Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of the date of
signature by and between ENTREMED, INC., a Delaware corporation having its
principal office at 9640 Medical Center Drive, Rockville, MD 20850 (the
“Company”) and Kenneth W. Bair, Ph.D. (the “Executive”).
FOR AND IN CONSIDERATION of the mutual premises, agreements and covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:
1. Employment; Position and Duties.
Subject to the terms hereof, the Company hereby agrees to employ the Executive
during the Term (as hereafter defined) to act as, and to exercise all of the
powers and functions of its Senior Vice President, Research and Development, and
to perform such acts and duties and to generally furnish such services to the
Company and its subsidiaries (if any) as is customary for a senior management
person with a similar position in like companies, such services to include 1)
responsibility for the Company’s overall research and development activities,
including project management, coordination of outsourced research, and
nonclinical development activities, and 2) full operational responsibility for
the Company’s research and development programs, including program direction and
budget responsibility. Executive shall report directly to the Chief Executive
Officer (“CEO”) of the Company and have such other powers, duties and
responsibilities as the CEO, in consultation with and approval of the Board of
Directors (the “Board”), shall from time to time reasonably prescribe. Executive
will be a member of the Company’s Senior Management Team and the Business
Development Committee and will be the Company’s representative on the Scientific
Advisory Board, subject to approval by the Board as a named executive officer.
Executive hereby agrees to accept such employment and shall perform and
discharge faithfully, diligently, and to the best of his abilities such duties
and responsibilities and shall devote sufficient working time and efforts to the
business and affairs of the Company and its subsidiaries.
2. Place of Employment.
While Executive is employed by the Company during the Term, Executive shall
conduct his duties and responsibilities hereunder primarily from the executive
offices located in Rockville, Maryland (except for routine and customary
business travel), or from such other location in the Washington D.C.
metropolitan area as designated from time to time by the CEO.
3. Compensation
     a. Base Salary. While the Company employs Executive during the Term, the
Company shall pay to Executive an annual base salary (“Base Salary”) of no less
than $320,000, payable in accordance with the Company’s customary payroll policy
for its executives.

 

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     b. Base Salary Adjustments. Executive’s Base Salary shall be reviewed at
least annually in accordance with the Company’s customary practices for its
executives. The Board or a committee thereof may make such adjustments, as it
deems appropriate in its sole discretion; provided, however, in no event shall
the Company pay Executive a Base Salary of less than $320,000. In making such
adjustments the Board or a committee thereof may solicit and give consideration
to the views of the CEO.
     c. Incentive Compensation. While the Company employs Executive during the
Term, Executive’s annual incentive compensation (“Incentive Compensation”) shall
be targeted at 30% of base compensation, the exact amount of which shall be
determined by the Board or a committee thereof in its sole discretion. Executive
shall be eligible for Incentive Compensation commencing at the start of the
Initial Term. Such bonus, if any, shall be paid within ninety (90) days
following the last day of each fiscal year of the Company. In making such
determinations, the Board or a committee thereof may solicit and take into
consideration the views of the CEO.
     d. Certain Other Benefits. While the Company employs Executive during the
Term, Executive shall be entitled to participate in any and all employee benefit
plans and arrangements which are available to senior executive officers of the
Company, including without limitation, group medical, disability and life
insurance plans, and Company’s Directors and Officers (D&O) insurance policy.
Executive shall also be afforded no fewer than twenty-three (23) days paid time
off (PTO) pursuant to policies fixed by the Company.
     e. Expenses. The Company shall pay or reimburse Executive for all
reasonable business expenses actually paid or incurred by Executive while
Executive is employed by the Company during the Term subject to reasonable
documentation and in accordance with the Company’s business expense
reimbursement policy.
     f. Relocation Expenses.
     (i). The Company shall reimburse Executive an aggregate of $200,000 for
relocation expenses (the “Relocation Expense Payment”), consisting of (i)
$100,000, payable in a lump sum within thirty (30) days of the date of this
Agreement and (ii) $100,000 upon the sale of Executive’s principal residence in
Oakland, California, payable upon the closing of such sale. The Relocation
Expense Payment shall be used by Executive in his discretion for relocation
expenses including, but not limited to, moving company expenses, house hunting,
temporary housing, temporary storage or vehicle transportation costs, and real
estate commissions in connection with the sale of his residence in Oakland,
California.
     (ii). If Executive terminates his employment without Good Reason or is
terminated for Cause within twenty four (24) months of the date of this
Agreement, Executive shall reimburse the Company for all or a portion of the
Relocation Expense Payment as follows:
     (a) if the termination occurs within twelve months of the date of this
Agreement, Executive shall repay 75% of the Relocation Expense Payment;

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     (b) if the termination occurs at any time between thirteen (13) and
eighteen (18) months of the date of this Agreement, Executive shall repay 50% of
the Relocation Expense Payment; and
     (c) if the termination occurs within nineteen (19) and twenty four (24)
months of the date of this Agreement, Executive shall repay 25% of the
Relocation Expense Payment.
Any reimbursement by Executive to the Company of the Relocation Expense Payment
in accordance with this Section 3(f) shall be made within (10) business days of
Executive’s termination date, payable in a lump sum. For the purposes of
clarification, Executive shall not be obligated to reimburse the Relocation
Expense Payment in the event of a termination as a result of Death, Disability,
change in control, termination by Executive for Good Reason, termination by
Company without Cause, or termination as a result of the Company not seeking
term renewal.
     g. Legal Fees. The Company shall reimburse Executive up to $2,500 for legal
fees actually paid or incurred in connection with the preparation and execution
of this Agreement.
4. Term.
     The term of this Agreement shall be the period commencing on October 16,
2007 and continuing for one year (the “Initial Term”); provided, however, that
the Term of this Agreement shall be extended automatically for successive one
year periods (each one-year extension a “Successor Term” and together with the
Initial Term referred to herein as the “Term”) unless written notice of
nonextension is provided by either party to the other party at least thirty
(30) days prior to the end of the Initial Term or any Successor Term. In the
event that this Agreement is not extended at the end of the Initial Term or any
Successor Term and thereby terminates, only paragraphs 6, 7, 8(d), 8(g), 8(h),
8(i) and 11 shall survive such termination, except that Executive shall be
entitled to receive compensation and benefits to the extent expressly provided
herein or by the terms of any of the Company’s compensation and benefit plans,
programs or policies or as required by applicable law.
5. Stock Options.
Upon the Executive’s commencement of employment, the Company will grant stock
options to Executive covering 350,000 shares of common stock with a per share
exercise price equal to the closing price of EntreMed’s stock on the date of
grant. Such options will vest as to 25% of the covered shares three months after
the grant date, and shall vest as to the remaining covered shares in cumulative
25% share increments on each of the first, second, and third anniversary of the
date of grant, if Executive is then employed by the Company. Other periodic
stock and incentive stock option grants to Executive, if any, while the Company
employs Executive during the Term shall be determined by the Board or a
committee thereof in its discretion. In the event of a termination pursuant to
paragraph 8(d) hereof or a resignation pursuant to paragraph 9 hereof, for which
purposes sections 10(a) and 10(c) of this Agreement shall control, all vested
options held by Executive on the effective date of such termination or
resignation shall be

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exercisable in accordance with the terms of such grants until the later of the
date set forth in such grant or twelve (12) months following Executive’s date of
termination, but in no event beyond the expiration date of the relevant option.
Upon a change in control, as defined in the Executive’s option agreement, all
unvested options shall vest and become exercisable immediately. Except as set
forth herein, the terms of the stock option grants under this paragraph 5 shall
be otherwise in accordance with and subject to the terms of the Company’s 2001
Long Term Incentive Plan or successor plan and such terms and conditions as the
Board or a committee thereof may specify.
6. Unauthorized Disclosure.
During the Term and at all times thereafter, Executive shall not, without the
written consent of the Company, or except as required by applicable law,
disclose to any person, other than a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by Executive of his
duties as an executive officer of the Company, any material confidential
information obtained by Executive while in the employ of the Company with
respect to the businesses of the Company or any of its subsidiaries, including
but not limited to, operations, pricing, contractual or personnel data,
products, discoveries, improvements, trade secrets, license agreements,
marketing information, suppliers, dealers, principles, customers, or methods of
distribution, or any other confidential information the disclosure of which
Executive knows, or in the exercise of reasonable care should know, will be
damaging to the Company; provided, however, that confidential information shall
not include any information known generally to the public or to persons in the
industry of which the Company’s business is a part (in each case, other than as
a result of unauthorized disclosure by Executive) or any information otherwise
considered by the Company not to be confidential.
7. Indemnification.
     a. The Company shall defend, indemnify and hold harmless Executive if he is
made a party, or threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative (a “Proceeding”), because he is or was an officer or director
of the Company or any of its subsidiaries, affiliates, or successors, or because
he is or was serving in a fiduciary capacity with respect to employee benefit
plans of the Company, whether or not the basis of such Proceeding is alleged
action in an official capacity or otherwise, against all Expenses incurred or
suffered by him in connection with such Proceeding to the fullest extent
authorized by the General Corporation Law of the State of Delaware and any other
applicable law in effect from time to time, and such indemnification shall
continue as to Executive even if he ceases to be an officer or director or is no
longer employed by the Company, and shall inure to the benefit of Executive’s
heirs, executors and administrators.
     b. As used in this Agreement, the term “Expenses” shall include, without
limitation, damages, losses, judgments, liabilities, fines, penalties, excise
taxes, settlements and reasonable costs, reasonable attorneys’ fees, reasonable
accountants’ fees, and reasonable disbursements and costs of attachment or
similar bonds, investigations, and any reasonable expenses of establishing a
right to indemnification under this Agreement.

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     c. Expenses incurred by Executive in connection with any Proceeding shall
be paid by the Company upon presentation of appropriate documentation and a
giving by Executive of any undertakings required by applicable law.
8. Termination.
     a. Upon Death. If Executive dies while employed by the Company during the
Term, his estate shall be entitled to receive payment of Base Salary through the
last day of the nine (9) months following the month in which his death occurred,
payable over nine (9) months at the Company’s normal pay periods. If, in respect
of the fiscal year in which Executive dies the Board or a committee thereof
determines in its discretion that he would otherwise have been entitled to
receive Incentive Compensation under subparagraph 3(c) by reason of the
operations of the Company during such fiscal year, Executive’s estate shall be
entitled to receive a pro rata portion of his Incentive Compensation for such
fiscal year. Such pro rata portion shall equal the product of (x) the full
amount of such Incentive Compensation, and (y) a fraction, the numerator of
which is the number of days in the fiscal year of Executive’s death prior to the
date of death, and the denominator of which is the total number of days in such
fiscal year.
     b. Termination Upon Disability. The Company may terminate Executive’s
employment hereunder during the Term at the end of any calendar month in the
event of his Disability by giving to Executive written notice of termination. In
the event of any such termination pursuant to this subparagraph 8(b), Executive
shall be entitled to receive his Base Salary, payable in accordance with the
Company’s customary payroll policy for it executives, through the last day of
the nine (9) months following the month in which the date of termination
occurred. If in respect of the fiscal year in which Executive’s employment
terminates pursuant to this subparagraph 8(b) the Board or a committee thereof
determines in its discretion that he would otherwise have been entitled to
receive Incentive Compensation under subparagraph 3(c) by reason of the
operations of the Company during such fiscal year, Executive shall be entitled
to receive a pro rata portion of his Incentive Compensation for such year. Such
pro rata portion shall equal the product of (x) the full amount of such
Incentive Compensation, and (y) a fraction, the numerator of which is the number
of days in the fiscal year of Executive’s termination on account of Disability
prior to the date of termination, and the denominator of which is the total
number of days in such fiscal year.
     c. Termination for Cause. The Company may terminate Executive’s employment
hereunder at any time during the Term for Cause by giving to Executive written
notice of termination that specifies the reasons for and date of termination,
subject to the terms of sub-paragraph 10(a) hereunder. Upon any such termination
for Cause under this subparagraph 8(c), the Company shall pay to Executive Base
Salary through the date of termination, including the benefits provided at
paragraph 3(d), and the Company shall have no further obligations under this
Agreement.
     d. Termination Without Cause. The Company may terminate Executive’s
employment with the Company at any time during the Term, for any reason and
without Cause, by giving him written notice thirty (30) days prior to the date
of termination. Until the effective date of any such termination, the Company
shall continue to pay to Executive the full compensation specified in this
Agreement, including the benefits provided at paragraph 3(d). Following the date
of termination, Executive shall make himself reasonably available to

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members of the Board, the CEO, and other senior managers and officers of the
Company to assist in the transition of responsibilities and information to
others and to facilitate the orderly conduct of business operations. Upon
termination, the Company shall have no other financial obligations to Executive
under any compensation or benefit plan, program or policy and Executive’s
participation in the Company’s compensation and benefit plans, programs and
policies shall cease as of the date of Executive’s termination except as set
forth herein or as expressly provided under the terms of any such plans,
programs or policies, or as required by applicable law. However, in addition to
the above, if Executive is terminated pursuant to this subparagraph 8(d), the
Company shall (i) pay Executive a severance amount equal to nine (9) months Base
Salary over the following nine (9) months at the Company’s normal pay periods,
and (ii) provide Executive coverage under the Company’s health insurance
program, under the same terms as are available to other senior executive
officers of the Company, for a period of nine (9) months, after which Executive
would be eligible for COBRA continuation coverage, or until he has obtained
substantially equivalent new coverage, as determined by the Board or a committee
thereof in its discretion, through successor employment, whichever occurs
sooner. If, in respect of the fiscal year in which Executive’s employment
terminates pursuant to this subparagraph 8(d), the Board or a committee thereof
determines in its discretion that he would otherwise have been entitled to
receive Incentive Compensation under subparagraph 3(c) by reason of the
operations of the Company during such fiscal year, Executive shall be entitled
to receive a pro rata portion of his Incentive Compensation for such year. Such
pro rata portion shall equal the product of (x) the full amount of such
Incentive Compensation, and (y) a fraction, the numerator of which is the number
of days in the fiscal year of Executive’s termination without Cause prior to the
date of termination, and the denominator of which is the total number of days in
such fiscal year.
     e. Resignation for Other than Good Reason. Executive may voluntarily
terminate his employment with the Company during the Term for any reason upon at
least thirty (30) days prior written notice, which specifies the effective date
of termination. Until the effective date of such termination, the Company shall
continue to pay him the full compensation specified in this Agreement, including
the benefits provided at paragraph 3(d), provided he continues to perform his
duties during this period. Thereafter, the Company shall have no further
obligations to him under this Agreement. This subparagraph 8(e) shall not apply
to Executive’s resignation for Good Reason pursuant to paragraph 9 hereof.
     f. No Mitigation. The parties hereto acknowledge and agree that, in the
event Executive’s employment with the Company is terminated pursuant to this
paragraph 8, he shall not be required to mitigate his damages by affirmatively
seeking other employment. Further, except as provided in subparagraph 8(d)(ii)
above, the amount of any payment or benefit provided for in this Agreement shall
not be reduced by any compensation earned by him or benefit provided to him as
the result of employment by another employer or otherwise.

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     g. Non-Competition. For a period of 1) twelve (12) months after resignation
for other than for Good Reason or 2) six (6) months after termination of
employment with the Company for any other reason, Executive shall not, as an
individual, principal, agent, employee, consultant or otherwise, directly or
indirectly, or with respect to any company or entity with which the Company has
concluded partnership, licensing, joint research and development or other
similar business agreements during his employment with the Company, render any
services to any firm or company or any division or subsidiary of any firm or
company, engaged in the development or commercialization of compounds, analogs
or derivatives of those compounds that (a) are of a similar type, that is, small
molecules, (for example, but not limited to, small peptidomimetic molecules),
(b) have more than one mechanism of action and cellular pathway in common with;
and (c) are within the same field (i.e. oncology or inflammation) as, those
being developed and or commercialized by the Company during the Term (“Competing
Company”). In addition, for an additional period of six (6) months after the
six-month period set forth above and subject to Section 6 hereof, Executive only
may provide services to such a Competing Company if Executive does not work on,
or furnish confidential information regarding, any matter related to such
compounds defined above. Moreover, for a period of [twelve (12)] months after
the termination of Executive’s employment with the Company, Executive shall not
take any action, without the prior written consent of the Company, to assist
Executive’s successor employer or any other entity in recruiting or hiring any
other employee who was an employee of the Company during Executive’s employment.
This prohibition includes (i) identifying to such successor employer or its
agents or such other entity, the person or persons who have special knowledge
concerning the Company or its inventions, processes, methods or confidential
affairs, and (ii) commenting to Executive’s successor employer or its agents or
such other entity about the quantity or work, quality of work, special knowledge
or personal characteristics of any person who is still employed by the Company.
Executive also agrees that he will not provide such information to a prospective
employer or to an executive search firm during interviews preceding possible
employment.
     h. Non-Disparagement. During the Term and thereafter, Executive shall not
communicate negatively about or otherwise disparage the Company or its products
or each and any of the released parties described in subparagraph 8(i) in any
way whatsoever except as may be required for truthful sworn testimony or in
connection with a legal or administrative proceeding, report, claim or dispute.
The Company, acting in its official capacity, shall not make any public false,
disparaging or derogatory statements in connection with or concerning
Executive’s service to the Company except as may be required for truthful sworn
testimony or in connection with a legal or administrative proceeding, report,
claim or dispute. After termination, in the event Executive materially breaches
any of the conditions set forth herein or in any other paragraph of this
Agreement, the Company may discontinue the provision of any payment or benefits
to him under this Agreement, and in such event he shall forfeit his entitlement
to any further termination payments or benefits under this Agreement. After
termination, in the event the Company materially breaches any of the conditions
set forth herein or in any other paragraph of this Agreement, the Executive may
pursue any remedies available to him at law.
     i. Release. In consideration of Executive’s receipt of severance benefits
subject to and in accordance with subparagraphs 8(b) and (d) and paragraph 9 of
this Agreement, Executive agrees that, upon his first receipt and acceptance of
any such benefits, he shall have released and forever discharged the Company,
its subsidiaries and affiliates, successors and assigns,

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predecessors and all of their respective officers, directors, employees and
agents and employee benefits plans from all claims, demands, liabilities and
causes of action arising out of facts or occurrences arising or occurring at any
time up to and including the time of Executive’s termination or resignation,
whether known or unknown, and the parties hereto contemplate that this release
shall be broadly construed.
9. Resignation for Good Reason.
If Executive has Good Reason during the Term, Executive may resign at any time
during the Term by providing at least thirty (30) days prior written notice to
the Company that specifies the reason for, and the effective date of, his
resignation. If Executive resigns during the Term for Good Reason, such
resignation shall be deemed a Termination without Cause under subparagraph 8(d)
hereof and Executive shall receive the compensation and benefits provided under
subparagraph 8(d) hereof as if he had been terminated without Cause.
10. Definitions.
     a. “Cause” shall mean Executive’s (i) habitual drunkenness or drug
addiction, (ii) material failure to perform and discharge his duties and
responsibilities hereunder, (iii) misconduct that is materially and
significantly injurious to the Company, (iv) conviction of a felony involving
the personal dishonesty of Executive or moral turpitude, (v) conviction of any
crime or offense involving the property of the Company or (vi) material breach
of Executive’s obligations under this Agreement. Provided, however, with regard
to a.(ii) and a.(vi.) above, the parties exclude for this purpose an action not
taken in bad faith that is remedied by Executive promptly upon receipt of
written notice thereof given to the Company.
     b. “Disability” shall mean the Executive’s incapacity due to physical or
mental illness which prevents the proper performance of Executive’s duties as
set forth herein or established pursuant hereto for ninety (90) days in any
twelve (12) month period of the Term. A qualified independent physician mutually
selected by the Company and the Executive shall determine any questions as to
the existence or extent of illness or incapacity of Executive, upon which the
Company and Executive cannot agree. The determination of such physician
certified in writing to the Company and to the Executive shall be final and
conclusive for all purposes of this Agreement. For purposes of the disability
provisions of this Agreement, if the Executive is unable to act on his own
behalf due to incapacity, any person legally authorized to do so may act on the
Executive’s behalf.
     c. “Good Reason” shall mean the occurrence of any of the following events
during the Term: (A) the assignment to Executive of any duties inconsistent in
any material respect with Executive’s position, authority, duties or
responsibilities as of the commencement of the Term or any other action by the
Company which results in a diminution in any material respect in such position,
duties or responsibilities, excluding for this purpose an isolated and
inadvertent action not taken in bad faith that is remedied by the Company
promptly after receipt of written notice thereof given by Executive; (B) a
reduction by the Company in Executive’s annual Base Salary as in effect on the
date hereof or subsequently in effect hereunder, except as agreed to by
Executive, unless such change was applicable to all senior executives of the
Company; (C) the failure by the Company to continue to provide Executive with
benefits substantially similar to

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those enjoyed by him under any of the Company’s pension, life insurance,
medical, health and accident, disability or other welfare plans in which he was
participating as of the commencement of the Term or subsequently in effect
hereunder, unless such change was applicable to all senior executives of the
Company; (D) the failure by the Company to pay to Executive any deferred
compensation when due under any deferred compensation plan or agreement
applicable to him; (E) the failure by the Company to honor in any material
respect the terms and provisions of this Agreement; or (G) a requirement by the
Company that Executive conduct his duties and responsibilities from a permanent
location more than fifty (50) miles from the place of employment, as defined in
paragraph 2 herein.
11. Miscellaneous.
     a. Assignments and Binding Effect. The respective rights and obligations of
the parties under this Agreement shall be binding upon the parties hereto and
their heirs, executors, administrators, successors, and assigns, including, in
the case of the Company, any other corporation or entity with which the Company
may be merged or otherwise combined and, in the case of Executive, his estate or
other legal representatives.
     b. No Assignment of Benefits. Except as otherwise provided herein or by
applicable law, no right or interest of the Executive under this Agreement shall
be assignable or transferable, in whole or in part, either directly or by the
operation of law or otherwise, including without limitation execution, levy,
garnishment, attachment, pledge or in any manner; no attempted transfer thereof
shall be effective.
     c. Governing Law. This Agreement shall be governed as to its validity,
interpretation and effect by the laws of the State of Maryland, without
reference to its conflict of laws provisions.
     d. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid, illegal, or unenforceable for any
reason, the remaining provisions and portions of this Agreement shall remain in
full force and effect to the fullest extent permitted by law. Such invalid,
illegal or unenforceable provision(s) shall be deemed modified to the extent
necessary to make it (them) valid, legal, and enforceable.
     e. Withholding. All amounts payable hereunder shall be paid net of any
applicable withholding required under federal, state or local laws and any
additional withholding to which Executive has agreed.
     f. Entire Agreement; Amendments. This Agreement constitutes the entire
Agreement and understanding of the Company and Executive with respect to the
terms of Executive’s employment with the Company and supersedes all prior
discussions, understandings and agreements with respect thereto.
     g. Captions. All captions and headings used herein are for convenient
reference only and do not form part of this Agreement.

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     h. Waiver. No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is agreed to in writing
and signed by the Executive and the Board or its delegate. The failure of the
Company or the Executive to insist upon strict compliance with the terms of this
Agreement or the failure of the Company or the Executive to assert any right the
Company or the Executive may have hereunder shall not be deemed a waiver of such
provision or right or any other provision of this Agreement.
     f. Notice. Any notice or communication required or permitted under this
Agreement shall be made in writing and shall be delivered by hand, or mailed by
registered or certified mail, return receipt requested, first call postage
prepaid, addressed as follows:
If to Executive:
Kenneth W. Bair, Ph.D.
c/o EntreMed, Inc.
9640 Medical Center Drive
Rockville, Maryland 20850
If to the Company:
EntreMed, Inc.
9640 Medical Center Dive
Rockville, Maryland 20850
Attn.: Chief Executive Officer
     g. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute one and the same agreement.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of October 16, 2007.

                  Kenneth W. Bair, PhD      Executive        ENTREMED, INC.
      By:           James S. Burns        President and Chief Executive Officer 
   

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