HYBRIDON INC
EX-10.43 LICENSE AND ROYALTY AGREEMENT
<DOCUMENT>
<TYPE>EX-10.43
<SEQUENCE>5
<FILENAME>b45660hiexv10w43.txt
<DESCRIPTION>EX-10.43 LICENSE AND ROYALTY AGREEMENT
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.43

                CONFIDENTIAL MATERIALS OMITTED AND FILED WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                          LICENSE AND ROYALTY AGREEMENT

         The Board of Supervisors of Louisiana State University and Agricultural
and Mechanical College, a public constitutional corporation, organized and
existing under the laws of the State of Louisiana ("LSU"); and Hybridon, Inc., a
corporation having a principal place of business at 620 Memorial Drive,
Cambridge, Massachusetts 02139 ("HYBRIDON" or "LICENSEE"); enter into the
following Agreement effective the 1st day of July, 1998 (the "EFFECTIVE DATE").

         WHEREAS LSU owns a partial interest in an invention concerning the
modulation of gene expression, for which invention a United States patent
application has been filed;

         WHEREAS Hybridon is in the business of manufacturing and selling
products useful in modulation of gene expression; and

         WHEREAS LSU and Hybridon have agreed to the following terms and
conditions, and desire to enter this License and Royalty Agreement (the
"AGREEMENT");

         THEREFORE, in consideration of the mutual obligations set forth in this
Agreement, LSU and Hybridon agree as follows:

                             ARTICLE I. DEFINITIONS

A.       "LICENSED PATENTS" shall mean: (1) Sudhir Agrawal, Jaindong Chen, and
Ruiwen Zhang, "Mdm2-Specific Antisense Oligonucleotides," United States patent
application serial number 08/916,384, filed August 22, 1997; and Jaindong Chen,
Sudhir Agrawal, and Ruiwen Zhang, "Mdm2-Specific Antisense Oligonucleotides,"
United States patent application serial number 09/073,567, filed May 6, 1998, a
continuation-in-part of prior application Serial No. 08/916,834; (2) any United
States patent application that claims the benefit of the filing date of the
applications of part (1) of this Paragraph under 35 U.S.C. Section 119(e) or 35
U.S.C. Section 120, provided in such a case that only those claims supported by
the specification of the original applications of part (1) shall be included;
(3) any United States patent, reissue patent, or reexamination certificate
resulting from the applications of parts (1) and (2) of this Paragraph,

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including any extension of the term of any such patent; and (4) any non-United
States patent or patent application substantially corresponding to any of items
(1) through (3) above.

B.       A "PATENT COUNTRY" shall mean any country in which at least one patent
application within Licensed Patents is pending (including any country elected or
designated in a pending Patent Cooperation Treaty application or in a pending
application filed with a regional patent system); or in which there is at least
one issued, unexpired patent within Licensed Patents. A country may cease to be
a "PATENT COUNTRY" under the conditions provided in Article II, Paragraph (D).

                            ARTICLE II. LICENSE GRANT

A.       SCOPE OF LICENSE. Subject to the terms and conditions of this
Agreement, LSU grants to Licensee, and Licensee accepts from LSU, an exclusive
license under LSU's partial interest in Licensed Patents to make, use, offer to
sell, sell, and import Licensed Products in each Patent Country. This license
may be subject to certain rights that the United States Government has in
Licensed Patents pursuant to 35 U.S.C. Sections 200-212.

B.       TERM. The term of this Agreement shall be until the last to expire of
any patent within Licensed Patents.

C.       SUPPLEMENTAL LICENSING TERMS AND CONDITIONS. The "Supplemental
Licensing Terms and Conditions" attached to this Agreement as Appendix A are
incorporated into and made an integral part of this Agreement. All terms defined
in the Supplemental Licensing Terms and Conditions (the "SUPPLEMENTAL TERMS")
shall have the same meaning in this Agreement. The provisions of the main body
of this Agreement and of the Supplemental Licensing Terms and Conditions shall
be construed so as to give full effect to both. However, in the event of an
otherwise irresolvable inconsistency, the provisions of the main body of this
Agreement shall control.

D.       EXPIRATION OR INVALIDITY OF PATENTS. In a particular Patent Country, in
the event that: (1) all issued claims within Licensed, Patents have expired or
are judicially held invalid or judicially held unenforceable, or that no patents
within Licensed Patents ever issue; and (2) no claims within Licensed Patents
are still pending in any application; and (3) all applicable appeals

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and appeal delays have run; then thereafter that country shall cease to be
considered a "Patent Country" within the contemplation of this Agreement.

                         ARTICLE III. ROYALTIES AND FEES

A.       (1)     LEGAL EXPENSES. Licensee shall pay or reimburse LSU for all
         reasonable past and future legal expenses for negotiating or drafting
         this Agreement, such amount not to exceed $5,000.00. Licensee shall
         also reimburse LSU for all reasonable and future legal expenses for
         reviewing any proposed sublicense agreements whether or not approved,
         such amount not to exceed $1,500.00 each. Such payment shall be due
         thirty (30) days after receipt of an invoice from LSU.

         (2)     PATENT PROSECUTION. Licensee shall manage the filing,
         prosecution, and maintenance of all applications and patents within
         Licensed Patents as Licensee in its discretion sees fit, in such
         countries as Licensee in its discretion sees fit, within the bounds
         imposed by applicable law. Licensee shall promptly provide LSU with
         copies of pertinent filing receipts and issued patents from all
         countries, including English translations where readily available.
         Licensee may abandon any patent application or patent with Licensed
         Patents if, in Licensee's judgment, it is prudent to do so, upon giving
         LSU reasonable notice of Licensee's intention to abandon. In such a
         case, LSU shall have the right, but not the obligation, to assume
         responsibility for future prosecution and maintenance of affected
         applications or patents. LSU shall at all times be a co-owner of
         Licensed Patents in all countries.

B.       MILESTONE PAYMENTS. Licensee will make the following milestone payments
within thirty (30) days after the described event occurs:

         (1)     A payment of $[**] upon the filing of an Investigational New
         Drug ("IND") for a Licensed Product;

         (2)     A payment of $[**] upon the commencement of Phase III clinical
         trials in any country for Licensed Product; and

         (3)     A payment of $[**] upon the filing and acceptance of the first
         New Drug Application ("NDA") or equivalent for a Licensed Product in
         any country.

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C.       ROYALTY.

         (1)     Licensee shall pay to LSU a royalty equal to the "Applicable
         Percentage" of Net Sales Receipts. The Applicable Percentage shall be
         [**] percent ([**]%) of Net Sales Receipts up to $50,000,000 in a given
         calendar year. For Net Sales Receipts over $50,000,000 in a given
         calendar year, the Applicable Percentage shall be [**] ([**]%). This
         royalty shall be paid quarterly, by January 31, April 30, July 31, and
         October 31, based on payments received by, and non-cash transfers for
         value made by Licensee during the prior three calendar months.

         (2)     If Licensee pays a third party (other than the University of
         Alabama) royalties on sales of Licensed Products on account of Patent
         rights that would necessarily and inherently be infringed by the
         practice of all inventions within the scope of the claims of Licensed
         Patents, then Licensee may deduct from the royalties otherwise payable
         to LSU under subparagraph (1) above for a given calendar quarter the
         smaller of the following two amounts: (a) half of the royalties
         otherwise due under subparagraph (1) for that calendar quarter; or (b)
         half of the royalties payable to the third party for that calendar
         quarter. Such deductions may not be carried forward or carried backward
         to any other calendar quarter. Only royalties based on sales of
         Licensed Products shall be included in part (b); amounts paid to the
         third party that are not based on such sales, i.e., initial licensing
         fees, milestone payments, and the like, shall not be included. This
         deduction applies only to royalties otherwise due under subparagraph
         (1) above, and does not apply to any other amounts due under this
         Agreement (e.g., milestone payments or minimum royalties). Evidence of
         such payments to third parties shall be submitted to LSU with the
         quarterly reports required by Paragraph E of this Article III.

D.       MINIMUM ROYALTIES. Minimum royalty payments under Paragraph (B) of this
Article III shall be required to keep Licensee's license under this Agreement in
force. The date of approval of the first New Drug Application or equivalent for
a Licensed Product in any country shall begin the annual clock (e.g., if
approval is received by August 1, 1999, then the first year begins August 1,
1999 and ends August 1, 2000) by which Licensee shall pay LSU an annual minimum
royalty according to the following schedule:

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<TABLE>
<CAPTION>
PERIOD                                           MINIMUM ANNUAL ROYALTY PAYMENT
------                                           ------------------------------
<S>                                              <C>
First Year                                                   $[**]

Second Year                                                  $[**]

Third Year                                                   $[**]

Each Subsequent Calendar Year, or                            $[**]
Fraction Thereof, During the Term
of this Agreement
</TABLE>

The minimum royalty payment for a given year shall be paid to LSU not later than
thirty (30) days after the end of the given year. No royalty or minimum royalty
payment may be carried forward or carried back as a credit against royalties or
minimum royalties in any other period. If Licensee fails to make any royalty or
minimum royalty payment timely, and if LSU has notified Licensee of that
failure, and if that failure has not been cured within thirty (30) days of
Licensee's receipt of that notice, then LSU shall have the option to terminate
this Agreement, or to make Licensee's license under this Agreement nonexclusive,
in either case upon giving Licensee thirty days written notice. If Licensee's
license becomes nonexclusive, it shall continue to be governed by all provisions
of this Agreement not inherently inconsistent with such nonexclusivity, except
that minimum royalty obligations (and only minimum royalty obligations) shall be
reduced by [**] percent ([**]%).

E.       QUARTERLY REPORTS. Licensee shall forward to LSU quarterly reports on
or before January 31, April 30, July 31, and October 31 of each year, for the
preceding three calendar months, containing the data, information, and
documentation necessary to determine fully the amounts owed by Licensee to LSU
under this Agreement, and containing quarterly reports on the status of
Licensee's marketing of Licensed Products. Such a report shall be made for each
quarter, whether or not any payment is due for that quarter.

            ARTICLE IV. REPRESENTATIONS, WARRANTIES, AND DISCLAIMERS

A.       NO WARRANTIES OR REPRESENTATIONS. LSU makes no warranty or
representation whatsoever as to the usefulness of Licensed Patents or Licensed
Products, or their fitness for the purpose for which intended or for any other
purpose. LSU makes no representations, and extends no warranties of any kind,
either express or implied, except as expressly provided in this

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Agreement. LSU warrants that it owns a partial interest in an invention defined
by the Licensed Patents. LSU represents that to the best knowledge, information,
and belief of Dr. Jaindong Chen, the patent application fully complies with the
requirements of 37 C.F.R. Section 1.56 as of the Effective Date of this
Agreement. Hybridon represents that to the best knowledge, information, and
belief of Dr. Sudhir Agrawal, the patent application fully complies with the
requirements of 37 C.F.R. Section 1.56 as of the Effective Date of this
Agreement.

B.       DISCLAIMERS. Nothing in this Agreement shall be construed as:

         1.       A warranty or representation by LSU as to the validity,
                  enforceability, scope, or inventorship of any patent or know
                  how, except as qualified above; or

         2.       A warranty or representation by LSU that anything licensed,
                  sublicensed, made, used, sold, imported, or otherwise disposed
                  of under any license granted in or sublicense permitted by
                  this Agreement is or will be free from infringement of patents
                  of third parties or other rights of third parties; or

         3.       An obligation that LSU bring or litigate actions against third
                  parties for infringement, except to the extent and in the
                  circumstances stated in Article 4 of the Supplemental Terms;
                  or

         4.       A requirement that LSU file or prosecute any patent
                  application, secure the issuance of any patent, or maintain
                  any patent, except as provided in Article III, Paragraph
                  (A)(4); or

         5.       An establishment of a partnership, joint venture, agency, or
                  employer-employee relationship between the parties; and
                  neither party shall represent the contrary to anyone else.

C.       DISCLAIMER OF RESPONSIBILITY. LSU assumes no responsibilities whatever
for any damages caused to Licensee, any Affiliate, any vendees, other
transferees, or sublicensees of or by any product or process incorporating or
made by the use of inventions licensed under this Agreement, or incorporating or
made by the use of any information furnished under this Agreement.

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                          ARTICLE V. USE OF LSU'S NAME

         Licensee may make no use whatsoever of LSU's name, marks, insignia, or
logos; or of the name of any LSU campus, department, center, or institute; or
the name of any LSU employee (including without limitation the name of any named
inventor of any Licensed Patent); in news releases, advertisements, promotional
materials, or otherwise, without the prior written consent of LSU for each such
use.

                             ARTICLE VI. INSURANCE

A.       LICENSEE. Throughout the term of this Agreement, and to the extent
applicable from and after the date of the first commercial sale of a Licensed
Product, Licensee shall maintain commercially insured policies of insurance
which provide coverage and limits as required by statute or necessary to
prudently insure the activities and operations of Licensee. The commercial
general liability insurance policy shall include the interests of LSU as an
additional insured and provide coverage limits of not less than $2,000,000
combined single limits as respects premises, operations, contractual liability
and, if applicable, liability arising out of products and/or completed
operations. Licensee shall provide LSU with certificates of insurance for
commercially insured policies. It is expressly agreed that the insurance is a
minimum requirement which shall not in any way limit the liability of Licensee
and shall be primary coverage. The amount of liability insurance coverage
required by this Article is subject to the inflation adjustment defined in
Article 12 of the Supplemental Terms.

B.       SUBLICENSEE OR ASSIGNEE. Each sublicensee, assignee, or transferee of
any of Licensee's rights under this Agreement shall maintain commercially
insured policies of insurance, or programs of self-insurance with financial
reserves sufficient to support its obligations under the Agreement, which
provide coverage and limits as required by statute or necessary to prudently
insure the activities and operations of Sublicensee. The commercial general
liability insurance policy, or liability self-insurance programs, shall include
the interests of LSU as an additional insured and provide coverage limits of not
less than $2,000,000 combined single limits as respects premises, operations,
contractual liability and, if applicable, liability arising out of products
and/or completed operations. Sublicensee shall provide LSU with certificates of
insurance for commercially insured policies, or a letter from Sublicensee's
independent auditors

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stating the self-insurance program is adequate for $2,000,000 protection. It is
expressly agreed that the insurance or self-insurance is a minimum requirement
which shall not in any way limit the liability of Sublicensee and shall be
primary coverage. The amount of liability insurance coverage required by this
Article is subject to the inflation adjustment defined in Article 12 of the
Supplemental Terms.

                              ARTICLE VII. NOTICES

         All written notices, payments, and other correspondence under this
Agreement shall be considered given when deposited in the United States Mail,
first class postage prepaid, to:

HYBRIDON, INC.:

E. Andrews Grinstead, III
Hybridon, Inc.
620 Memorial Drive
Cambridge, MA 02139

LSU:                                          IF LSU, AN ADDITIONAL COPY TO:

Chancellor                                    Office of Research
Louisiana State University Medical            Louisiana State University Medical
Center                                        Center
433 Bolivar Street                            433 Bolivar Street
New Orleans, Louisiana 70112-2223             New Orleans, Louisiana 70112-2223

These names or addresses may be changed by giving notice as provided in this
Paragraph.

                          ARTICLE VIII. MISCELLANEOUS

A.       ENTIRE UNDERSTANDING. This Agreement (including the Supplemental Terms)
constitutes the entire understanding between LSU and Licensee, and supersedes
any prior agreement or understanding on the same subject matter. Any
modification or amendment to this Agreement shall not be effective unless and
until reduced to writing and signed on behalf of both LSU and Licensee.

B.       CONSTRUCTION. The parties acknowledge that this Agreement followed
extended and extensive negotiations by the parties, and that this Agreement
incorporates the negotiated suggestions of both parties, and that both parties
have had the benefit of the advice of counsel in the conduct of these
negotiations. The parties therefore agree that no presumptions shall arise

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favoring any party by virtue of the authorship of any of the provisions of this
Agreement (including the Supplemental Terms).

C.       HEADINGS. The headings or captions appearing at the beginnings of the
Articles and Paragraphs of this Agreement (including the headings and captions
appearing in the Supplemental Terms) are provided for convenience of reference
only, and do not constitute part of this Agreement.

WITNESSES:                                      BOARD OF SUPERVISORS OF
                                                LOUISIANA STATE UNIVERSITY
                                                AND AGRICULTURAL AND
                                                MECHANICAL COLLEGE

  H. Douglas Grayson                            By: /s/ Allen A. Copping
                                                    ----------------------------
                                                    Allen A. Copping, President

  Barbara Robinson                              Date: 6/30/99

                                                HYBRIDON, INC.

                                                By: /s/ E. A. Grinstead, III
_________________________                           ----------------------------
                                                    E. Andrews Grinstead, III,
                                                    Chairman, Ceo, and President

_________________________                       Date: 24 June 1998

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                                                                      APPENDIX A

                   SUPPLEMENTAL LICENSING TERMS AND CONDITIONS
         FOR LSU/HYBRIDON LICENSE AND ROYALTY AGREEMENT OF JULY 1, 1998

                                 1. DEFINITIONS

1.1      The "AGREEMENT" shall mean the License and Royalty Agreement between
LSU and Hybridon of July 1, 1998, the agreement to which these Supplemental
Licensing Terms and Conditions are appended. The term "AGREEMENT" shall also be
deemed to include these incorporated Supplemental Licensing Terms and
Conditions. All terms defined in the main body of the Agreement shall have the
same meaning in these Supplemental Licensing Terms and Conditions (the
"SUPPLEMENTAL TERMS").

1.2      "LICENSED PRODUCT" shall mean any product that is claimed by one or
more pending or issued claims of Licensed Patents; or that is produced by a
process claimed by one or more pending or issued claims of Licensed Patents; or
that is especially made or especially adapted for use in a process claimed by
one or more pending or issued claims of Licensed Patents, and that is not a
staple article or commodity of commerce suitable for a substantial use that does
not encompass such a process; or that is packaged or sold with instructions for
using the product in a process claimed by one or more pending or issued claims
of Licensed Patents.

1.3      "NET SALES RECEIPTS" shall mean all revenue received or accrued by
Licensee during the term of the Agreement, arising out of or related to the use,
transfer, lease, or sale of any Licensed Product at the actual amounts charged
by Licensee or by any Affiliate. "NET SALES RECEIPTS" shall also include
consideration received by Licensee for a Licensed Product that is made during
the term of a Licensed Patent, but that is used, sold, or otherwise transferred
after that term. "NET SALES RECEIPTS" shall not include the following items,
provided that the deducted items are separately invoiced or documented and do
not exceed the reasonable and customary amounts for such items in the particular
country: (1) trade, cash, and quantity discounts actually allowed and taken
directly with respect to such sales; (2) transportation charges or allowances,
if any, added to the price; (3) sales, excise, or other taxes imposed upon and
with specific reference to the particular sales of Licensed Products or Licensed
Processes that a Special Party is required to collect and remit to a government
as a matter of law; but in no circumstances shall any deduction or exclusion
from Net Sales Receipts be taken for any franchise tax or income tax; and (4)
amounts repaid or credited on account of rejections, defects, recalls, returns,
rebates, or retroactive price reductions. No other deductions of any kind shall
be made, whether for agents' commissions or otherwise. Where all or part of the
consideration received by Licensee or an Affiliate of Licensee, as otherwise set
forth in this Paragraph 1.3 for the use or transfer of any Licensed Product is
not cash, or where the final use of a Licensed Product is by a Special Party (as
that term is defined below), then the "NET SALES RECEIPTS" for that Licensed
Product for purposes of computing royalties or other amounts due under the
Agreement shall be deemed to be the fair market value for such Licensed Product.
In determining fair market value, appropriate weight shall be given to any
arms-length transaction by Licensee or an Affiliate of Licensee involving the
same or a similar Licensed Product. If any Licensed Product is sold or otherwise
transferred between any of the following persons (collectively, "SPECIAL
PARTIES"): Licensee, a Sublicensee, and Affiliates of Licensee or of a
Sublicensee--then "NET SALES

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RECEIPTS" shall be counted for that Licensed Product only once, and shall be the
consideration defined above for the final sale or transfer of the Licensed
Product to a third party, or the final use of the Licensed Product by a Special
Party.

1.4      "AFFILIATE" shall mean a company or other person controlling,
controlled by, or under common control with Licensee, where "control" shall mean
the direct or indirect control by ownership or otherwise of more than fifty
percent (50%) of the outstanding voting shares or voting rights, or other
similar measure of control. An "AFFILIATE" shall also include a party who has
been approved by LSU to act as Licensee's joint venture partner in performing
one or more activities under this Agreement. An "AFFILIATE" of a Sublicensee
shall mean a company or other person controlling, controlled by, or under common
control with that Sublicensee, where "control" shall mean the direct or indirect
control by ownership or otherwise of more than fifty percent (50%) of the
outstanding voting shares or voting rights, or other similar measure of control.

1.5      "PROSECUTION" or to "PROSECUTE" means to take action in the United
States Patent and Trademark Office (or, if appropriate in context, in a
non-United States patent office) respecting a patent application, as provided
generally in title 37 of the Code of Federal Regulations (or, if appropriate in
context, as provided in analogous regulations of a non-United States patent
office).

1.6      "MAINTENANCE" or to "MAINTAIN" means to pay maintenance fees for a
patent under 35 U.S.C. Section 41(b) and (c) (or, if appropriate in context, to
pay taxes or annuities to keep a patent application pending, or patent in force
in a country other than the United States).

                                2. LICENSE GRANT

2.1      RIGHTS OF AFFILIATES. The license granted to Licensee by the Agreement
shall extend to any Affiliate of Licensee as well, provided that prior to the
exercise by any Affiliate of any rights under the Agreement, LSU shall be given
a written notice, signed on behalf of both Licensee and each such Affiliate: (1)
stating that the Affiliate intends to exercise such rights, and (2) agreeing
that the Affiliate and Licensee shall be solidarily (i.e., jointly and
severally) liable for all obligations to LSU under the Agreement arising from
the activities of that Affiliate. The activities of the Affiliate under the
Agreement shall be deemed to be the activities of Licensee. The rights of any
Affiliate under the Agreement shall continue only so long as the Agreement
continues in effect with respect to Licensee; such rights shall terminate, for
example, upon any termination, assignment, or transfer of Licensee's rights
under the Agreement. Furthermore, an Affiliate's rights under the Agreement
shall terminate on the occurrence of an event (for example, a sale or other
transfer of the Affiliate's stock) that causes an entity that was once an
Affiliate no longer to be an Affiliate under the definition of Paragraph 1.5 of
these Supplemental Terms. An Affiliate may not sublicense, assign, or otherwise
transfer any rights that Affiliate has acquired under the Agreement.

2.2      RESTRICTIONS ON ASSIGNMENT, SUBLICENSE, OR TRANSFER. Licensee shall not
assign, transfer, or sublicense any rights under the Agreement without the
express prior written approval of LSU, except as provided below in 2.2(a), any
such approval not to be unreasonably withheld and limited to issues of adequate
protection of LSU's interests. The sale or sales of a non-

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controlling interest in Licensee shall not constitute an assignment, transfer,
or sublicense within the meaning of this Paragraph. Licensee shall reimburse LSU
for all reasonable and future legal expenses for reviewing any proposed
sublicense agreements whether or not approved, such amount not to exceed
$1,500.00 each.

         (a)      LSU's approval of a sublicense is not required if each of the
following five conditions is satisfied: (I) the transaction must be a sublicense
of rights under this Agreement, rather than an assignment or other transfer of
rights; (II) the sublicense may not purport to transfer greater rights in
Licensed Patents than are granted to Hybridon by this Agreement; (III) the
sublicense must be expressly restricted from granting any further
sub-sublicense, assignment, or transfer of the sublicensed rights, except to an
affiliate of the sublicense, or except in connection with a merger, a
consolidation, or a transfer of substantially all the sublicensee's assets, or
except in a country where the sublicensee or an affiliate is not licensed to do
business; (IV) LSU must be given a copy of the fully executed sublicense within
thirty days of its execution; and (V) the sublicense must include provisions
that expressly obligate the sublicensee itself to provide LSU with protections
not less than those found in the following provisions of the present Agreement:
Article V; Article VI; (Supplemental Terms) Paragraphs 2.7, 5.1 through 5.4,
6.1, and 9.1 through 9.4. Hybridon shall be solidarily (i.e., jointly and
severally) liable for all obligations of the sublicensee to LSU where a
sublicense is granted without LSU's approval.

         (b)      Unless each of the above five conditions (i) - (v) set forth
in subparagraph (a) of this Paragraph 2.2 of these Supplemental Terms is
satisfied, Licensee shall not sublicense any rights under this Agreement without
LSU's prior, written approval, the granting of such approval not to be
unreasonably withheld.

2.3      NO LICENSE BY ESTOPPEL. Except as the Agreement may expressly and
unambiguously provide otherwise, nothing in the Agreement shall be construed as
granting by implication, estoppel, or otherwise any licenses or rights under any
patents, patent applications, or know how owned in whole or in part by LSU,
other than the express license under Licensed Patents provided in Paragraph (A)
of Article II of the Agreement, regardless of whether such patents, patent
applications, or know how are dominant of or subordinate to any patent within
Licensed Patents.

2.4      EFFECT OF PATENT INVALIDITY. If no patent within Licensed Patents ever
issues, or if all such patents are judicially held invalid or judicially held
unenforceable and there are no longer any pending applications within Licensed
Patents in that country, and all applicable appeals and appeal delays have
expired, then thereafter the term of this Agreement shall expire.

2.5      MARKETING OBLIGATIONS. Licensee shall: (1) make diligent efforts
commensurate with those employed by pharmaceutical companies of similar size to
develop commercially marketable Licensed Products, and to develop competitive
markets for those Licensed Products in the U.S. and European countries, in order
to maximize Net Sales Receipts; (2) make diligent efforts to obtain any state,
federal, or other governmental licenses or regulatory clearances necessary for
Licensee's intended use of Licensed Products; and (3) review Licensee's progress
of the above performance obligations with appropriate LSU personnel at intervals
of six months to assure a reasonable level of contact, communication, and
compliance.

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2.6      REGULATORY APPROVAL. Licensee will undertake all efforts required to
obtain any state, federal, or other governmental license or regulatory clearance
necessary for the use of Licensed Products, and all resulting expenses of this
undertaking shall be borne solely by Licensee. Any research necessary or
desirable for the commercialization or marketing of Licensed Products by
Licensee shall be the sole responsibility of Licensee. Licensee, at Licensee's
sole expense, will prepare and deliver all necessary and appropriate documents,
and take all necessary and appropriate actions, to seek to obtain any such
license or regulatory clearance.

2.7      RESERVED LSU RIGHTS. The license granted by the Agreement is subject to
a reserved, non-exclusive, worldwide right in LSU to make, have made, use, offer
to sell, sell at cost, and import Licensed Products for experimental,
educational, or noncommercial purposes, in any field of use, throughout the term
of the Agreement, including any extensions of the term of the Agreement.

                             3. FEES AND ROYALTIES

3.1      GENERAL. The various fees and royalties that are due from Licensee to
LSU under the Agreement are cumulative, and not exclusive. In other words, each
such amount is to be paid without regard to any other amount that may be due. In
the event any claim within Licensed Patents is judicially held invalid or
judicially held unenforceable, and all applicable appeals and appeal delays have
run, then royalties and fees from that point forward (but not retroactively)
shall be computed as if that claim had never issued.

3.2      PATENT EXPIRATION. The obligation to pay royalties under any patent
within Licensed Patents shall terminate as to each such patent upon its
expiration, except that royalties accrued but not paid prior to such expiration
shall be payable with the next quarterly payment otherwise due under Paragraph
(B) of Article III of the Agreement. If a Licensed Product is covered by claims
of more than one patent within Licensed Patents, the obligation to pay royalties
for that Licensed Product shall continue so long as any such patent has not
expired.

3.3      TERMINATION. Upon termination of the Agreement for any reason, Licensee
shall pay LSU within 60 days all royalties and other amounts that have accrued
on or before the termination, regardless of whether such royalties or other
amounts would otherwise be due.

3.4      SUBLICENSE PAYMENTS.

         (1)     Payments due to LSU on account of a bona fide, arms-length
                 sublicense shall be computed under this Paragraph 3.4 only.
                 Royalties or other consideration received by Licensee from such
                 a sublicense shall not be included in computing the Net Sales
                 Receipts defined in Paragraph 1.3 of these Supplemental Terms;
                 nor shall royalties be computed on such amounts under Paragraph
                 (B) of Article III of the Agreement; nor shall amounts paid by
                 Licensee to LSU on account of such a sublicense be credited
                 against minimum royalty payments under Paragraph (C) of Article
                 III of the Agreement.

         (2)     Upon signing a sublicense agreement, Licensee shall pay to LSU
                 one of the following amounts: (a) $[**] it the sublicense does
                 not require an initial licensing

                                     - 13 -

<PAGE>

                 fee or other initial payment; or (b) $[**] if the sublicense
                 does require an initial licensing fee or other initial payment.

         (3)     On a quarterly basis, on the same schedule as provided in
                 Paragraph (C) of Article III of the Agreement, Licensee shall
                 pay to LSU a royalty equal to the "Appropriate Percentage" of
                 Net Sales Receipts of the Sublicensee (substituting
                 "Sublicensee" for "Licensee" in the definition of Paragraph 1.3
                 of these Supplemental Terms). The Appropriate Percentage for
                 Sublicensee shall be [**] percent ([**]%) of Net Sales Receipts
                 of Sublicensee up to $50,000,000 in a given calendar year. For
                 Net Sales Receipts of Sublicensee over $50,000,000 in a given
                 calendar year, the Appropriate Percentage shall be
                 [**] percent ([**]%). These amounts shall be computed
                 separately computed separately for each sublicense and for each
                 calendar quarter, without regard to any amounts paid for any
                 other calendar quarter or for any other sublicense.

         (4)     If Licensee pays a third party (other than the University of
                 Alabama) royalties on sublicensee sales of Licensed Products on
                 account of Patent rights that would necessarily and inherently
                 be infringed by the practice of all inventions within the scope
                 of the claims of Licensed Patents, then Licensee may deduct
                 from the royalties otherwise payable to LSU under subparagraph
                 (3) above for a given calendar quarter the smaller of the
                 following two amounts: (a) [**] percent ([**]%) of the
                 royalties otherwise due under subparagraph (3) for that
                 calendar quarter; or (b) [**] percent ([**]%) of the royalties
                 payable to the third party for that calendar quarter. Such
                 deductions may not be carried forward or carried backward to
                 any other calendar quarter. Only royalties based on sales of
                 Licensed Products shall be included in part (b); amounts paid
                 to the third party that are not based on such sales, i.e.,
                 initial licensing fees, milestone payments, and the like, shall
                 not be included. This deduction applies to royalties otherwise
                 due under subparagraph (3) above, and does not apply to any
                 other amounts due under this Agreement. Evidence of such
                 payments to third parties shall be submitted to LSU with the
                 quarterly reports required by Paragraph E of Article III.

3.5      CURRENCY. All dollar amounts defined in the Agreement refer to United
States dollars. All payments under the Agreement shall be in United States
currency. Where payments are received by Licensee in a given non-United States
currency, conversion to United States currency will be made as follows: All
payments received in that currency during each calendar month will be totalled.
The total payments for the calendar month will then be converted to United
States currency at the "mean exchange rate" for that month. The "mean exchange
rate" for a month is the arithmetic mean of the spot exchange rates reported in
the Wall Street Journal for the following two dates: (a) the first business day
falling on or after the 7th of the month, and (b) the first business day falling
on or after the 22nd of the month. The pertinent exchange rate for purposes of
computing this mean is the number of United States dollars (or fraction thereof)
equivalent to one unit of foreign currency.

3.6      LATE PAYMENTS. If any payment is made more than thirty days after the
date due under the Agreement, then Licensee shall also pay LSU interest at the
rate of fifteen percent (15%) per annum until paid. If either of these amounts
is higher than allowed by applicable law, then the


                                     - 14 -

<PAGE>

highest amount allowed by law shall apply. However, in no event shall the
provisions of this paragraph be construed as a grant of permission for any
payment delays.

3.7      PAYMENT PROCEDURE. All payments due under this agreement shall be
payable to "LOUISIANA STATE UNIVERSITY," and shall be made at the appropriate
address given for notices in Article VII of the Agreement. All payments due
shall be made without any deduction for taxes, assessments, or charges of any
kind that may be imposed on Licensee by any government or by any political
subdivision of any government. Any such taxes, assessments, or other charges
shall be assumed solely by Licensee.

            4. ENFORCEMENT OF LICENSED PATENTS, AND RELATED MATTERS

4.1      INFRINGEMENT OF LICENSED PATENT RIGHTS BY OTHERS. Hybridon shall have
the right, but not the obligation, to bring suit in its own name for
infringement of any patent of the Licensed Patents in any Patent Country. Such
suit may be brought and conducted by Hybridon initially at its sole cost and
expense, provided, however that LSU shall have the right to have LSU's attorney
advised concerning such suit and to have LSU's attorney consult with Hybridon's
attorneys concerning the conduct of such suit. LSU shall cooperate fully with
Hybridon in the conduct of any such suit, at Hybridon's expense. Additionally,
LSU agrees to be named an additional party-plaintiff, if necessary or desirable
and requested by Hybridon, in any such suit brought by Hybridon. Hybridon shall
not be required to pay directly or reimburse LSU for fees and expenses for legal
services performed by LSU's attorney at the request of LSU that are not required
by the rules of procedure or order of a court in the conduct of such suit and
that have not been specifically requested by Hybridon. Any recovery from such
suit (whether by way of judgment or settlement) shall be shared fifty percent
(50%) to Hybridon and fifty percent (50%) to LSU after deduction of Hybridon's
reasonable costs and expenses in conducting the suit. Should Hybridon elect not
to file and prosecute a suit for infringement of any patent of the Licensed
Patents, then LSU shall have the right, but not the obligation, to do so in
LSU's name, for LSU's benefit and at LSU's expense. Hybridon shall cooperate
fully with LSU in the conduct of any such suit, and shall assign to LSU any
rights Hybridon might have for damages or injunction against the defendant in
that suit. Additionally, Hybridon agrees to be named an additional
party-plaintiff, if necessary or desirable and requested by LSU, in any such
suit brought by LSU.

4.2      LITIGATION DOES NOT AFFECT ROYALTIES. The pendency of a lawsuit for
infringement of Licensed Patents, or otherwise concerning the validity or
enforceability of Licensed Patents shall not affect in any way Licensee's
obligations to pay royalties or other amounts under the Agreement.

4.3      INTERFERENCE. Licensee shall pay all legal and other costs associated
with any interference proceedings involving any of Licensed Patents, whether
such proceedings be in court or in the Patent and Trademark Office. Decisions
regarding the initiation, prosecution, defense, appeal, or settlement of any
such interference proceedings shall be made jointly by LSU and Licensee.

                                     - 15 -

<PAGE>

                                  5. AUDITING

5.1      LICENSEE'S RECORDS. Licensee (and any Affiliate exercising rights under
the Agreement) shall make and keep full and accurate books and records in
accordance with Generally Accepted Accounting Principles showing the
sublicensing, manufacture, use, distribution, importation, lease, and sale of
any Licensed Product by Licensee and by Licensee's Affiliates. Licensee shall
require any Sublicensees to keep similar books and records. Licensee agrees that
LSU, LSU's designee, or the Louisiana Legislative Auditor may inspect and audit
the books and records of Licensee (and of any Affiliate exercising rights under
this Agreement) pertaining to Licensed Products during regular business hours on
ten days written notice, and may make copies of those books and records at
Licensee's place of business to the extent necessary to verify the payments due
under the Agreement. Such inspection shall be limited to one audit per year and
to an audit of, at most, the three prior years. Any such audit shall be at the
expense of LSU, of LSU's designee, or of the Louisiana Legislative Auditor, as
applicable; except that should such an audit indicate an underpayment of 10% or
more for any calendar quarter, then Licensee shall pay the cost of the audit
within thirty days of its completion.

5.2      CONFIDENTIALITY. LSU agrees that, except to the extent that LSU may be
required by applicable law to so disclose, LSU will not disclose, and will keep
confidential for a period of five years, any information about Licensee's
customers, prices, or other confidential information about the business affairs
of Licensee that LSU may discover in the course of any examination of books and
records permitted under this Article 5, provided that at the time of the audit
Licensee clearly identifies any such information that Licensee considers to be
confidential.

5.3      SUBLICENSE OR ASSIGNMENT. In the event that any right granted under the
Agreement is sublicensed, assigned, or otherwise transferred, any agreement
sublicensing, assigning, or otherwise transferring that right shall grant LSU
the same rights to audit the books and records of the sublicensee, assignee, or
other transferee as LSU has with respect to Licensee's books and records under
this Article 5.

5.4      TERM OF AUDIT RIGHTS. The right of LSU to inspect the books and records
of Licensee or of any Affiliate, assignee, or transferee shall continue past the
term or termination of the Agreement, until the later of the date on which all
payments due under the Agreement have been made, or two years after the
expiration of the Agreement.

                               6. INDEMNIFICATION

6.1      Licensee shall indemnify, hold harmless and defend LSU, its agents,
officers, board members, employees, students, and the inventors of Licensed
Patents against all claims, suits, losses, liabilities, damages, costs, fees and
expenses (including reasonable attorneys' fees) resulting from or arising out of
the exercise of this license or any sublicense. This indemnification shall
include, but is not limited to, any and all claims alleging product liability,
personal injury, or suits for declaratory judgment or claim or counterclaim for
infringement, noninfringement, validity, invalidity, enforceability,
unenforceabilty, ownership, or inventorship of Licensed Patents. LSU shall
promptly notify Licensee in writing of any claim or suit brought against LSU in
respect of which LSU intends to invoke the provisions of this paragraph, and
Licensee shall have the right to defend with counsel of its own choosing under
its control.

                                     - 16 -

<PAGE>

Licensee shall keep LSU informed on a current basis of its defense of any claims
pursuant to this paragraph.

                                   7. DEFAULT

7.1      If Licensee is in breach or default of any term or condition of the
Agreement, or fails to perform any obligation under the Agreement, LSU may give
written notice to Licensee, specifying the reason why there is a default or
breach, after which notice Licensee shall have 30 days to cure the breach. If
the breach is not cured, or if efforts satisfactory to LSU are not instituted to
cure the breach within that 30 day period, the Agreement may be terminated at
the option of LSU, upon written notice of termination to Licensee, and Licensee
shall have no further rights to sublicense, make, use, import, offer to sell, or
sell Licensed Patents or Licensed Products. If the breach is cured, or if
efforts satisfactory to LSU are instituted to cure the breach within the 30 day
period, the Agreement shall continue as if no breach had occurred; provided,
however, that upon the third default arising out of failure to pay monies due to
LSU under the Agreement, or upon default or rejection under the provisions of
Article 8 of these Supplemental Terms, no notice or period to cure shall be
necessary, and LSU may terminate the Agreement at its option without further
notice to Licensee and without allowing Licensee a period to cure, and in such
an event Licensee shall have no further right to sublicense, make, use, import,
offer to sell, or sell Licensed Patents or Licensed Products.

7.2      If Licensee is in breach or default of any term or condition of a
separate research agreement to be executed within sixty (60) days of the
Effective Date of this Agreement between Licensee and LSU regarding a project
concerning the technology of the Licensed Patents under the direction of Dr.
Jaindong Chen, then LSU may, at LSU's option, treat the breach or default of
that other contract as a breach or default of the present Agreement, subject to
the notice, cure, and termination provisions of Paragraph 7.1 above.

                           8. BANKRUPTCY OF LICENSEE

8.1      ACCELERATED PROCEDURES. If bankruptcy proceedings under any Chapter of
the Bankruptcy Code, or other insolvency proceedings, voluntary or involuntary,
are filed by or against Licensee, then Licensee or its representative must
assume the Agreement within sixty days of that filing, and Licensee must cure
all defaults existing under the Agreement within that sixty day period, and
Licensee must provide such adequate assurance of future performance of its
obligations under the Agreement as may be required by the Bankruptcy or other
Court, and should Licensee fail to assume the Agreement within sixty days of
that filing, or should Licensee fail to cure all defaults existing under the
Agreement within that sixty day period, or should Licensee fail to provide
adequate assurance of its future performance of its obligations under the
Agreement as may be required by the Bankruptcy or other Court, then the
Agreement shall be deemed to be rejected.

8.2      FAILURE TO HAVE PROCEEDINGS DISMISSED. If any bankruptcy or other
insolvency proceedings filed by or against Licensee are not dismissed within
ninety days of their filing, those proceedings shall constitute default by
Licensee of the terms of the Agreement. Upon default under this Paragraph, LSU
may, at its option, and without notice or period to cure,

                                     - 17 -

<PAGE>

terminate the Agreement, in which case Licensee shall have no further rights to
sublicense, make, use, offer to sell, sell or import Licensed Patents or
Licensed Products.

                      9. ADDITIONAL RIGHTS AND OBLIGATIONS

9.1      COMPLIANCE WITH LAWS. In fulfilling its obligations under the
Agreement, Licensee shall comply with all applicable licensing, regulatory, and
statutory requirements. Licensee shall be responsible for paying any taxes or
other assessments, and for complying with all applicable laws and regulations of
the United States and other countries, including without limitation all
applicable laws and regulations relating to the environment, to human drugs, to
human medical devices, to human medical treatment, to veterinary drugs, to
agriculture, and to foodstuffs.

9.2      TERMINATION TERMINATES SUBLICENSES. Any termination of the Agreement
shall terminate any sublicense that Licensee has entered under the Agreement to
the extent the sublicense is dependent on LSU's interests in Licensed Patents.
However, termination of the Agreement shall not affect any sublicense that is
dependent on Hybridon's interest in Licensed Patents. Any sublicensee desiring
different treatment may request a different agreement regarding termination of
sublicense rights directly from LSU at the time that it negotiates with Licensee
for a sublicense agreement, but LSU shall have no obligation to consent to such
a different agreement.

9.3      MARKING. Licensee, any Affiliate of Licensee, and each sublicensee
shall mark any article or composition within the claims of any issued patent
within Licensed Patents, or any article or composition intended for a use within
the claims of any issued patent within Licensed Patents, with the words
"Patent," "Patents," "For Use Under Patent," or "For Use Under Patents," and the
number or numbers of each such issued patent. When, from the character of the
article or composition, this marking cannot be made, the marking shall instead
be placed on a label attached to any packaging containing any such article or
composition.

9.4      PROHIBITION ON MISUSE. Licensee shall engage in no activity that would
constitute a misuse of any patent or patent application within Licensed Patents.
Each sublicense, assignment, or other transfer of any rights in Licensed Patents
shall contain a provision forbidding the sublicensee, assignee, or other
transferee from engaging in any activity that would constitute a misuse of any
item in Licensed Patents.

9.5      REQUEST BY LSU FOR LICENSEE TO USE LSU NAME. At LSU's request, Licensee
shall include LSU's name in any news release, advertisement, or promotional
material in a mutually acceptable manner. Licensee's acceptance of a manner of
thus using LSU's name, as proposed by LSU, shall not be unreasonably withheld.

9.6      LICENSEE TRADEMARKS. Subject to Article V of the Agreement and
Paragraph 9.5 of these Supplemental Terms, Licensee may acquire its own
trademarks for use in connection with Licensed Products.

                            10. CONSULTING SERVICES

10.1     CONSULTING SERVICES. LSU will entertain requests by Licensee to allow
LSU employees, acting independently of their employment at LSU, to serve as
consultants to Licensee. The terms

                                     - 18 -

<PAGE>

and conditions of any such consulting agreements shall be negotiated between
Licensee and any prospective consultant, and shall be consistent with the laws
of the State of Louisiana and the rules, regulations, and policies of LSU. It is
understood that LSU employees who act as consultants may not ordinarily grant
rights in intellectual property to the outside employer.

                                11. PUBLICATION

11.1     PUBLICATION. Whereas LSU is an academic institution, LSU shall be free
to make such publications as LSU sees fit concerning Licensed Patents or
Licensed Products.

                            12. INFLATION ADJUSTMENT

12.1     INFLATION ADJUSTMENT. The dollar amounts of any insurance specifically
stated in the Agreement to be subject to adjustment for inflation under
Paragraph 12 of the Supplemental Terms are subject to adjustment as follows.
(This inflation adjustment does not apply to any item that does not specifically
refer to the inflation adjustment of this Paragraph 12 of these Supplemental
Terms.) The "MULTIPLIER" on any given date is defined to be the ratio of (a) the
Consumer Price Index for All Urban Consumers, All Items, U.S. City Average (the
"INDEX") most recently issued by the United States Government as of that date to
(b) the Index on the effective date of the Agreement. At any time when the
Multiplier is at least 1.10 times the value of the Multiplier on the date of the
most recent adjustment under this Paragraph (or is at least 1.10 if there has
been no previous adjustment under this Paragraph), then LSU may give Licensee
written notice that the effective amount of each of the dollar amounts that is
subject to inflation adjustment under the Agreement is adjusted to the original
amount as specified in the Agreement, multiplied by the Multiplier as of the
date of the written notice. The adjusted amounts are effective immediately
following this notice, and shall then remain constant until another notice of
adjustment under this Paragraph is given. Notwithstanding any other provision of
this Paragraph to the contrary, in the specific case of liability insurance
required by Article VI of the Agreement, an adjustment notice under this
Paragraph is effective as of the time when Licensee (or a sublicensee) next
renews or replaces its then-current liability insurance policy; and the amount
of liability insurance coverage required shall be the amount specified in
Article VI, multiplied by the Multiplier as of the date of issuance, renewal, or
replacement of the policy.

                               13. MISCELLANEOUS

13.1     EFFECT OF AN INVALID PROVISION. If any part of the Agreement (including
the Supplemental Terms) is finally adjudged to be invalid by a court of
competent jurisdiction, or by an arbitrator as provided in Paragraph 13.3 of
these Supplemental Terms, the remaining parts of the Agreement shall remain in
full force and effect. Furthermore, in lieu of that invalid part, there shall be
automatically added to the Agreement a provision as similar in terms to that
invalid part as may be possible, legal, valid, and enforceable.

13.2     GOVERNING LAW. This contract, its terms, and the enforcement of this
contract shall be governed by the substantive law of the State of Louisiana.

13.3     ATTORNEY'S FEES. If it becomes necessary for one party to employ the
services of an attorney for the protection and enforcement of its rights under
the Agreement, or to compel performance of the other party's obligations under
the Agreement, upon final judgment or award

                                     - 19 -

<PAGE>

by a court of competent jurisdiction or an arbitrator against the other party,
the court or arbitrator in its discretion may order that other party to pay
reasonable attorney's fees at both trial and appellate levels to or for an
attorney of the employing party's choice.

13.4     NO WAIVER. The failure of either party to insist upon strict
performance of any provision of the Agreement, or to exercise any right under
the Agreement, shall not constitute a waiver of that provision or right.

                                14. TERMINATION

14.1     EFFECT OF TERMINATION. Upon termination of the Agreement for any
reason, each of the following provisions shall continue in effect indefinitely,
until its purpose can no longer be fulfilled, or is no longer meaningful: Main
Body of Agreement {Article I (all); II (par. (C) only); III (except that
Licensee shall have no obligation to pay patenting expenses accruing after
termination of the Agreement, and that LSU shall have no obligation to prosecute
or maintain any patent application or patent); IV (all); V; VI (all); VII; and
VIII (ALL)}; and Supplemental Terms (APPENDIX A) {Article 1 (all), 3, 5 (all),
6, 9.1, 9.2, 11, 12, 13 (all), and 14.} Following the termination of the
Agreement, any provision of the Agreement (or of the Supplemental Terms) not
referred to in the preceding list shall cease to have effect. By way of
illustration and not limitation, following the termination of the Agreement
Licensee shall remain obligated to pay LSU all licensing fees, royalties,
minimum royalties, and other amounts that are due under Article III and that
accrued prior to the effective date of termination.

               INITIALS OF SIGNATORIES TO MAIN BODY OF AGREEMENT:

<TABLE>
<CAPTION>
       s/AAC             6/30/98             s/EAG III            24 June 1998
--------------------   -----------    ------------------------   ---------------
(Initialed for LSU)      (Date)       (Initialed for Licensee)      (Date)
<S>                    <C>            <C>                        <C>
</TABLE>

                                     - 20 -

</TEXT>
</DOCUMENT>
