

                           (iv) of any consolidation or merger to which the
                  Corporation is a party and for which approval of any
                  stockholders of the Corporation shall be required, or of the
                  sale or transfer of all or substantially all of the assets of
                  the Corporation or of any compulsory share exchange whereby
                  the Common Stock is converted into other securities, cash or
                  other property; or

                           (v) of any Liquidation Event;

then the Corporation shall cause to be filed with the transfer agent for the
Series B Preferred Stock, and shall cause to be mailed to the Registered
Holders, at their last addresses as they shall appear upon the stock transfer
books of the Corporation, at least twenty (20) days prior to the applicable
record date hereinafter specified, a notice stating (x) the date on which a
record (if any) is to be taken for the purpose of such dividend, distribution or
granting of rights or warrants or, if a record is not to be taken, the date as
of which the holders of Common Stock or Series A Preferred Stock of record to be
entitled to such dividend, distribution, rights or warrants are to be determined
and a description of the cash, securities or other property to be received by
such holders upon such dividend, distribution or granting of rights or warrants
or (y) the date on which such reclassification, consolidation, merger, sale,
transfer, share exchange or Liquidation Event is expected to become effective,
the date as of which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such exchange or Liquidation Event and the
consideration, including securities or other property, to be received by such
holders upon such exchange; provided, however, that no failure to mail such
notice or any defect therein or in the mailing thereof shall affect the validity
of the corporate action required to be specified in such notice.

                 (h) Other Changes in Conversion Rate. The Corporation from time
to time may increase the Conversion Rate by any amount for any period of time if
the period is at least 20 days and if the increase is irrevocable during the
period. Whenever the Conversion Rate is so increased, the Corporation shall mail
to the Registered Holders a notice of the increase at least 15 days before the
date the increased Conversion Rate takes effect, and such notice shall state the
increased Conversion Rate and the period it will be in effect.

                  The Corporation may make such increases in the Conversion
Rate, in addition to those required or allowed by this Section 4, as shall be
determined by it, as evidenced by a resolution of the Board of Directors, to be
advisable in order to avoid or diminish any income tax to holders of Common
Stock resulting from any dividend or distribution of stock or issuance of rights
or warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes.
<PAGE>
                  Notwithstanding anything to the contrary herein, in no case
shall the Conversion Price be adjusted to an amount less than $.001 per share,
the current par value of the Common Stock into which the Series B Preferred
Stock is convertible.

                  (i) Ambiguities/Errors. The Board of Directors of the
Corporation shall have the power to resolve any ambiguity or correct any error
in the provisions relating to the convertibility of the Series B Preferred
Stock, and its actions in so doing shall be final and conclusive.

                  5. Mandatory Conversion and Redemption. (a) In the event the
Corporation causes the Series A Preferred Stock to be converted in whole or in
part, into fully paid and nonassessable shares of Common Stock, then the
Corporation shall also convert the Series B Preferred Stock, in whole or in
part, on a pro rata basis among holders of the Series B Preferred Stock, into
fully paid and nonassessable shares of Common Stock using a conversion price of
$.50. Any shares of Series B Preferred Stock so converted shall be treated as
having been surrendered by the holder thereof for conversion pursuant to Section
4 on the date of such mandatory conversion (unless previously converted at the
option of the holder).

                  (b) If, at any time, the Corporation redeems the Series A
Preferred Stock, the Corporation may, at its option, redeem the Series B
Preferred Stock, in whole or in part, on a pro rata basis among holders of the
Series B Preferred Stock.

                  (c) No greater than 60 nor fewer than 20 days prior to the
date of any such mandatory conversion or redemption, notice by first class mail,
postage prepaid, shall be given to the holders of record of the Series B
Preferred Stock to be converted or redeemed, addressed to such holders at their
last addresses as shown on the stock transfer books of the Corporation. Each
such notice shall specify the date fixed for conversion or redemption, the place
or places for surrender of shares of Series B Preferred Stock and the then
effective Conversion Rate pursuant to Section 4.

                  Any notice which is mailed as herein provided shall be
conclusively presumed to have been duly given by the Corporation on the date
deposited in the mail, whether or not the holder of the Series B Preferred Stock
receives such notice; and failure properly to give such notice by mail, or any
defect in such notice, to the holders of the shares to be converted or redeemed
shall not affect the validity of the proceedings for the conversion or
redemption of any other shares of Series B Preferred Stock. On or after the date
fixed for conversion or redemption (the "Take-Out Date") as stated in such
notice, each holder of shares called to be converted or
<PAGE>
redeemed shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice for conversion or redemption.
After the mailing of such notice, but before the Take-Out Date as stated
therein, all rights whatsoever with respect to the shares so called for
conversion or redemption (except the right of the holders to convert such shares
pursuant to Section 4 and to have such shares converted or redeemed, as the case
may be, upon surrender of their certificates therefor, pursuant to this Section
5) shall terminate. On or after the Take-Out Date, notwithstanding that the
certificates evidencing any shares properly called for conversion or redemption
shall not have been surrendered, such shares shall no longer be deemed
outstanding and all rights whatsoever with respect to the shares so called for
conversion or redemption (except the right of the holders to have such shares
converted or redeemed, as the case may be, upon surrender of their certificates
therefor, pursuant to this Section 5) shall terminate.

                  6. Outstanding Shares. For purposes of this Certificate of
Designation, a share of Series B Preferred Stock, when issued, shall be deemed
outstanding except (i) from the date, or the deemed date, of surrender of
certificates evidencing shares of Series B Preferred Stock, all shares of Series
B Preferred Stock converted into Common Stock or redeemed pursuant to Section 5
and (ii) from the date of registration of transfer, all shares of Series B
Preferred Stock held of record by the Corporation or any subsidiary of the
Corporation.

                  7. Class Voting Rights. The Corporation shall not, without the
affirmative vote or consent of the holders of at least 50% of all outstanding
Series B Preferred Stock, voting separately as a class, (i) amend, alter or
repeal any provision of the Certificate of Incorporation or the Bylaws of the
Corporation so as to adversely affect the relative rights, preferences,
qualifications, limitations or restrictions of the Series B Preferred Stock;
(ii) authorize or issue, or increase the authorized amount of, Series B
Preferred Stock, other than Series B Preferred Stock issuable in exchange for 8%
Notes or accrued interest thereon or issuable as dividends on Series B Preferred
Stock; or (iii) issue securities ranking prior to, or pari passu with the Series
B Preferred Stock.

                  8. Status of Acquired Shares. Shares of Series B Preferred
Stock received upon conversion or redemption pursuant to Section 4 or Section 5
or otherwise acquired by the Corporation will be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
class, and may thereafter be issued, but not as shares of Series B Preferred
Stock.

                  9. Preemptive Rights. The Series B Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any securities
of the Corporation.
<PAGE>
                  10. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such changes as
shall be necessary to render the provision in question effective and valid under
applicable law.

                  IN WITNESS WHEREOF, Sudhir Agrawal, President and Acting Chief
Executive Officer of the Corporation, acting for and on behalf of the
Corporation, has hereunto subscribed his name this 15 day of March, 2001.

                             HYBRIDON, INC.

                             By:     //Sudhir Agrawal
                                ------------------------------------------------
                             Name:  Sudhir Agrawal
                             Title: President and Acting Chief Executive
                                    Officer
<PAGE>
                                 HYBRIDON, INC.

                           CERTIFICATE OF ELIMINATION
                     OF NUMBER OF SHARES OF PREFERRED STOCK
                                  DESIGNATED AS
                      SERIES B CONVERTIBLE PREFERRED STOCK

         Hybridon, Inc., a Delaware corporation (the "Corporation"), pursuant to
authority conferred upon the Board of Directors of the Corporation by the
Corporation's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and in accordance with the provisions of
Section 151(g) of the General Corporation Law of the State of Delaware (the
"Delaware Law"), certifies that the Board of Directors of the Corporation duly
adopted the following resolution:

"RESOLVED:                 That no shares of the Corporation's Series B
                           Convertible Preferred Stock (the "Series B Preferred
                           Stock") are outstanding and no shares of Series B
                           Preferred Stock will be issued subject to the
                           Certificate of Designation dated March 28, 2001 with
                           respect to such series (the "Series B Certificate of
                           Designation"); and that the proper officers of the
                           Corporation be and hereby are authorized and directed
                           in the name and on behalf of the Corporation to
                           execute and file a certificate with the Secretary of
                           State of the State of Delaware pursuant to Section
                           151(g) of the Delaware Law setting forth the text of
                           this resolution, upon the filing and effectiveness of
                           which all matters are set forth in the Series B
                           Certificate of Designation shall be deemed to have
                           been eliminated from the Certificate of Incorporation
                           and the 85,000 shares of Preferred Stock previously
                           designated as Series B Preferred Stock shall resume
                           their status as undesignated shares of Preferred
                           Stock available for future issuance in accordance
                           with the Certificate of Incorporation."

IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be affixed
hereto and this Certificate to be signed by its Chief Executive Officer this
10th day of December, 2001.

                                                     HYBRIDON, INC.

                                                     By:  /s/ Stephen R. Seiler
                                                     Stephen R. Seiler
                                                     Chief Executive Officer
<PAGE>
                           CERTIFICATE OF DESIGNATIONS
                                       OF
                  SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
                                       OF
                                 HYBRIDON, INC.
                         ------------------------------

Hybridon, Inc., a corporation organized and existing under the laws of the State
of Delaware (hereinafter called the "Corporation"), hereby certifies that the
following resolution was adopted by the Board of Directors of the Corporation at
a meeting duly called and held on December 10, 2001:

RESOLVED: That pursuant to the authority granted to and vested in the Board of
Directors of the Corporation (hereinafter called the "Board") in accordance with
the provisions of the Certificate of Incorporation, as amended, the Board hereby
creates a series of Preferred Stock, $.01 par value per share (the "Preferred
Stock"), of the Corporation and hereby states the designation and number of
shares, and fixes the relative rights, preferences and limitations thereof as
follows:

Series C Junior Participating Preferred Stock:

Section 1. Designation and Amount. The shares of such series shall be designated
as "Series C Junior Participating Preferred Stock" (the "Series C Preferred
Stock") and the number of shares constituting the Series C Preferred Stock shall
be one hundred thousand (100,000). Such number of shares may be increased or
decreased by resolution of the Board prior to issuance; provided, that no
decrease shall reduce the number of shares of Series C Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series C Preferred Stock.

Section 2. Dividends and Distributions.

(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
C Preferred Stock with respect to dividends, the holders of shares of Series C
Preferred Stock, in preference to the holders of Common Stock, par value $.001
per share (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board out
of funds of the Corporation legally available for the payment of dividends,
quarterly dividends payable in cash on the last day of each fiscal quarter of
the Corporation in each year (each such date being

                                       -1-
<PAGE>
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series C Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $10 or (b) subject to the
provision for adjustment hereinafter set forth, 1,000 times the aggregate per
share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series C Preferred Stock.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series C Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event. In
the event the Corporation shall at any time declare or pay any dividend on the
Series C Preferred Stock payable in shares of Series C Preferred Stock, or
effect a subdivision, combination or consolidation of the outstanding shares of
Series C Preferred Stock (by reclassification or otherwise than by payment of a
dividend in shares of Series C Preferred Stock) into a greater or lesser number
of shares of Series C Preferred Stock, then in each such case the amount to
which holders of shares of Series C Preferred Stock were entitled immediately
prior to such event under clause (b) of the first sentence of this Section 2(A)
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Series C Preferred Stock that were outstanding
immediately prior to such event and the denominator of which is the number of
shares of Series C Preferred Stock outstanding immediately after such event.

(B) The Corporation shall declare a dividend or distribution on the Series C
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock) and the Corporation shall pay such
dividend or distribution on the Series C Preferred Stock before the dividend or
distribution declared on the Common Stock is paid or set apart; provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the
Series C Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative on outstanding shares of
Series C Preferred Stock from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series C Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment

                                       -2-
<PAGE>
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series C
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
may fix a record date for the determination of holders of shares of Series C
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.

Section 3. Voting Rights. The holders of shares of Series C Preferred Stock
shall have the following voting rights:

(A) Subject to the provision for adjustment hereinafter set forth, each share of
Series C Preferred Stock shall entitle the holder thereof to 1,000 votes on all
matters submitted to a vote of the stockholders of the Corporation. In the event
the Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series C Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event. In the event the Corporation shall at any time declare or
pay any dividend on the Series C Preferred Stock payable in shares of Series C
Preferred Stock, or effect a subdivision, combination or consolidation of the
outstanding shares of Series C Preferred Stock (by reclassification or otherwise
than by payment of a dividend in shares of Series C Preferred Stock) into a
greater or lesser number of shares of Series C Preferred Stock, then in each
such case the number of votes per share to which holders of shares of Series C
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Series C Preferred Stock that were outstanding immediately prior to
such event and the denominator of which is the number of shares of Series C
Preferred Stock outstanding immediately after such event.

(B) Except as otherwise provided herein, in the Certificate of Incorporation or
by law, the holders of shares of Series C Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.

(C) (i) If at any time dividends on any Series C Preferred Stock shall be in
arrears in an amount equal to six quarterly dividends thereon, the holders of
the Series C Preferred Stock, voting as a separate series from all other series
of Preferred Stock and classes of capital stock, shall be entitled to elect two
members of the Board in addition to any Directors elected by any other series,
class or classes of securities and the authorized number of Directors

                                       -3-
<PAGE>
will automatically be increased by two. Promptly thereafter, the Board of the
Corporation shall, as soon as may be practicable, call a special meeting of
holders of Series C Preferred Stock for the purpose of electing such members of
the Board. Such special meeting shall in any event be held within 45 days of the
occurrence of such arrearage.

(ii) During any period when the holders of Series C Preferred Stock, voting as a
separate series, shall be entitled and shall have exercised their right to elect
two Directors, then, and during such time as such right continues, (a) the then
authorized number of Directors shall be increased by two, and the holders of
Series C Preferred Stock, voting as a separate series, shall be entitled to
elect the additional Directors so provided for, and (b) each such additional
Director shall not be a member of any existing class of the Board, but shall
serve until the next annual meeting of stockholders for the election of
Directors, or until his successor shall be elected and shall qualify, or until
his right to hold such office terminates pursuant to the provisions of this
Section 3(C).

(iii) A Director elected pursuant to the terms hereof may be removed with or
without cause by the holders of Series C Preferred Stock entitled to vote in an
election of such Director.

(iv) If, during any interval between annual meetings of stockholders for the
election of Directors and while the holders of Series C Preferred Stock shall be
entitled to elect two Directors, there is no such Director in office by reason
of resignation, death or removal, then, promptly thereafter, the Board shall
call a special meeting of the holders of Series C Preferred Stock for the
purpose of filling such vacancy and such vacancy shall be filled at such special
meeting. Such special meeting shall in any event be held within 45 days of the
occurrence of such vacancy.

(v) At such time as the arrearage is fully cured, and all dividends accumulated
and unpaid on any shares of Series C Preferred Stock outstanding are paid, and,
in addition thereto, at least one regular dividend has been paid subsequent to
curing such arrearage, the term of office of any Director elected pursuant to
this Section 3(C), or his successor, shall automatically terminate, and the
authorized number of Directors shall automatically decrease by two, the rights
of the holders of the shares of the Series C Preferred Stock to vote as provided
in this Section 3(C) shall cease, subject to renewal from time to time upon the
same terms and conditions, and the holders of shares of the Series C Preferred
Stock shall have only the limited voting rights elsewhere herein set forth.

(D) Except as set forth herein, or as otherwise provided by law, holders of
Series C Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.

Section 4. Certain Restrictions.

                                       -4-
<PAGE>
(A) Whenever quarterly dividends or other dividends or distributions payable on
the Series C Preferred Stock as provided in Section 2 are in arrears, thereafter
and until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series C Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:

(i) declare or pay dividends, or make any other distributions, on any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Preferred Stock;

(ii) declare or pay dividends, or make any other distributions, on any shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred Stock, except dividends
paid ratably on the Series C Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to the
Series C Preferred Stock; or

(iv) redeem or purchase or otherwise acquire for consideration any shares of
Series C Preferred Stock, or any shares of stock ranking on a parity with the
Series C Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board) to all holders of such
shares upon such terms as the Board, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

Section 5. Reacquired Shares. Any shares of Series C Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth herein, in the Certificate
of Incorporation, or in any other Certificate of Designations creating a series
of Preferred Stock or any similar stock or as otherwise required by law.

                                       -5-
<PAGE>
Section 6. Liquidation, Dissolution or Winding Up.

(A) Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series C Preferred Stock unless, prior thereto, the holders of shares of Series
C Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series C
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series C Preferred Stock, except distributions made ratably on the Series C
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up.

(B) Neither the consolidation, merger or other business combination of the
Corporation with or into any other corporation nor the sale, lease, exchange or
conveyance of all or any part of the property, assets or business of the
Corporation shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 6.

(C) In the event the Corporation shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series C Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of paragraph (A) of this Section 6 shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event. In the event the Corporation shall at any time declare or pay any
dividend on the Series C Preferred Stock payable in shares of Series C Preferred
Stock, or effect a subdivision, combination or consolidation of the outstanding
shares of Series C Preferred Stock (by reclassification or otherwise than by
payment of a dividend in shares of Series C Preferred Stock) into a greater or
lesser number of shares of Series C Preferred Stock, then in each such case the
aggregate amount to which holders of shares of Series C Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of
paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Series C Preferred
Stock that were outstanding immediately prior to such event and the denominator
of which is the number of shares of Series C Preferred Stock outstanding
immediately after such event.

Section 7. Consolidation, Merger, etc. Notwithstanding anything to the contrary
contained herein, in case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each share

                                       -6-
<PAGE>
of Series C Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series C Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. In the event the Corporation shall
at any time declare or pay any dividend on the Series C Preferred Stock payable
in shares of Series C Preferred Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Series C Preferred Stock (by
reclassification or otherwise than by payment of a dividend in shares of Series
C Preferred Stock) into a greater or lesser number of shares of Series C
Preferred Stock, then in each such case the amount set forth in the first
sentence of this Section 7 with respect to the exchange or change of shares of
Series C Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Series C Preferred
Stock that were outstanding immediately prior to such event and the denominator
of which is the number of shares of Series C Preferred Stock outstanding
immediately after such event.

Section 8. No Redemption. The shares of Series C Preferred Stock shall not be
redeemable.

Section 9. Rank. The Series C Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any
other class of the Preferred Stock issued either before or after the issuance of
the Series C Preferred Stock (including, without limitation, the Series A
Convertible Preferred Stock $.01 par value, of the Company established pursuant
to the Certificate of Designation for Series A Convertible preferred Stock dated
May 5, 1998), unless the terms of any such series shall provide otherwise.

Section 10. Amendment. At such time as any shares of Series C Preferred Stock
are outstanding, the Certificate of Incorporation, as amended, of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series C Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series C Preferred Stock, voting
together as a single class.

Section 11. Fractional Shares. Series C Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of Series C Preferred Stock.

                                       -7-
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of
the Corporation by its Chief Executive Officer this 10th day of December, 2001.

                                         HYBRIDON, INC.

                                         By:  /s/ Stephen R. Seiler
                                         Name:  Stephen R. Seiler
                                         Title:  Chief Executive Officer

                                       -8-<PAGE>
                                                                   EXHIBIT 10.1

SILICON VALLEY BANK

                           LOAN AND SECURITY AGREEMENT

BORROWER: INFINIUM SOFTWARE, INC.
ADDRESS:  25 COMMUNICATIONS WAY
          HYANNIS, MASSACHUSETTS 02601

DATE:     OCTOBER 26, 2001

THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK, a California-chartered bank, with its principal place of
business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan
production office located at One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462 ("Silicon") and the borrower
named above (the "Borrower"), with offices located at the above address
("Borrower's Address"). The Schedule and Exhibits to this Agreement (the
"Schedule" and the "Exhibits," respectively) shall for all purposes be deemed to
be part of this Agreement, and the same are integral parts of this Agreement.
(Definitions of certain terms used in this Agreement are set forth in Section 8
below.)

1.       LOANS.

         1.1      LOANS. Silicon will make loans to Borrower (the "Loans") up to
the amounts (the "Credit Limit") shown on the Schedule, provided no Default or
Event of Default has occurred and is continuing, and subject to deduction of any
Reserves for accrued interest and such other Reserves as Silicon reasonably
deems proper from time to time.

         1.2      INTEREST. All Loans and all other monetary Obligations shall
bear interest at the rate shown on the Schedule, except where expressly set
forth to the contrary in this Agreement. Interest shall be payable monthly, on
the last day of the month. Interest may, in Silicon's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the same
rate as the other Loans. Silicon may, in its discretion, charge interest to
Borrower's Deposit Accounts maintained with Silicon.

         1.3      OVERADVANCES. If at any time or for any reason the total of
all outstanding Loans and all other Obligations exceeds the Credit Limit (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, upon written notice or demand. Without limiting Borrower's obligation
to repay to Silicon on demand the amount of any Overadvance, Borrower agrees to
pay Silicon interest on the outstanding amount of any Overadvance (by way of
clarification the amount in excess of the Credit Limit), on demand, at a rate
equal to the interest rate which would otherwise be applicable to the
Overadvance, plus an additional two percent (2%) per annum.

         1.4      FEES. Borrower shall pay Silicon the fees shown on the
Schedule, which are in addition to all interest and other sums payable to
Silicon and are not refundable.

         1.5      LETTERS OF CREDIT. At the request of Borrower, Silicon may, in
its commercially reasonable discretion and in good faith, issue or arrange for
the issuance of letters of credit for the account of Borrower, in each case in
form and substance satisfactory to Silicon in its commercially reasonable
discretion (collectively, "Letters of Credit"). The aggregate face amount of all
outstanding Letters of Credit from time to time (plus all Silicon exposure under
any foreign exchange contracts) shall not exceed the amount shown on the
Schedule (the "Letter of Credit Sublimit"), and shall be reserved against Loans
which would otherwise be available hereunder. Borrower shall pay

<PAGE>

SILICON VALLEY BANK                                  LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

all bank charges (including charges of Silicon) for the issuance of Letters of
Credit, together with such additional fee as Silicon's letter of credit
department shall charge in connection with the issuance of the Letters of
Credit, which such fees shall not exceed Silicon's then standard fees for
letters of credit. Any payment by Silicon under or in connection with a Letter
of Credit shall constitute a Loan hereunder on the date such payment is made.
Unless otherwise agreed by the parties in writing, each Letter of Credit shall
have an expiry date no later than thirty days prior to the Maturity Date.
Borrower hereby agrees to indemnify, save, and hold Silicon harmless from any
loss, cost, expense, or liability, including payments made by Silicon,
reasonable expenses, and reasonable attorneys' fees incurred by Silicon arising
out of or in connection with any Letters of Credit, except to the extent such
loss, cost, expense or liability is due to the gross negligence or willful
misconduct of Silicon. Borrower agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Silicon and
opened for Borrower's account or by Silicon's interpretations of any Letter of
Credit issued by Silicon for Borrower's account, and Borrower understands and
agrees that Silicon shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower's instructions or those
contained in the Letters of Credit or any modifications, amendments, or
supplements thereto, except to the extent due to the gross negligence or willful
misconduct of Silicon. Borrower understands that Letters of Credit may require
Silicon to indemnify the issuing bank for certain costs or liabilities arising
out of claims by Borrower against such issuing bank, except to the extent due to
the gross negligence or willful misconduct of Silicon. Borrower hereby agrees to
indemnify and hold Silicon harmless with respect to any loss, cost, expense, or
liability incurred by Silicon under any Letter of Credit as a result of
Silicon's indemnification of any such issuing bank. The provisions of this Loan
Agreement, as it pertains to Letters of Credit, and any other present or future
documents or agreements between Borrower and Silicon relating to Letters of
Credit are cumulative, provided that to the extent of any inconsistency between
this Loan Agreement and a letter of credit application, the terms of this Loan
Agreement shall control.

2.       SECURITY INTEREST.

         2.1      SECURITY INTEREST. To secure the payment and performance of
all of the Obligations when due, and the performance of each of the Borrower's
duties under this Agreement and all documents executed in connection herewith,
Borrower hereby grants to Silicon a continuing security interest in all of
Borrower's interest in the following, whether now owned or hereafter acquired,
and wherever located: All Inventory, Equipment, Receivables, and General
Intangibles, including, without limitation, all of Borrower's Intellectual
Property, all of Borrower's Deposit Accounts, Investment Property, and all
money, and all property now or at any time in the future in Silicon's possession
(including claims and credit balances), and all proceeds (including proceeds of
any insurance policies, except in such circumstances where the Borrower receives
the proceeds on behalf of, or for the benefit of, a third party (other than
Silicon) proceeds of proceeds and claims against third parties), all products
and all books and records related to any of the foregoing (all of the foregoing,
together with all other property in which Silicon may now or in the future be
granted a lien or security interest, is referred to herein, collectively, as the
"Collateral"). The security interest granted herein shall be a first priority
security interest in the Collateral. Silicon may, while an Event of Default
exists, place a "hold" on any Deposit Account pledged as collateral.

         2.2      CONCERNING REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE.
In anticipation of the possible application, in one or more jurisdictions to the
transactions contemplated hereby, of the revised Article 9 of the Uniform
Commercial Code in the form or substantially in the form approved by the
American Law Institute and the National Conference of Commissioners on Uniform
State Law and contained in the 1999 Official Text of the Uniform Commercial Code
("Revised Article 9"), it is hereby agreed that applying the law of any
jurisdiction in which Revised Article 9 is in effect, the Collateral is all
assets of the Borrower, whether or not within the scope of Revised Article 9.
The Collateral shall include, without limitation, the following categories of
assets as defined in Revised Article 9: goods (including inventory, equipment
and any accessions thereto), instruments (including promissory notes),
documents, accounts (including health-care-insurance receivables, and license
fees), chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities and all other investment property,
general intangibles (including payment intangibles and software), supporting
obligations and any and all proceeds of any thereof, wherever located, whether
now owned or hereafter acquired. If the Borrower shall at any time, whether or
not

                                       2
<PAGE>

SILICON VALLEY BANK                                  LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

Revised Article 9 is in effect in any particular jurisdiction, acquire a
commercial tort claim with an anticipated value in excess of $250,000.00, as
defined in Revised Article 9, the Borrower shall promptly notify Silicon in a
writing signed by the Borrower of the brief details thereof and grant to Silicon
in such writing a security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
satisfactory to Silicon.

         2.3      EXCLUDED COLLATERAL. Notwithstanding the foregoing provisions
of this Section 2, such grant of a security interest shall not extend to, and
the term "Collateral" shall not include any contract, license, lease or other
agreement to which the Borrower is party as licensee, lessee or otherwise, to
the extent that (i) such contract, license or agreement is not assignable or
capable of being encumbered as a matter of law or under the terms of such
contract, license, lease or other agreement (but solely to the extent that any
such restriction shall be enforceable under applicable law), without the consent
of the licensor or lessor thereof or other applicable party thereto and (ii)
such consent has not been obtained; provided, however, that the foregoing grant
of security interest shall extend to, and the term "Collateral" shall include
(A) any and all proceeds of such contracts, licenses, leases and other
agreements to the extent that the assignment or encumbering of such proceeds is
not so restricted and (B) upon any licensor, lessor or other applicable party
consent with respect to any such otherwise excluded contract, license, lease or
other agreement being obtained, thereafter such contract, license, lease or
other agreement, as the case may be, as well as any and all proceeds thereof
that might have theretofore have been excluded from such grant of a security
interest and the term "Collateral". Further, the term "Collateral" shall not
include the assets of Borrower's subsidiary, Cort Directions, Inc., or any stock
of Cort Directions, Inc. owned by Borrower, all as more fully described in
Section 5.5 of this Loan Agreement.

3.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

         In order to induce Silicon to enter into this Agreement and to make
Loans, Borrower represents and warrants to Silicon as follows, and that Borrower
will at all times comply with all of the following covenants:

         3.1      CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation,
is and will continue to be, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Borrower is
and will continue to be qualified and licensed to do business in all
jurisdictions in which any failure to do so would have a material adverse effect
on Borrower. The execution, delivery and performance by Borrower of this
Agreement, and all other documents contemplated hereby (i) have been duly and
validly authorized, (ii) are enforceable against Borrower in accordance with
their terms (except as enforcement may be limited by equitable principles and by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditors' rights generally), (iii) do not violate Borrower's articles or
certificate of incorporation, Borrower's by-laws, or to the extent it would have
a material adverse effect on the Borrower, any law or any material agreement or
instrument which is binding upon Borrower or its property, and (iv) do not
constitute grounds for acceleration of any material indebtedness or obligation
under any material agreement or instrument which is binding upon Borrower or its
property.

         3.2      NAME; TRADE NAMES AND STYLES. The name of Borrower set forth
in the heading to this Agreement is its correct name. Listed on the Schedule are
all prior names of Borrower and all of Borrower's present and prior trade names
used in the last five years. Borrower shall give Silicon 30 days' prior written
notice before changing its name or doing any material amount of business under
any other name. Borrower has complied, and will in the future comply in all
material respects, with all laws relating to the conduct of business under a
fictitious business name.

         3.3      PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set
forth in the heading to this Agreement is Borrower's chief executive office. In
addition, Borrower has places of business and Collateral in excess of $20,000.00
per location is located only at the locations set forth on the Schedule.
Borrower will give Silicon at least 30 days prior written notice before opening
any additional place of business, changing its chief executive office, changing
its state of formation or moving any of the Collateral to a location other than
Borrower's Address or

                                       3
<PAGE>

SILICON VALLEY BANK                                  LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

one of the locations set forth on the Schedule, or such other location for which
Borrower has furnished notice to Silicon, other than Collateral that is in
transit or temporarily removed from such locations.

         3.4      TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and
will at all times in the future be, the sole owner of all the Collateral, except
for items of Equipment and Real Property which are leased by Borrower. Items
which are leased are not owned by Borrower and therefore are not Collateral. The
Collateral now is and will remain free and clear of any and all liens, charges,
security interests, encumbrances and adverse claims, except for Permitted Liens.
Silicon now has, and will continue to have, a first-priority perfected and
enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and Borrower will at all times defend Silicon and the
Collateral against all material claims of others. None of the Collateral now is
or will be affixed to any real property in such a manner, or with such intent,
as to become a fixture. Borrower will not become a lessee under any new real
property lease pursuant to which the lessor may obtain any rights in any of the
Collateral (except as may constitute Permitted Liens) and no such lease shall in
the future, prohibit, restrain, or impair Borrower's right to remove its books
and records from the leased premises. Whenever any Collateral is located upon
premises in which any third party has an interest (whether as owner, mortgagee,
beneficiary under a deed of trust, lien or otherwise), Borrower shall, whenever
requested by Silicon, use its reasonable efforts to cause such third party to
execute and deliver to Silicon, in form reasonably acceptable to Silicon, such
waivers and subordinations as Silicon shall specify, so as to ensure that
Silicon's rights in the Collateral are, and will continue to be, superior to the
rights of any such third party. Borrower will keep in full force and effect, and
will comply in all material respects with all the terms of, any lease of real
property where any of the Collateral now or in the future may be located.

         3.5      MAINTENANCE OF COLLATERAL. Borrower will maintain the
Collateral in good working condition, ordinary wear and tear excepted, and
Borrower will not use the Collateral for any unlawful purpose. Borrower will
immediately advise Silicon in writing of any material loss or damage to the
Collateral.

         3.6      BOOKS AND RECORDS. Borrower has maintained and will maintain
at Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.

         3.7      FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial
statements now or in the future delivered to Silicon have been, and will be,
prepared in conformity with generally accepted accounting principles, except for
footnotes and year end adjustments, and now and in the future will completely
and accurately reflect the financial condition of Borrower, at the times and for
the periods therein stated. Between the last date covered by any such statement
provided to Silicon and the date hereof, there has been no material adverse
change in the financial condition or business of Borrower. Borrower is now and
will continue to be solvent, which shall be defined as the ability of the
Borrower to pay its financial obligations in the normal course of business as
they become due.

         3.8      TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and Borrower has timely paid, and will
timely pay, all foreign, federal, state and local taxes, assessments, deposits
and contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, or the filing of any tax returns or
reports, provided that Borrower (i) in good faith contests Borrower's obligation
to pay the taxes by appropriate process promptly and diligently instituted and
conducted, (ii) notifies Silicon in writing of the commencement of, and any
material development in, the process, and takes such reserves as may be required
by Silicon and/or GAAP. Borrower is unaware of any claims or adjustments
proposed for any of Borrower's prior tax years which could reasonably be
expected to result in additional taxes becoming due and payable by Borrower.
Borrower has paid, and shall continue to pay all lawfully required amounts with
respect to all present and future pension, profit sharing and deferred
compensation plans in accordance with their terms, and Borrower has not and will
not withdraw from participation in, permit partial or complete termination of,
or permit the occurrence of any other event with respect to, any such plan which
could reasonably be expected to result in any material liability of Borrower,
including any material liability to the Pension Benefit Guaranty Corporation or
its successors or any other governmental agency.

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         3.9      COMPLIANCE WITH LAW. Borrower has complied, and will comply,
in all material respects, with all provisions of all material foreign, federal,
state and local laws and regulations relating to Borrower, including, but not
limited to, those relating to Borrower's ownership of real or personal property,
the conduct and licensing of Borrower's business, and all environmental matters.

         3.10     LITIGATION. Except as disclosed in the Schedule or otherwise
previously disclosed to Silicon in writing, there is no claim, suit, litigation,
proceeding or investigation pending or (to best of Borrower's knowledge)
threatened by or against or affecting Borrower in any court or before any
governmental agency (or any basis therefor known to Borrower) which may
reasonably be expected to result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of Borrower, or
in any material impairment in the ability of Borrower to carry on its business
in substantially the same manner as it is now being conducted. Borrower will
promptly inform Silicon in writing of any claim, proceeding, litigation or
investigation in the future instituted by or against Borrower involving any
single claim of $200,000 or more, or involving $500,000 or more in the
aggregate.

         3.11     USE OF PROCEEDS. All proceeds of all Loans shall be used
solely for working capital purposes. Borrower is not purchasing or carrying any
"margin stock" (as defined in Regulation U of the Board of Governors of the
Federal Reserve System) and no part of the proceeds of any Loan will be used to
purchase or carry any "margin stock" or to extend credit to others for the
purpose of purchasing or carrying any "margin stock."

4.       RECEIVABLES.

         4.1      REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents
and warrants to Silicon as follows: Each Receivable with respect to which Loans
are requested by Borrower shall, on the date each Loan is requested and made,
(i) except with respect to any Receivable relating to maintenance revenues or
for which Borrower bills in advance, represent an undisputed bona fide existing
obligation of the Account Debtor created by the sale, delivery, and acceptance
of goods or the rendition of services in the ordinary course of Borrower's
business, and (ii) meet the Minimum Eligibility Requirements set forth in
Section 8 below.

         4.2      REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE.
Borrower represents and warrants to Silicon as follows: All statements made and
all unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct in all material
respects and all such invoices, instruments and other documents and all of
Borrower's books and records are and shall be genuine and in all material
respects what they purport to be, and all signatories and endorsers have the
capacity to contract. All sales and other transactions underlying or giving rise
to each Receivable shall comply in all material respects with all applicable
laws and governmental rules and regulations. All signatures and endorsements on
all documents, instruments, and agreements relating to all Receivables are and
shall be genuine, and all such documents, instruments and agreements are and
shall be legally enforceable in accordance with their terms.

         4.3      SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower
shall deliver to Silicon transaction reports and loan requests and schedules of
all Receivables, and schedules of collections, all on Silicon's standard forms,
which hall conform to generally accepted standards in the banking industry;
provided, however, that Borrower's failure to execute and deliver the same shall
not affect or limit Silicon's security interest and other rights in all of
Borrower's Receivables, nor shall Silicon's failure to advance or lend against a
specific Receivable affect or limit Silicon's security interest and other rights
therein. The Borrower shall furnish Silicon with its initial loan request thirty
(30) days prior to the requested funding date, and one (1) business day prior to
each subsequent requested funding date. Together with each such loan request, or
later if requested by Silicon, Borrower shall furnish Silicon with copies (or,
at Silicon's request, originals) of all contracts, orders, invoices, and other
similar documents, as requested by Silicon, for any goods the sale or
disposition of which gave rise to such Receivables, and Borrower warrants the
genuineness of all of the foregoing. Borrower shall also furnish to Silicon an
aged accounts receivable trial balance in such form and at such intervals as set
forth in the Schedule. In addition, Borrower shall deliver to Silicon the
originals of all instruments, chattel paper, security agreements, guarantees and
other documents and

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property evidencing or securing any Receivables, immediately upon receipt
thereof and in the same form as received, with all necessary endorsements, all
of which shall be with recourse. Borrower shall also provide Silicon with copies
of all credit memos, upon Silicon's request.

         4.4      COLLECTION OF RECEIVABLES. Borrower shall cause the Account
Debtors to remit all Receivables to Silicon and Silicon shall hold all payments
on, and proceeds of, Receivables in a lockbox account, or such other "blocked
account" as Silicon may specify, pursuant to a blocked account agreement in such
form as Silicon may specify. All such payments on, and proceeds of, Receivables
shall be applied to the Obligations in such order as Silicon shall determine.
Silicon or its designee may, at any time reasonably necessary to enforce and/or
preserve Silicon's security in the Receivables, notify Account Debtors that the
Receivables have been assigned to Silicon.

         4.5.     REMITTANCE OF PROCEEDS. At any time there are any borrowings
outstanding under this Loan Agreement, all proceeds arising from the disposition
of any Collateral (other than Collateral comprised of Investment Property held
by a third party, provided that such Investment Property is subject to an
Account Control Agreement in form and substance reasonably satisfactory to
Silicon) shall be delivered, in kind, by Borrower to Silicon in the original
form in which received by Borrower not later than the following Business Day
after receipt by Borrower, to be applied to the Obligations in such order as
Silicon shall determine; provided that, if no Default or Event of Default has
occurred, Borrower shall not be obligated to remit to Silicon the proceeds of
the sale of worn out or obsolete equipment disposed of by Borrower in good faith
in an arm's length transaction for an aggregate sale price of $50,000 or less
(for all such transactions in any fiscal year). Borrower agrees that it will not
commingle proceeds of Collateral with any of Borrower's other funds or property,
but will hold such proceeds separate and apart from such other funds and
property and in an express trust for Silicon. Nothing in this Section 4.5 limits
the restrictions on disposition of Collateral set forth elsewhere in this
Agreement.

         4.6      DISPUTES. Borrower shall notify Silicon promptly of all
disputes or claims in excess of $150,000.00 relating to Receivables. Borrower
shall not forgive (completely or partially), compromise or settle any Receivable
for less than payment in full, or agree to do any of the foregoing, except that
Borrower may do so, provided that: (i) Borrower does so in good faith, in a
commercially reasonable manner, in the ordinary course of business, and in arm's
length transactions, which are reported to Silicon on the regular reports
provided to Silicon; (ii) no Default or Event of Default has occurred and is
continuing; and (iii) taking into account all such discounts settlements and
forgiveness, the total outstanding Loans will not exceed the Credit Limit.
Silicon may, at any time after the occurrence of and during the continuance of
an Event of Default, settle or adjust disputes or claims directly with Account
Debtors for amounts and upon terms which Silicon considers advisable in its
reasonable credit judgment and, in all cases, Silicon shall credit Borrower's
Loan account with only the net amounts received by Silicon in payment of any
Receivables.

         4.7      RETURNS. Provided no Event of Default has occurred and is
continuing, and further provided that Borrower does not, in good faith, dispute
the return, if any Account Debtor returns any Inventory to Borrower in the
ordinary course of its business, Borrower shall promptly determine the reason
for such return and promptly issue a credit memorandum to the Account Debtor in
the appropriate amount (sending a copy to Silicon in accordance herewith). In
the event any attempted return occurs after the occurrence and during the
continuance of any Event of Default, Borrower shall (i) hold the returned
Inventory in trust for Silicon, (ii) segregate all returned Inventory from all
of Borrower's other property, and (iii) immediately notify Silicon of the return
of any Inventory with a value in excess of $50,000.00, specifying the reason for
such return, the location and condition of the returned Inventory.

         4.8      VERIFICATION. Silicon may, from time to time, verify directly
with the respective Account Debtors the validity, amount and other matters
relating to the Receivables, by means of mail, telephone or otherwise, either in
the name of Borrower or Silicon or such other name as Silicon may choose.

         4.9      NO LIABILITY. Silicon shall not under any circumstances be
responsible or liable for any shortage or discrepancy in, damage to, or loss or
destruction of, any goods, the sale or other disposition of which gives rise to
a Receivable, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle,

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collection or failure to collect any Receivable, or for settling any Receivable
in good faith for less than the full amount thereof, nor shall Silicon be deemed
to be responsible for any of Borrower's obligations under any contract or
agreement giving rise to a Receivable. Nothing herein shall, however, relieve
Silicon from liability for its own gross negligence or willful misconduct.

5.       ADDITIONAL DUTIES OF THE BORROWER.

         5.1      FINANCIAL AND OTHER COVENANTS. Borrower shall at all times
comply with the financial and other covenants set forth in the Schedule.

         5.2      INSURANCE. Borrower shall, at all times insure all of the
tangible personal property Collateral and carry such other business insurance,
with insurers reasonably acceptable to Silicon, in the form and amounts as set
forth in the certificate of insurance attached hereto, and Borrower shall
provide evidence of such insurance to Silicon, so that Silicon is reasonably
satisfied that such insurance is, at all times, in full force and effect. All
such insurance policies shall name Silicon as an additional loss payee, and
shall contain a lenders loss payee endorsement in form reasonably acceptable to
Silicon. Upon receipt of the proceeds of any such insurance, Silicon shall apply
such proceeds in reduction of the Obligations as Silicon shall determine in its
sole discretion, except that, provided no Default or Event of Default has
occurred and is continuing, Silicon shall release to Borrower insurance proceeds
with respect to Equipment totaling less than $100,000, which, if paid with
respect to the loss or damage of equipment, shall be utilized by Borrower for
the replacement of the Equipment with respect to which the insurance proceeds
were paid. Silicon may require reasonable assurance that the insurance proceeds
so released will be so used. If Borrower fails to provide or pay for any
insurance, Silicon may, but is not obligated to, obtain the same at Borrower's
expense. Notwithstanding anything in this Loan Agreement to the contrary,
nothing herein shall be construed to prohibit the payment of insurance proceeds
received by the Borrower on behalf of, or for the benefit of, a third party, to
such third party.

         5.3      REPORTS. Borrower, at its expense, shall provide Silicon with
the written reports set forth in the Schedule.

         5.4      ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times,
and on one Business Day's prior notice, Silicon, or its agents, shall have the
right to inspect the Collateral, and the right to audit and copy Borrower's
books and records. Silicon shall keep confidential all information obtained in
any such inspection or audit using the same degree of care Silicon uses to
protect and keep confidential its own confidential information, but Silicon
shall have the right to disclose any such information to its auditors,
regulatory agencies, and attorneys, and pursuant to any subpoena or other legal
process. The foregoing inspections and audits shall be at Borrower's expense and
the charge therefor shall be $600 per person per day (or such higher amount as
shall represent Silicon's then current standard charge for the same), plus
reasonable out of pocket expenses. Borrower will not enter into any agreement
with any accounting firm, service bureau or third party to store Borrower's
books or records at any location other than Borrower's Address, without first
obtaining Silicon's written consent (which consent shall not be unreasonably
withheld), which may be conditioned upon such accounting firm, service bureau or
other third party agreeing to give Silicon the same rights with respect to
access to books and records and related rights as Silicon has under this Loan
Agreement, provided that such third party agrees to be bound by the
confidentiality provision in Section 10 of this Loan Agreement. Borrower waives
the benefit of any accountant-client privilege.

         5.5      NEGATIVE COVENANTS. Except as may be permitted in the
Schedule, Borrower shall not, without Silicon's prior written consent, do any of
the following: (i) merge or consolidate with another corporation or entity; (ii)
acquire any assets, except in the ordinary course of business; (iii) enter into
any other transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral, except for the sale of finished Inventory and the
license of intellectual property rights in Borrower's intellectual property in
the ordinary course of Borrower's business, and except for the sale of obsolete
or unneeded Equipment in the ordinary course of business; (v) store any
Inventory or other Collateral with any warehouseman or other third party unless
Borrower has used commercially reasonable efforts to obtain a waiver of lien;
(vi) sell any Inventory on a sale-or-return, guaranteed sale,

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consignment, or other contingent basis; (vii) make any loans of any money or
other assets, except for (a) additional loans to foreign subsidiary companies in
an amount not to exceed $800,000.00 in the aggregate outstanding at any time, or
(b) additional loans to Cort Directions, Inc. a/k/a Infinium Advantage Business
Unit (hereinafter referred to as "Cort") in an amount not to exceed $200,000.00
in the aggregate outstanding at any time; or (c) loans to employees in an amount
not to exceed $100,000.00 in the aggregate outstanding at any time; (viii) incur
any debts outside the ordinary course of business, except to subsidiary
companies in an amount not to exceed $500,000.00 in the aggregate outstanding at
any time; (ix) guarantee or otherwise become liable with respect to the
obligations of another party or entity, except on behalf of subsidiary companies
up to $100,000.00 in the aggregate; (x) pay or declare any dividends on
Borrower's stock (except for dividends payable solely in stock of Borrower);
(xi) redeem, retire, purchase or otherwise acquire, directly or indirectly, any
of Borrower's stock, except up to 300,000 shares after the date hereof (not to
exceed $200,000.00) in the aggregate with respect to stock options for
employees; (xii) make any change in Borrower's capital structure which would
have a material adverse effect on Borrower or on the prospect of repayment of
the Obligations; or (xiv) dissolve or elect to dissolve. Transactions permitted
by the foregoing provisions of this Section 5.5 are only permitted if no Default
or Event of Default would occur as a result of such transaction. Notwithstanding
anything herein or elsewhere to the contrary, the parties agree: (1) the assets
of whatever nature residing with Cort as reflected in the books and records of
Borrower are hereby excluded as Collateral and shall not be included as Eligible
Receivables; (2) the covenants and other terms and conditions under this Loan
Agreement shall not apply to the activities, business interests and assets of
Cort; (3) nothing in this Loan Agreement shall be construed to restrict,
prohibit or otherwise limit Borrower's ability to sell Cort in whole or in part
whether by sale of all or substantially all of Cort's assets, by the sale of all
or a majority of the stock in Cort, or by such other means as Borrower and
purchaser of Cort may agree; and (4) the stock of Cort owned by Borrower shall
not be "Collateral" hereunder.

         5.6      LITIGATION COOPERATION. Should any third-party suit or
proceeding be instituted by or against Silicon with respect to any Collateral or
in any manner relating to Borrower, Borrower shall, without expense to Silicon,
make available Borrower and its officers, employees and agents and Borrower's
books and records, to the extent that Silicon may deem them reasonably necessary
in order to prosecute or defend any such suit or proceeding, provided such shall
be during ordinary business hours and not interfere with Borrower's business.

         5.7      FURTHER ASSURANCES. Borrower agrees, at its expense, on
request by Silicon, to execute all documents and take all actions, as are
reasonably necessary in order to perfect and maintain Silicon's perfected
security interest in the Collateral, and in order to fully consummate the
transactions contemplated by this Agreement.

6.       TERM.

         6.1      MATURITY DATE. This Agreement shall continue in effect until
the maturity date set forth on the Schedule (the "Maturity Date"); provided that
the Maturity Date may be extended upon written agreement of the parties hereto.

         6.2      PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or on
any earlier effective date of termination, there are any outstanding Letters of
Credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such Letters of Credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said Letters of Credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the commercially
reasonable discretion of Silicon to the extent provided in this Agreement,
Silicon may, in its sole discretion, refuse to make any further Loans after
termination of this

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Agreement. No termination shall in any way affect or impair any right or remedy
of Silicon, nor shall any such termination relieve Borrower of any Obligation to
Silicon, until all of the Obligations have been paid and performed in full. Upon
payment and performance in full of all the Obligations and the termination of
the availability of any further Loans, Silicon shall promptly deliver to
Borrower termination statements, requests for reconveyances and such other
documents as may be required to fully terminate Silicon's security interests.

7.       EVENTS OF DEFAULT AND REMEDIES.

         7.1      EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement, and Borrower
shall give Silicon immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to Silicon by
Borrower or any of Borrower's officers, or authorized employees as set forth in
Schedule 7.1A attached hereto and made a part hereof, now or in the future,
shall be untrue or misleading in a material respect; or (b) Borrower shall fail
to pay when due any Loan or any interest thereon or any other monetary
Obligation or other indebtedness to Silicon under this Loan Agreement; or (c)
the total Loans and other Obligations outstanding at any time shall exceed the
Credit Limit and are not promptly reduced in accordance with Section 1.3; or (d)
Borrower shall fail to comply with any of the financial covenants set forth in
the Schedule or shall fail to perform any other non-monetary Obligation which by
its nature cannot be cured; or (e) Borrower shall fail to perform any other
non-monetary Obligation, which failure is not cured within 5 Business Days after
written notice from Silicon; or (f) (i) any levy, assessment, attachment,
seizure, lien or encumbrance (other than a Permitted Lien) with respect to an
amount in excess of $100,000.00 is made on all or any part of the Collateral ,
or (ii) the service of process upon Silicon seeking to attach by trustee, mesne,
or other process, any of the Borrower's funds on deposit with , or assets of the
Borrower in the possession of, Silicon with a value in excess of $50,000.00; or
(g) any default or event of default occurs under any obligation secured by a
Permitted Lien, which is not cured within any applicable cure period or waived
in writing by the holder of the Permitted Lien; or (h) Borrower breaches any
material contract or obligation, which has or may reasonably be expected to have
a material adverse effect on Borrower's business or financial condition; or (i)
Dissolution, termination of existence, insolvency or business failure of
Borrower; or appointment of a receiver, trustee or custodian, for all or any
part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding by Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; or (j) the
commencement of any proceeding against Borrower or any guarantor of any of the
Obligations under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 45 days after the date commenced; or (k) revocation or
termination of, or limitation or denial of liability upon, any guaranty of the
Obligations or any attempt to do any of the foregoing, or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or (m) Borrower makes any payment on account of any indebtedness
or obligation which has been subordinated to the Obligations, pursuant to a
written subordination agreement, other than as permitted in the applicable
subordination agreement, or if any Person who has subordinated such indebtedness
or obligations terminates or in any way limits his subordination agreement; or
(n) there shall be a change in the record or beneficial ownership of an
aggregate of more than 50% of the outstanding shares of stock of Borrower
(except for estate planning and related vehicles and transfer of ownership), in
one or more transactions, compared to the ownership of outstanding shares of
stock of Borrower in effect on the date hereof, without the prior written
consent of Silicon; or (o) Borrower shall generally not pay its debts as they
become due, or Borrower shall conceal, remove or transfer any part of its
material property, with intent to hinder, delay or defraud its creditors, or
make or suffer any transfer of any of its property which may be fraudulent under
any bankruptcy, fraudulent conveyance or similar law; or (p) there shall be (i)
a material impairment in the perfection or priority of Silicon's security
interest in the Collateral or in the value of such Collateral; (ii) a material
adverse change in the business, operations, or condition (financial or
otherwise) of the Borrower; (iii) a material impairment of the prospect of

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repayment of any portion of the Obligations; or (q) an Event of Default under
the IP Security Agreement executed in connection with this Agreement shall
occur.

         7.2      REMEDIES. Upon the occurrence and during the continuing of any
Event of Default, and at any time thereafter, Silicon, at its option, and
without notice or demand of any kind (all of which are hereby expressly waived
by Borrower), may do any one or more of the following: (a) Cease making Loans or
otherwise extending credit to Borrower under this Agreement or any other
document or agreement; (b) Accelerate and declare all or any part of the
Obligations to be immediately due, payable, and performable, notwithstanding any
deferred or installment payments allowed by any instrument evidencing or
relating to any Obligation; (c) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose Borrower hereby authorizes
Silicon without judicial process to enter onto any of Borrower's premises
without interference to search for, take possession of, keep, store, or remove
any of the Collateral, and remain on the premises or cause a custodian to remain
on the premises in exclusive control thereof, without charge for so long as it
is reasonably necessary in order to complete the enforcement of its rights under
this Agreement or any other agreement; provided, however, that should Silicon
seek to take possession of any of the Collateral by Court process, Borrower
hereby irrevocably waives: (i) any bond and any surety or security relating
thereto required by any statute, court rule or otherwise as an incident to such
possession; (ii) any demand for possession prior to the commencement of any suit
or action to recover possession thereof; and (iii) any requirement that Silicon
retain possession of, and not dispose of, any such Collateral until after trial
or final judgment; (d) Require Borrower to assemble any or all of the Collateral
and make it available to Silicon at places designated by Silicon which are
reasonably convenient to Silicon and Borrower, and to remove the Collateral to
such locations as Silicon may deem advisable; (e) Complete the processing,
manufacturing or repair of any Collateral prior to a disposition thereof and,
for such purpose and for the purpose of removal, Silicon shall have the right to
use Borrower's premises, vehicles, hoists, lifts, cranes, equipment and all
other property without charge; (f) Sell, lease or otherwise dispose of any of
the Collateral, in its condition at the time Silicon obtains possession of it or
after further manufacturing, processing or repair, at one or more public and/or
private sales, in lots or in bulk, for cash, exchange or other property, or on
credit, and to adjourn any such sale from time to time without notice other than
oral announcement at the time scheduled for sale. Silicon shall have the right
to conduct such disposition on Borrower's premises without charge, for such time
or times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and
the Collateral need not be located at the place of disposition. Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with respect to any
item of the Collateral or proceeds thereof, and, in Silicon's sole discretion,
to grant extensions of time to pay, compromise claims and settle Receivables and
the like for less than face value; (h) Offset against any sums in any of
Borrower's general, special or other Deposit Accounts with Silicon; and (i)
Demand and receive possession of any of Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable attorneys' fees, expenses, costs, liabilities
and obligations incurred by Silicon with respect to the foregoing shall be added
to and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and
after the occurrence of any Event of Default, the interest rate applicable to
the Obligations shall be increased by an additional four percent (4%) per annum.
All exercise of remedies by or on behalf of Silicon shall be done in a
commercially reasonable manner.

         7.3      STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower
and Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to
Borrower at least ten days prior to the sale, and, in the case of a public sale,
notice of the sale is published at least ten days before the sale in a newspaper
of general circulation in the county where the sale is to be conducted; (ii)
Notice of the sale describes the

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collateral in general, non-specific terms; (iii) The sale is conducted at a
place reasonably designated by Silicon, with or without the Collateral being
present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m; (v)
Payment of the purchase price in cash or by cashier's check or wire transfer is
required; (vi) With respect to any sale of any of the Collateral, Silicon may
(but is not obligated to) direct any prospective purchaser to ascertain directly
from Borrower any and all information concerning the same. Silicon shall be free
to employ other methods of noticing and selling the Collateral, in its
discretion, if they are commercially reasonable.

         7.4      POWER OF ATTORNEY. Upon the occurrence and during the
continuance of any Event of Default, without limiting Silicon's other rights and
remedies, Borrower grants to Silicon an irrevocable power of attorney coupled
with an interest, authorizing and permitting Silicon (acting through any of its
employees, attorneys or agents) at any time, at its option, but without
obligation, with or without notice to Borrower, and at Borrower's expense, to do
any or all of the following, in Borrower's name or otherwise, but Silicon agrees
to exercise the following powers in a commercially reasonable manner: (a)
Execute on behalf of Borrower any documents that Silicon may, in its sole
discretion, deem advisable in order to perfect and maintain Silicon's security
interest in the Collateral, or in order to exercise a right of Borrower or
Silicon, or in order to fully consummate all the transactions contemplated under
this Agreement, and all other present and future agreements; (b) Execute on
behalf of Borrower any document exercising, transferring or assigning any option
to purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any
real or personal property which is part of Silicon's Collateral or in which
Silicon has an interest; (c) Execute on behalf of Borrower, any invoices
relating to any Receivable, any draft against any Account Debtor and any notice
to any Account Debtor, any proof of claim in bankruptcy, any Notice of Lien,
claim of mechanic's, materialman's or other lien, or assignment or satisfaction
of mechanic's, materialman's or other lien; (d) Take control in any manner of
any cash or non-cash items of payment or proceeds of Collateral; endorse the
name of Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into Silicon's possession; (e) Endorse all checks and
other forms of remittances received by Silicon; (f) Pay, contest or settle any
lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (g) Grant extensions of time to pay, compromise
claims and settle Receivables and General Intangibles for less than face value
and execute all releases and other documents in connection therewith; (h) Pay
any sums required on account of Borrower's taxes or to secure the release of any
liens therefor, or both; (i) Settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, Borrower to give Silicon the same rights
of access and other rights with respect thereto as Silicon has under this
Agreement; and (k) Take any action or pay any sum required of Borrower pursuant
to this Agreement and any other present or future agreements. Any and all
reasonable sums paid and any and all reasonable costs, expenses, liabilities,
obligations and attorneys' fees incurred by Silicon with respect to the
foregoing shall be added to and become part of the Obligations, shall be payable
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations. In no event shall Silicon's rights under
the foregoing power of attorney or any of Silicon's other rights under this
Agreement be deemed to indicate that Silicon is in control of the business,
management or properties of Borrower.

         7.5      APPLICATION OF PROCEEDS. All proceeds realized as the result
of any sale of the Collateral shall be applied by Silicon first to the
reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by Silicon in the exercise of its rights under this Agreement, second
to the interest due upon any of the Obligations, and third to the principal of
the Obligations, in such order as Silicon shall determine in its sole
discretion. Any surplus shall be paid to Borrower or other persons legally
entitled thereto; Borrower shall remain liable to Silicon for any deficiency.
If, Silicon, in its sole discretion, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale of
Collateral, Silicon shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of
purchase price or deferring the reduction of the Obligations until the actual
receipt by Silicon of the cash therefor.

         7.6      REMEDIES CUMULATIVE. In addition to the rights and remedies
set forth in this Agreement, Silicon shall have all the other rights and
remedies accorded a secured party under the Massachusetts Uniform Commercial
Code and under all other applicable laws, and under any other instrument or
agreement now or in the future entered into between Silicon and Borrower, and
all of such rights and remedies are cumulative and none is exclusive. Exercise

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or partial exercise by Silicon of one or more of its rights or remedies shall
not be deemed an election, nor bar Silicon from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Silicon to
exercise any rights or remedies shall not operate as a waiver thereof, but all
rights and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed.

8.       DEFINITIONS.

         As used in this Agreement, the following terms have the following
meanings:

         "ACCOUNT DEBTOR" means the obligor on a Receivable.

         "AFFILIATE" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.

         "BUSINESS DAY" means a day on which Silicon is open for business in
Massachusetts.

         "CODE" means the Uniform Commercial Code as adopted and in effect in
the Commonwealth of Massachusetts from time to time.

         "COLLATERAL" has the meaning set forth in Section 2.1 above.

         "DEFAULT" means any event which with notice or passage of time or both,
would constitute an Event of Default.

         "DEPOSIT ACCOUNT" has the meaning set forth in the Code.

         "ELIGIBLE RECEIVABLES" means Receivables arising in the ordinary course
of Borrower's business from the sale of goods or rendition of services, which
Silicon, in its commercially reasonably judgment, shall deem eligible for
borrowing, based on such considerations as Silicon may from time to time deem
appropriate. Without limiting the fact that the determination of which
Receivables are eligible for borrowing is a matter of Silicon's discretion, the
following (the "MINIMUM ELIGIBILITY REQUIREMENTS") are the minimum requirements
for a Receivable to be an Eligible Receivable: (i) the Receivable must not be
outstanding for more than 90 days from its invoice date, (ii) the Receivable
must not be subject to any contingencies (including Receivables arising from
sales on consignment, guaranteed sale or other terms pursuant to which payment
by the Account Debtor may be conditional, except as may otherwise be acceptable
to Silicon in its commercially reasonable discretion), (iii) the Receivable must
not the subject of a dispute (whether or not relating to the particular
Receivable) and then shall be excluded only to the extent of such dispute, (iv)
the Receivable must not be owing from an Affiliate of Borrower, (v) the
Receivable must not be owing from an Account Debtor which is subject to any
insolvency or bankruptcy proceeding, or whose financial condition is not
reasonably acceptable to Silicon, or which, fails or goes out of a material
portion of its business, (vi) the Receivable must not be owing from the United
States or any department, agency or instrumentality thereof (unless there has
been compliance, to Silicon's satisfaction, with the United States Assignment of
Claims Act), (vii) the Receivable must not be owing from an Account Debtor
located outside the United States (unless pre-approved by Silicon in its
discretion in writing, or backed by a letter of credit satisfactory to Silicon,
or FCIA insured satisfactory to Silicon), and (viii) the Receivable must not be
owing from an Account Debtor to whom Borrower is or may be liable for goods
purchased from such Account Debtor or otherwise, but shall only be excluded up
to the extent of the amount of such purchase. Receivables owing from one Account
Debtor will not be deemed Eligible Receivables to the extent they exceed 25% of
the total Receivables outstanding. In addition, if more than 50% of the
Receivables owing from an Account Debtor are outstanding more than 90 days from
their invoice date (without regard to unapplied credits), then all Receivables
owing from that Account Debtor will be deemed ineligible for borrowing. In
addition, Eligible Receivables will be further reduced by the Borrower's
"gross-down" reserves, as adjusted monthly and as reflected on the Borrower's
balance sheets. Silicon may, from

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time to time, in its discretion, revise the Minimum Eligibility Requirements,
upon 5 days prior written notice to the Borrower.

         "EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.

         "EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of
this Agreement.

         "GENERAL INTANGIBLES" means all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower, including,
without limitation, all choses in action, causes of action, corporate or other
business records, Deposit Accounts, inventions, designs, drawings, blueprints,
patents, patent applications, trademarks and the goodwill of the business
symbolized thereby, names, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, security and other
deposits, rights in all litigation presently or hereafter pending for any cause
or claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Borrower against Silicon, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, proprietary information, purchase
orders, and all insurance policies and claims (including without limitation life
insurance, key man insurance, credit insurance, liability insurance, property
insurance and other insurance), tax refunds and claims, computer programs,
discs, tapes and tape files, claims under guaranties, security interests or
other security held by or granted to Borrower, all rights to indemnification and
all other intangible property of every kind and nature (other than Receivables).

         "INVENTORY" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease (including without
limitation all raw materials, work in process, finished goods and goods in
transit), and all materials and supplies of every kind, nature and description
which are or might be used or consumed in Borrower's business or used in
connection with the manufacture, packing, shipping, advertising, selling or
finishing of such goods, merchandise or other personal property, and all
warehouse receipts, documents of title and other documents representing any of
the foregoing.

         "INVESTMENT PROPERTY" has the meaning set forth in the Code.

         "OBLIGATIONS" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon in connection with this Agreement, however
evidenced, including, without limitation, the Borrower's obligations pursuant to
the IP Security Agreement, whether arising from an extension of credit, opening
of a letter of credit, banker's acceptance, foreign exchange contracts, loan,
guaranty, indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment and any participation by
Silicon in Borrower's debts owing to others), absolute or contingent, due or to
become due, including, without limitation, all interest, charges, expenses,
fees, reasonable attorney's fees, expert witness fees, audit fees, letter of
credit fees, collateral monitoring fees, closing fees, facility fees,
termination fees, minimum interest charges and any other sums chargeable to
Borrower under this Agreement.

         "PERMITTED LIENS" means the following: (i) purchase money security
interests or security interests arising in connection with the capitalized
leases, in specific items of Equipment; (ii) leases of specific items of
Equipment; (iii) liens for taxes not yet payable and which are not the subject
of collection action; (iv) additional security interests and liens consented to
in writing by Silicon, which consent shall not be unreasonably withheld; (v)
security interests being terminated substantially concurrently with this
Agreement; (vi) liens of materialmen, mechanics, landlords, warehousemen,
carriers, or other similar liens arising in the ordinary course of business and
securing obligations which are not delinquent or which are being contested in
good faith; (vii) liens incurred in connection

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with the extension, renewal or refinancing of the indebtedness secured by liens
of the type described above in clauses (i) or (ii) above, provided that any
extension, renewal or replacement lien is limited to the property encumbered by
the existing lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase; and (viii)Liens in favor of customs and
revenue authorities which secure payment of customs duties in connection with
the importation of goods. Silicon will have the right to require, as a condition
to its consent under subsection (iv) above, that the holder of the additional
security interest or lien sign an intercreditor agreement on Silicon's then
standard form, acknowledge that the security interest is subordinate to the
security interest in favor of Silicon, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations remain
outstanding, and that Borrower agree that any uncured default in any obligation
secured by the subordinate security interest shall also constitute an Event of
Default under this Agreement.

         "PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.

         "RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, securities accounts, investment
property, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, all merchandise returned
to or repossessed by Borrower, and all rights of stoppage in transit and all
other rights or remedies of an unpaid vendor, lienor or secured party.

         "RESERVES" means, as of any date of determination, such amounts as
Silicon may from time to time establish and revise in good faith reducing the
amount of Loans, Letters of Credit and other financial accommodations which
would otherwise be available to Borrower under the lending formula(s) provided
in the Schedule: (a) to reflect events, conditions, contingencies or risks
which, as determined by Silicon in good faith, do or may affect (i) the
Collateral or any other property which is security for the Obligations or its
value (including without limitation any increase in delinquencies of
Receivables), (ii) the assets, business or prospects of Borrower or any
Guarantor, or (iii) the security interests and other rights of Silicon in the
Collateral (including the enforceability, perfection and priority thereof); or
(b) to reflect Silicon's good faith belief that any collateral report or
financial information furnished by or on behalf of Borrower or any guarantor to
Silicon is or may have been incomplete, inaccurate or misleading in any material
respect; or (c) in respect of any state of facts which Silicon determines in
good faith constitutes an Event of Default or may, with notice or passage of
time or both, constitute an Event of Default.

         OTHER TERMS. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with generally accepted accounting principles, consistently applied. All other
terms contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the Code, to the extent such terms are defined therein.

9.       GENERAL PROVISIONS.

         9.1      INTEREST COMPUTATION. In computing interest on the
Obligations, all checks, and other items of payment received by Silicon
(including proceeds of Receivables and payment of the Obligations in full) shall
be deemed applied by Silicon on account of the Obligations three Business Days
after receipt by Silicon of immediately available funds (except that wired funds
will be applied within one Business Day from receipt thereof), and, for purposes
of the foregoing, any such funds received after 12:00 Noon on any day shall be
deemed received on the next Business Day. Silicon may charge Borrower's loan
account for the amount of any item of payment which is returned to Silicon
unpaid.

         9.2      APPLICATION OF PAYMENTS. All payments with respect to the
Obligations may be applied, and in Silicon's sole discretion reversed and
re-applied, to the Obligations, in such order and manner as Silicon shall
determine in its sole discretion, unless directed by Borrower prior to an Event
of Default.

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         9.3      CHARGES TO ACCOUNTS. Silicon may, in its discretion, require
that Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same rate
applicable to the Loans. Silicon may also, in its discretion, charge any
monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.

         9.4      MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly
with an account of advances, charges, expenses and payments made pursuant to
this Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within sixty days after each account
is received by Borrower, describing the nature of any alleged errors or
admissions.

         9.5      NOTICES. All notices to be given under this Agreement shall be
in writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed to Silicon or Borrower at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by one
party to the other party. Notices to Silicon shall be directed to the Commercial
Finance Division, to the attention of the Division Manager or the Division
Credit Manager. Notices to Borrower shall be directed to its Chief Financial
Officer with a copy to its General Counsel. All notices shall be deemed to have
been given upon delivery in the case of notices personally delivered, or at the
expiration of one Business Day following delivery to the private delivery
service, or two Business Days following the deposit thereof in the United States
mail, with postage prepaid.

         9.6      SEVERABILITY. Should any provision of this Agreement be held
by any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement, which shall continue in full
force and effect.

         9.7      INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Silicon and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. There are
no oral understandings, representations or agreements between the parties which
are not set forth in this Agreement or in other written agreements signed by the
parties in connection herewith.

         9.8      WAIVERS. The failure of Silicon at any time or times to
require Borrower to strictly comply with any of the provisions of this Agreement
or any other present or future agreement between Borrower and Silicon shall not
waive or diminish any right of Silicon later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent, and whether or not similar. None of
the provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Silicon shall be deemed to have been
waived by any act or knowledge of Silicon or its agents or employees, but only
by a specific written waiver signed by an authorized officer of Silicon and
delivered to Borrower. Borrower waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, General Intangible, document or guaranty at any time held
by Silicon on which Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement.

         9.9      NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any
of its directors, officers, employees, agents, attorneys or any other Person
affiliated with or representing Silicon shall be liable for any claims, demands,
losses or damages, of any kind whatsoever, made, claimed, incurred or suffered
by Borrower or any other party through the ordinary negligence of Silicon, or
any of its directors, officers, employees, agents, attorneys or any other Person
affiliated with or representing Silicon, but nothing herein shall relieve
Silicon from liability for its own gross negligence or willful misconduct.

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         9.10     AMENDMENT. The terms and provisions of this Agreement may not
be waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Silicon.

         9.11     TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.

         9.12     ATTORNEYS FEES AND COSTS. Borrower shall reimburse Silicon for
all reasonable attorneys' fees and all filing, recording, search, title
insurance, appraisal, audit, and other reasonable costs incurred by Silicon,
pursuant to, or in connection with, or relating to this Agreement (whether or
not a lawsuit is filed), including, but not limited to, any reasonable
attorneys' fees and costs Silicon incurs in order to do the following: prepare
and negotiate this Agreement and the documents relating to this Agreement;
obtain legal advice in connection with this Agreement or Borrower; enforce, or
seek to enforce, any of its rights; prosecute actions against, or defend actions
by, Account Debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower's books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce Silicon's security interest in, the Collateral; and
otherwise represent Silicon in any litigation relating to Borrower. In
satisfying Borrower's obligation hereunder to reimburse Silicon for attorneys
fees, Borrower may, for convenience, issue checks directly to Silicon's
attorneys, Riemer & Braunstein, LLP, but Borrower acknowledges and agrees that
Riemer & Braunstein, LLP is representing only Silicon and not Borrower in
connection with this Agreement. If either Silicon or Borrower files any lawsuit
against the other predicated on a breach of this Agreement, Silicon shall be
entitled to recover its reasonable costs and attorneys' fees, including (but not
LIMITED to) reasonable attorneys' fees and costs incurred in the enforcement of,
execution upon or defense of any order, decree, award or judgment. All
attorneys' fees and costs to which Silicon may be entitled pursuant to this
Section 9.12 shall immediately become part of Borrower's Obligations, shall be
due on demand, and shall bear interest at a rate equal to the highest interest
rate applicable to any of the Obligations.

         9.13     BENEFIT OF AGREEMENT. The provisions of this Agreement shall
be binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Silicon; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
Borrower from its liability for the Obligations.

         9.14     RIGHT OF SET-OFF. Borrower and any guarantor hereby grant to
Silicon, a lien, security interest and right of setoff as security for all
Obligations to Silicon, whether now existing or hereafter arising upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Silicon or any entity under the
control of Silicon Valley Bank or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Silicon may set off the same or any part thereof and apply the same
to any liability or obligation of Borrower and any guarantor even though
unmatured and regardless of the adequacy of any other collateral securing the
loan. ANY AND ALL RIGHTS TO REQUIRE SILICON TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

         9.15.    JOINT AND SEVERAL LIABILITY. If Borrower consists of more than
one Person, their liability shall be joint and several, and the compromise of
any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.

         9.16     LIMITATION OF ACTIONS. Any claim or cause of action by
Borrower against Silicon, its directors, officers, employees, agents,
accountants or attorneys, based upon, arising from, or relating to this Loan
Agreement, or any other present or future document or agreement, or any other
transaction contemplated hereby or thereby or relating hereto or thereto, or any
other matter, cause or thing whatsoever, occurred, done, omitted or suffered to
be

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done by Silicon, its directors, officers, employees, agents, accountants or
attorneys, shall be barred unless asserted by Borrower by the commencement of an
action or proceeding in a court of competent jurisdiction by the filing of a
complaint within one year after the first act, occurrence or omission upon which
such claim or cause of action, or any part thereof, is based, or if later, upon
Borrower obtaining knowledge of the existence of such claim. Borrower agrees
that such one-year period is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action. The one-year period
provided herein shall not be waived, tolled, or extended except by the written
consent of Silicon in its sole discretion. This provision shall survive any
termination of this Loan Agreement or any other present or future agreement.

         9.17     SECTION HEADINGS; CONSTRUCTION. Section headings are only used
in this Agreement for convenience. Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
section, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Silicon or Borrower under any rule
of construction or otherwise.

         9.18     GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all
acts and transactions hereunder and all rights and obligations of Silicon and
Borrower shall be governed by the laws of the Commonwealth of Massachusetts. As
a material part of the consideration to Silicon to enter into this Agreement,
Borrower (i) agrees that all actions and proceedings relating directly or
indirectly to this Agreement shall, at Silicon's option, be litigated in state
or federal courts located within Massachusetts; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any such
action or proceeding, provided, however, that if for any reason Silicon cannot
avail itself of such courts in the Commonwealth of Massachusetts, Borrower
accepts jurisdiction of the courts and venue in Santa Clara, California.

         9.19     MUTUAL WAIVER OF JURY TRIAL. BORROWER AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

10.      CONFIDENTIALITY

         In handling any confidential information, Silicon shall exercise the
same degree of care that it exercises for its own proprietary and confidential
information, but disclosure of information may be made: (i) to Silicon 's
subsidiaries or affiliates in connection with their present or prospective
business relations with Borrower, provided such subsidiaries and/or affiliates
agree to bound by confidentiality provisions no less restrictive than those in
this Agreement; (ii) to prospective transferees or purchasers of any interest in
the Loans, provided such transferees and purchasers agree in writing to be bound
by confidentiality provisions no less restrictive than those in this Agreement;
(iii) as required by law, regulation, subpoena, or other order, (iv) as required
in connection with Silicon 's examination or audit, provided the recipient of
the information agrees to be bound by confidentiality provisions no less
restrictive than those in this Agreement; and (v) as Silicon considers
appropriate in exercising remedies under this Agreement, provided Silicon
notifies Borrower prior to any such disclosure. Confidential information does
not include information that either: (a) is in the public domain or in Silicon
's possession when disclosed to Silicon , or becomes part of the public domain
after disclosure to Silicon other than due to Silicon's breach of its
confidentiality obligations hereunder; or (b) is disclosed to Silicon by a third
party, if Silicon reasonably does not know that the third party is prohibited
from disclosing the information.

                                       17
<PAGE>

SILICON VALLEY BANK                                  LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the date first above written.

BORROWER:

INFINIUM SOFTWARE, INC.

BY: _____________________________________

TITLE: __________________________________

SILICON:

SILICON VALLEY BANK, D/B/A
SILICON VALLEY EAST

BY: _____________________________________

TITLE: __________________________________

                                       18
<PAGE>

SILICON VALLEY BANK

                                   SCHEDULE TO
                           LOAN AND SECURITY AGREEMENT

BORROWER: INFINIUM SOFTWARE, INC.
ADDRESS:  25 COMMUNICATIONS WAY
          HYANNIS, MASSACHUSETTS 02601

DATE:     OCTOBER 26, 2001

This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.
================================================================================

1.       CREDIT LIMIT

         (Section 1.1): An amount not to exceed the lesser of (A) or (B), below:

================================================================================
         (A)
                  ==============================================================
                  (i)      $3,000,000 at any one time outstanding (the "Maximum
                  Credit Limit"); MINUS
================================================================================
                  ==============================================================
                  (ii)     the aggregate amounts then undrawn on all outstanding
                  letters of credit or foreign exchange contracts issued or
                  incurred, or caused to be issued or incurred by Silicon for
                  the account and/or benefit of the Borrower.
================================================================================
         (B)
                  ==============================================================
                  (i)      65% of the amount of Borrower's Eligible Receivables
                  (as defined in Section 8 above); MINUS
================================================================================
                  ==============================================================
                  (ii)     the aggregate amounts then undrawn on all outstanding
                  letters of credit or foreign exchange contracts, issued or
                  incurred, or caused to be issued or incurred by Silicon for
                  the account and/or benefit of the Borrower.
================================================================================

         LETTER OF CREDIT/FOREIGN EXCHANGE CONTRACT SUBLIMIT
         (Section 1.5):    $500,000

2.       INTEREST.

         INTEREST RATE (Section 1.2):

         A rate equal to the "Prime Rate" in effect from time to time, plus
1.00% per annum. Interest shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. "Prime Rate" means the rate announced from
time to time by Silicon as its "prime rate;" it is a base rate upon which other
rates charged by Silicon are based, and it is not necessarily the best rate
available at Silicon. The interest rate applicable to the Obligations shall
change on each date there is a change in the Prime Rate.

         MINIMUM MONTHLY
         INTEREST (Section 1.2):     N/A.

                                       1
<PAGE>

SILICON VALLEY BANK                      SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

================================================================================

3.  FEES (Section 1.4):

         Loan Fee: $30,000.00, with $15,000.00 payable (and having been
received) upon execution of the Loan Commitment between Silicon and the Borrower
and remaining $15,000.00 payable upon the execution of this Agreement.

         Prepayment Fee: If the Obligations are voluntarily or involuntarily (in
the event of bankruptcy) prepaid or if this Agreement is otherwise terminated
prior to its maturity, the Borrower shall pay to Silicon a termination fee in
the amount equal to 1% of the Maximum Credit Limit then in effect, provided that
no such termination fee shall be charged if the credit facility hereunder is
replaced or transferred to another division of Silicon. The termination fee
shall be due and payable upon prepayment by the Borrower in the case of
voluntary prepayments or upon demand by Silicon in the event of applicable
involuntary prepayment, and if not paid immediately shall bear interest at a
rate equal to the highest rate applicable to any of the Obligations.

================================================================================

4.  MATURITY DATE

         (Section 6.1):    December 31, 2002
================================================================================

5.  FINANCIAL COVENANTS

         (Section 5.1): Borrower shall comply with each of the following
covenant(s). Compliance shall be determined as of the end of each month, except
as otherwise specifically provided below:

         a.       TANGIBLE NET WORTH:

         Borrower shall maintain a deficit Tangible Net Worth of not a greater
deficit than the sum of (i) plus (ii) below:

         =======================================================================
         (i)      (a)      ($19,000,000) from the date of this Agreement until
                           and including November 30, 2001;
================================================================================
                  (b)      ($16,500,000) from December 1, 2001 until and
                           including February 28, 2002;

                  (c)      ($13,750,000) from March 1, 2002 until and including
                           May 30, 2002; and

                  (d)      ($10,000,000) thereafter
         =======================================================================
         (ii)     80% of all consideration received after the date hereof for
                  equity securities and subordinated debt of the Borrower which
                  is subordinated by written agreement to the Obligations
                  hereunder.
================================================================================

In no event shall the amount of this Minimum Tangible Net Worth covenant be
decreased.

         =======================================================================
         b.       COMPENSATING BALANCES.
================================================================================

         Borrower shall maintain at least $1,000,000.00 in cash on deposit
(non-interest bearing) with Silicon at all times during the term of this
Agreement

         DEFINITIONS. For purposes of the foregoing financial covenants, the
following term shall have the following meaning:

                                       2
<PAGE>

SILICON VALLEY BANK                      SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

================================================================================

                  "Liabilities" shall have the meaning ascribed thereto by
generally accepted accounting principles.

                  "Tangible Net Worth" shall mean the excess of total assets of
the Borrower over total liabilities of the Borrower, determined in accordance
with generally accepted accounting principles, with the following adjustments:

                  (A) there shall be excluded from assets: (i) notes, accounts
receivable and other obligations owing to the Borrower from its officers or
other Affiliates, and (ii) all assets which would be classified as intangible
assets under generally accepted accounting principles, including without
limitation goodwill, licenses, patents, trademarks, trade names, copyrights,
capitalized software and organizational costs, licenses and franchises

                  (B) there shall be excluded from liabilities: all indebtedness
which is subordinated to the Obligations under a subordination agreement in form
specified by Silicon or by language in the instrument evidencing the
indebtedness which is acceptable to Silicon in its discretion.
================================================================================

6.  REPORTING.

      (Section 5.3):

         Borrower shall provide Silicon with the following:

         1.       Monthly, and upon each loan request, transaction reports and
borrowing base certificates in the form of Exhibit 5.3.1 attached hereto.
Subsequent to the initial loan requests, weekly reports shall be required
hereunder unless otherwise agreed to between the parties hereto.

         2.       Monthly Receivable agings, aged by invoice date, and
receivable reconciliations, within fifteen days after the end of each month.

         3.       Monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers, if any, within fifteen days after the end
of each month.

         4.       Monthly unaudited financial statements, as soon as available,
and in any event within thirty days after the end of each month.

         5.       Monthly Compliance Certificates, within thirty days after the
end of each month, in such form as Silicon shall reasonably specify, signed by
the Chief Financial Officer of Borrower, certifying that as of the end of such
month there exists no Event of Default under this Agreement, and setting forth
calculations showing compliance with the financial covenants set forth in this
Agreement and such other information as Silicon shall reasonably request,
including, without limitation, a statement that at the end of such month there
were no held checks.

         6.       Quarterly unaudited financial statements, as soon as
available, and in any event within forty-five days after the end of each fiscal
quarter of Borrower.

         7.       Annual operating budgets (including income statements, balance
sheets and cash flow statements, by month) for the upcoming fiscal year of
Borrower within thirty days prior to the end of each fiscal year of Borrower.

                                       3
<PAGE>

SILICON VALLEY BANK                      SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

         8.       Annual financial statements, as soon as available, and in any
event within 120 days following the end of Borrower's fiscal year, certified by
independent certified public accountants acceptable to Silicon.

         9.       Such additional reports and information as Silicon may from
 time to time reasonably specify.
================================================================================

7.       BORROWER INFORMATION:

         PRIOR NAMES OF
         BORROWER

         (Section 3.2):             See Perfection Certificate of even date

         PRIOR TRADE
         NAMES OF BORROWER
         (Section 3.2):             See Perfection Certificate of even date

         EXISTING TRADE
         NAMES OF BORROWER
         (Section 3.2):             See Perfection Certificate of even date

         OTHER LOCATIONS AND
         ADDRESSES (Section 3.3):   See Perfection Certificate of even date

         MATERIAL ADVERSE
         LITIGATION (Section 3.10): See attached Schedule 3.10
================================================================================

8.       OTHER COVENANTS

         (Section 5.1): Borrower shall at all times comply with all of the
following additional covenants:

         (1)      BANKING RELATIONSHIP. In order for Silicon to properly monitor
its loan arrangement with the Borrower, Borrower shall at all times maintain its
primary operating accounts with Silicon.

         (2)      SUBORDINATION OF INSIDE DEBT. All loans of the Borrower after
June 30, 2001 from its officers, directors and shareholders ("Inside Debt")
shall, at all times, be subordinated to the Obligations pursuant to a
subordination agreement on Silicon's standard form. Borrower represents and
warrants that there is no Inside Debt incurred after June 30, 2001presently
outstanding, except for the following: NONE. Prior to incurring any Inside Debt
in the future, Borrower shall cause the person to whom such Inside Debt will be
owed to execute and deliver to Silicon a subordination agreement on Silicon's
standard form.

         (3)      SUBORDINATION AGREEMENTS. Borrower warrants and represents
that there is no presently outstanding loans from any third party incurred after
June 30, 2001 and Borrower further agrees that prior to incurring any loans in
the future, Borrower shall concurrently cause any such creditor to execute and
deliver a Subordination Agreement in such form as Silicon shall specify,
subordinating to the Obligations the indebtedness of Borrower to such creditor.

         (4)      INTELLECTUAL PROPERTY SECURITY AGREEMENT. As a condition
precedent to the effectiveness of this Agreement, Borrower shall have executed
and delivered an Intellectual Property Security Agreement (the "IP Security
Agreement"), substantially in the form attached hereto as Exhibit B.

                                       4
<PAGE>

SILICON VALLEY BANK                      SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

                                       5
<PAGE>

SILICON VALLEY BANK                      SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

BORROWER:                                   SILICON:

INFINIUM SOFTWARE, INC.                     SILICON VALLEY BANK, d/b/a

By: ___________________________             By: ________________________________

Title: ________________________             Title: _____________________________

                                       6

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