<PAGE>   1

                                                              EXECUTION VERSION







                              PURCHASE AGREEMENT

                                   BETWEEN

                          BIOVENTURE INVESTMENTS KFT

                                     and

                                ENTREMED, INC.

                          Dated as of June 14, 2001




                             THALIDOMIDE ROYALTY








[*] = CERTAIN INFORMATION CONTAINED IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.  OMITTED TEXT IS INDICATED BY A "*".



<PAGE>   2

                              TABLE OF CONTENTS


<TABLE>
<S>                                                                      <C>
ARTICLE I - DEFINITIONS.....................................................1
   1.01.    Definitions.....................................................1


ARTICLE II - PURCHASE AND SALE..............................................5
   2.01.    Purchase and Sale...............................................5
   2.02.    No Assumed Obligations..........................................5
   2.03.    Purchase Price..................................................5
   2.04.    Closing.........................................................5
   2.05.    Contingent Purchase Price.......................................6
   2.06.    Shared Royalties................................................7
   2.07.    Offset..........................................................8


ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER......................8
   3.01.    Existence and Power.............................................8
   3.02.    Corporate Authorization.........................................9
   3.03.    Governmental Authorization......................................9
   3.04.    Non-Contravention...............................................9
   3.05.    Litigation......................................................9
   3.06.    Compliance with Laws...........................................10
   3.07.    No Prior Transfer..............................................10
   3.08.    Celgene Agreement..............................................10
   3.09.    CMCC Agreement.................................................11
   3.10.    Finders' Fees..................................................12


ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER.......................12
   4.01.    Organization and Existence.....................................12
   4.02.    Corporate Authorization........................................13
   4.03.    Governmental Authorization.....................................13
   4.04.    Non-Contravention..............................................13
   4.05.    Finders' Fees..................................................13
   4.06.    Litigation.....................................................13
   4.07.    Ability to Perform Obligations.................................13


ARTICLE V - COVENANTS......................................................14
   5.01.    Preservation of the Celgene Payments...........................14
   5.02.    Access to Information..........................................14
   5.03.    Notices of Certain Events......................................14
   5.05.    Commercially Reasonable Efforts; Further Assurances............14
   5.06.    Seller's Continuing Covenants..................................15
   5.07.    Buyer's Continuing Covenants...................................16
</TABLE>

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<TABLE>
<S>                                                                      <C>
   5.08.    Cash Received..................................................16
   5.09.    Notice of Payments.............................................16


ARTICLE VI - CONDITIONS TO CLOSING.........................................16
   6.01.    Conditions to Obligation of Buyer..............................16
   6.02.    Conditions to Obligation of Seller.............................17


ARTICLE VII - SURVIVAL; INDEMNIFICATION....................................19
   7.01.    Survival.......................................................19
   7.02.    Indemnification................................................19
   7.03.    Procedures; No Waiver; Exclusivity.............................20


ARTICLE VIII - TERMINATION.................................................20
   8.01.    Grounds for Termination........................................20
   8.02.    Effect of Termination..........................................20


ARTICLE IX - MISCELLANEOUS.................................................21
   9.01.    Notices........................................................21
   9.02.    Amendments; No Waivers.........................................22
   9.03.    Expenses.......................................................22
   9.04.    Successors and Assigns.........................................22
   9.05.    Governing Law; Jurisdiction, Etc...............................23
   9.06.    Counterparts; Effectiveness....................................24
   9.07.    Entire Agreement...............................................24
   9.08.    Captions.......................................................24

Schedules
---------
3.08(a)       Waivers under Celgene Agreement
3.08(g)       Third-Party Patents
3.09(a)       Patent Rights

Exhibits
--------

Exhibit A     Celgene Agreement
Exhibit B     Royalties Paid by Celgene to Seller under Celgene Agreement
              since December 9, 1998
Exhibit C     CMCC Agreement
Exhibit D     Form of Opinion of Seller's Counsel
Exhibit E     Form of IPO Agreement
Exhibit F     Form of Guaranty
</TABLE>


                                     -ii-

<PAGE>   4


                              PURCHASE AGREEMENT


AGREEMENT dated as of June 14, 2001 by and between EntreMed, Inc., a Delaware
corporation ("Seller"), and Bioventure Investments kft, a company organized
under the laws of Hungary and a wholly-owned subsidiary of Royalty Pharma AG,
a Swiss stock corporation ("Buyer").

                             W I T N E S S E T H:

         WHEREAS, Seller is a party to that certain License Agreement dated as
of May 26, 1994 (the "CMCC Agreement"), by and between Children's Medical
Center Corporation ("CMCC") and Seller, as amended by Amendment to License
Agreement effective as of December 9, 1997, Amendment to Agreement effective
as of August 23, 1995, Amendment to License Agreement effective as of December
3, 1998 and Amendment to License Agreement effective as of September 24, 1999;

         WHEREAS, Seller is a party to that certain Agreement dated as of
December 9, 1998 (the "Celgene Agreement"), by and between Seller and Celgene
Corporation ("Celgene"); and

         WHEREAS, Buyer desires to purchase Seller's rights to receive the Net
Celgene Payments (as defined below) under the Celgene Agreement, and Seller
desires to sell such rights to Buyer, upon the terms and subject to the
conditions hereinafter set forth.

         NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:


                                  ARTICLE I

                                 DEFINITIONS

         1.01.    DEFINITIONS.  The following terms, as used herein, have the
following meanings:

         "Accounting Referee" has the meaning set forth in Section 2.06.

         "Affiliate" means with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such other
Person.

         "Agreement" means this Purchase Agreement by and between Buyer and
Seller.

         "Applicable Net Celgene Payments" means (i) in respect of any period
prior to the Closing Date, for any calendar year, an amount equal to the
excess, if any, of (A) payments made or due by Celgene pursuant to

<PAGE>   5

Sections 4.1, 4.2(a)(ii) and 4.3 (only, with respect to Section 4.3, to the
extent such payments are royalty payments with royalty rates determined
pursuant to Section 4.1 or 4.2(a)(ii)) of the Celgene Agreement on Shared Net
Sales, net of payments made or due to CMCC pursuant to Sections 4.2 and 4.4 of
the CMCC Agreement for such year, over (B) US$* and (ii) in respect of any
period on or after the Closing Date, for any calendar year, an amount equal to
the excess, if any, of (A) payments made or due by Celgene to Buyer pursuant
to those sections of the New Thalidomide Agreement that are equivalent to
Sections 4.1, 4.2(a)(ii) and 4.3 (only, with respect to Section 4.3, to the
extent such payments are royalty payments with royalty rates determined
pursuant to Section 4.1 or 4.2) of the Celgene Agreement on Shared Net Sales
over (B) US$*; provided that, in the case of clause (ii) of this definition,
if the royalty payment provisions of the New Thalidomide Agreement are amended
or modified, or the New Thalidomide Agreement is terminated and a new
agreement entered into in substitution thereof, then "Applicable Net Celgene
Payments" shall be calculated based on the payment provisions of such amended,
modified or substituted agreement.

         "Applicable Net Sales" means (i) in respect of any period prior to
the Closing, Net Sales on which any royalty payments are due under Section 4.1
(and, for greater certainty, not under any other provision) of the Celgene
Agreement and (ii) in respect of any period on or after the Closing Date, Net
Sales on which any royalty payments are due under those sections of the New
Thalidomide Agreement that are equivalent to Section 4.1 (and, for greater
certainty, not under any other provision) of the Celgene Agreement; provided
that, in the case of clause (ii) of this definition, if the royalty payment
provisions of the New Thalidomide Agreement are amended or modified, or the
New Thalidomide Agreement is terminated and a new agreement entered into in
substitution thereof, then "Applicable Net Sales" shall be calculated based on
the net sales on which payments are due under such amended, modified or
substituted agreement.

         "Buyer's Consultants" has the meaning set forth in Section 5.02.

         "Celgene" has the meaning set forth in the recitals hereto.

         "Celgene Consent" means the acknowledgement and consent of Celgene in
the form and substance satisfactory to Buyer and Seller in their sole
discretion.

         "Celgene Cumulative Net Sales" means Applicable Net Sales from and
after December 9, 1998.

         "Celgene Payments" means (i) in respect of any period prior to the
Closing Date, all payments payable by Celgene under the Celgene Agreement
commencing in respect of the calendar quarter ended June 30, 2001, which, in
the absence of this Agreement, would otherwise have been made to Seller under
Sections 4.1, 4.2 and 4.3 of the Celgene Agreement and (ii) in respect of any
period on and after the Closing Date, all payments payable by Celgene under
the New Thalidomide Agreement commencing in respect of the calendar quarter
ended June 30, 2001, payable by Celgene under those sections of the New
Thalidomide Agreement that are equivalent to Sections 4.1, 4.2 and 4.3 of the
Celgene Agreement; provided that, in the case of clause (ii) of this
definition, if the royalty payment provisions of the New Thalidomide Agreement
are amended or modified, or the New Thalidomide Agreement is terminated and a

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<PAGE>   6

new agreement entered into in substitution thereof, then "Celgene Payments"
shall be calculated based on the payment provisions of such amended, modified
or substituted agreement.

         "Closing" has the meaning set forth in Section 2.04.

         "Closing Date" has the meaning set forth in Section 2.04.

         "CMCC" has the meaning set forth in the recitals hereto.

         "CMCC Agreement" has the meaning set forth in the recitals hereto.

         "CMCC Consent" means the acknowledgment and consent of CMCC in form
and substance satisfactory to Buyer and Seller in their sole discretion.

         "Commencement Date" means, if Celgene Cumulative Net Sales exceed
US$* at any time, the later of (i) January 1 of the calendar year following
the calendar year in which Celgene Cumulative Net Sales exceed US$* and (ii)
January 1, 2004. If Celgene Cumulative Net Sales do not exceed US$* at any
time, then there shall be no Commencement Date.

         "Contingent Purchase Price" has the meaning set forth in Section
2.05.

         "Contingent Purchase Price Threshold" has the meaning set forth in
Section 2.05.

         "Excluded Liabilities and Obligations" has the meaning set forth in
Section 2.02(a).

         "Governmental Authority" means any government, court, regulatory or
administrative agency or commission, or other governmental authority, agency
or instrumentality, whether federal, state or local (domestic or foreign),
including, without limitation, the U.S. Patent and Trademark Office and the
U.S. National Institutes of Health.

         "Guaranty" means the Guaranty by Royalty Pharma of the obligations of
Buyer pursuant to this Agreement substantially in the form attached hereto as
Exhibit F.

         "Indemnified Party" has the meaning set forth in Section 7.03.

         "Indemnifying Party" has the meaning set forth in Section 7.03.

         "IPO Agreement" means the Agreement from Royalty Pharma to Seller
substantially in the form attached hereto as Exhibit E.

         "Licensed Products" (i) in respect of any period prior to the Closing
Date, has the meaning set forth in the CMCC Agreement and (ii) in respect of
any period after the Closing Date, has the meaning set forth in the New
Thalidomide Agreement.

                                     -3-

<PAGE>   7

         "Licensed Processes" (i) in respect of any period prior to the
Closing Date, has the meaning set forth in the CMCC Agreement and (ii) in
respect of any period after the Closing Date, has the meaning set forth in the
New Thalidomide Agreement.

         "Lien" means, with respect to any agreement or other asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such agreement or other asset.

         "Loss" has the meaning set forth in Section 7.02.

         "Net Celgene Payments" means (i) in respect of any period prior to
the Closing Date, (A) all amounts payable by Celgene under the Celgene
Agreement commencing in respect of the calendar quarter ended June 30, 2001,
which, in the absence of this Agreement, would otherwise have been made to
Seller under Sections 4.1, 4.2 and 4.3 of the Celgene Agreement less (B) any
payments hereafter due CMCC under Sections 4.2 and 4.4 of the CMCC Agreement
and (ii) in respect of any period on or after the Closing Date, all amounts
payable by Celgene under the New Thalidomide Agreement commencing in respect
of the calendar quarter ended June 30, 2001, under those sections of the New
Thalidomide Agreement that are equivalent to Sections 4.1, 4.2 and 4.3 of the
Celgene Agreement.

         "Net Sales" (i) with respect to any period prior to the Closing Date,
has the meaning set forth in the Celgene Agreement and (ii) with respect to
any period on or after the Closing Date, has the meaning set forth in the New
Thalidomide Agreement.

         "New Analog Agreement" means the agreement between CMCC and Seller in
form and substance satisfactory to Seller (and if Buyer is a party, to Buyer).

         "New Thalidomide Agreement" means the agreement among CMCC, Celgene
and Buyer (and, for a limited purpose, Seller) in form and substance
satisfactory to Buyer and Seller.

         "Patent Rights" (i) in respect of any period prior to the Closing
Date, has the meaning set forth in the CMCC Agreement and (ii) in respect of
any period after the Closing Date, has the meaning set forth in the New
Thalidomide Agreement.

         "Person" means an individual, corporation, partnership, association,
trust or other entity or organization, but not including a government or
political subdivision or any agency or instrumentality of such government or
political subdivision.

         "Purchase Price" has the meaning set forth in Section 2.03.

         "PTO" means the United States Patent and Trademark Office.

         "Royalty Pharma" shall mean Royalty Pharma AG, a Swiss stock
corporation.

         "Securities Act" means the United States Securities Act of 1933, as
amended.

                                     -4-

<PAGE>   8


         "Shared Net Sales", for any calendar year, means Net Sales during
such year on which payments by Celgene are made or due under Sections 4.1,
4.2(a)(ii) and 4.3 (only, with respect to Section 4.3, to the extent such
payments are royalty payments with royalty rates determined pursuant to
Section 4.1 or 4.2(a)(ii)) of the Celgene Agreement or those sections of the
New Thalidomide Agreement that are equivalent to Sections 4.1, 4.2 and 4.3
(only, with respect to Section 4.3, to the extent of royalty payments with
royalty rates determined pursuant to Section 4.1 or 4.2) of the Celgene
Agreement.

         "Transaction Documents" means, collectively, this Agreement, the New
Thalidomide Agreement, the New Analog Agreement, the Celgene Consent, the CMCC
Consent, the IPO Agreement and the Guaranty.


                                  ARTICLE II

                              PURCHASE AND SALE

         2.01. PURCHASE AND SALE. Upon the terms and subject to the conditions
of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to
sell, transfer, assign and deliver to Buyer, at Closing, free and clear of all
Liens, all of Seller's right, title and interest in and to the Net Celgene
Payments. It is understood and agreed that (a) the execution and delivery of
the New Thalidomide Agreement is a condition to the Closing hereunder, (b) the
Celgene Agreement will be terminated upon effectiveness of the New Thalidomide
Agreement, (c) pursuant to the New Thalidomide Agreement, Celgene will pay
Buyer directly all Net Celgene Payments, (d) the execution and delivery of the
New Analog Agreement is a condition to the Closing hereunder, (e) the CMCC
Agreement will be terminated upon effectiveness of the New Thalidomide
Agreement and the New Analog Agreement and (f) effective upon the Closing,
Celgene will pay CMCC directly any royalty payments due CMCC under the New
Thalidomide Agreement pursuant to the terms thereof. After the Closing,
subject to Sections 2.05 and 2.06 hereof, Seller will have no further right,
title or interest in or to the Net Celgene Payments.

         2.02. NO ASSUMED OBLIGATIONS. Notwithstanding any provision in this
Agreement or any other writing to the contrary, Buyer is acquiring only the
Net Celgene Payments and is not assuming any liability or obligation of Seller
of whatever nature, whether presently in existence or arising or asserted
hereafter, whether under the Celgene Agreement, the CMCC Agreement or
otherwise (the "Excluded Liabilities and Obligations").

         2.03. PURCHASE PRICE. The purchase price for the Net Celgene Payments
is US$24,382,278 in cash (the "Purchase Price"). The Purchase Price shall be
reduced by an amount equal to the aggregate Net Celgene Payments received by
Seller after June 30, 2001 and prior to the Closing.

         2.04.    CLOSING.  The closing (the "Closing") of the purchase and
sale of the Net Celgene Payments hereunder shall take place at the offices of
Testa, Hurwitz & Thibeault, LLP, 125 High Street, Boston, Massachusetts 02110
USA on the third business day after satisfaction of the

                                     -5-


<PAGE>   9


closing conditions in Sections 6.01 and 6.02 hereof (the "Closing Date"), or
at such other time or place as the parties may mutually agree.  At the
Closing,

         (a)      Buyer shall pay the Purchase Price by wire transfer of
immediately available funds to an account designated by Seller.

         (b)      Buyer and Seller shall also execute and deliver all
instruments, documents and certificates as may be reasonably requested by the
other party, each in form and substance reasonably satisfactory to the other
party, that are necessary for the consummation at the Closing of the
transactions contemplated by this Agreement.

         2.05.    CONTINGENT PURCHASE PRICE.(a) Buyer will make a one-time
payment to Seller equal to US$3,000,000 in immediately available funds (the
"Contingent Purchase Price") within thirty (30) days after satisfaction of the
Contingent Purchase Price Threshold. The "Contingent Purchase Price Threshold"
shall be deemed to be satisfied on the date on or before December 31, 2004 on
which Celgene Cumulative Net Sales exceed US$*; provided, however, that Buyer
shall have no obligation to pay the Contingent Purchase Price pursuant to this
Section 2.05(a) unless and until (i) Buyer shall have received all Net Celgene
Payments then due on Cumulative Net Sales from the date of this Agreement to
the date of satisfaction of the Contingent Purchase Price Threshold (and, for
greater certainty, it is understood that the due date of the Contingent
Purchase Price shall not occur until Buyer shall have received such Net
Celgene Payments) and (ii) the New Thalidomide Agreement is in full force and
effect at that time.

         (b)      Notwithstanding anything to the contrary in Section 2.05(a),
in the event that the New Thalidomide Agreement is hereafter amended, modified
or terminated, the Contingent Purchase Price Threshold shall be deemed
satisfied on the date on which (i) Celgene Cumulative Net Sales exceed US$*
and (ii) the sum of (A) Net Celgene Payments made to Buyer pursuant to the New
Thalidomide Agreement prior to such amendment, modification or termination of
the New Thalidomide Agreement and (B) all royalty payments made to Buyer on
account of or in respect of thalidomide after such amendment, modification or
termination of the New Thalidomide Agreement, is equal to or greater than
US$*. For purposes of this Section 2.05(b), notwithstanding anything herein to
the contrary,

                  (x) "Celgene Cumulative Net Sales" shall mean the sum of (i)
         Applicable Net Sales from December 9, 1998 to the date immediately
         preceding the date on which the New Thalidomide Agreement is amended,
         modified or terminated and (ii) net sales of thalidomide by Celgene
         from and after the date on which the New Thalidomide Agreement is
         amended, modified or terminated; and

                  (y) the New Thalidomide Agreement shall not be considered
         amended or modified unless such amendment or modification in any
         respect affects or could reasonably be expected to affect the
         calculation of Celgene Cumulative Net Sales.

                                     -6-

<PAGE>   10



         2.06.    SHARED ROYALTIES. (a) From and after the Commencement Date,
Seller shall be entitled annually to *% of the Applicable Net Celgene
Payments. Subject to Section 2.06(b) hereof, Buyer shall make any such payment
to Seller within 10 business days after receipt by Buyer of all Net Celgene
Payments then due it and the reports thereon for the applicable calendar year.

         (b)      If Buyer and Seller disagree as to the occurrence of the
Commencement Date or the amount to which Seller is entitled pursuant to
Section 2.06(a) hereof, the parties shall use commercially reasonable best
efforts to resolve their disagreement within 10 business days. The parties
agree that commercially reasonable best efforts shall require the presence of
the Chief Executive Officer and Chief Financial Officer of each of Buyer and
Seller in person at a meeting in New York called for such purpose. If,
notwithstanding such efforts, the parties remain in disagreement, the
disagreement shall be referred to the New York City office of an independent
accounting firm of nationally recognized standing, which shall not have
performed services for Buyer or Seller or any of their respective Affiliates
within the last two years (the "Accounting Referee"). The parties agree to
submit written briefs to the Accounting Referee no later than 15 business days
after the Accounting Referee notifies Buyer and Seller in writing of its
acceptance of the engagement. All other procedures of the dispute resolution
effort shall be determined by the Accounting Referee in its sole discretion.
Costs of the Accounting Referee shall be borne equally by Buyer and Seller
except as may be awarded otherwise by the Accounting Referee. Buyer and Seller
shall instruct the Accounting Referee to award costs against either Buyer or
Seller if the Accounting Referee determines that such party's position was
frivolous or without reasonable commercial basis. The determination of the
Accounting Referee shall be final and binding upon the parties.

         (c)      In the event that Buyer fails to make when due any payment
due to Seller under Section 2.05 or this Section 2.06, Buyer shall pay Seller
interest on such unpaid amount at the rate per annum equal to the Prime Rate
(as reported in the Wall Street Journal) plus 2% from and after the 21st day
after the date on which such payment was due to Buyer under Section 2.05 or
2.06, as applicable, until the date such payment is made in full. Buyer's
obligation to pay interest shall not be construed as Seller's exclusive remedy
for Buyer's breach of Section 2.05 or Section 2.06; provided that Seller shall
not be entitled to greater interest than that set forth in this Section
2.06(c).

         (d)      Buyer will forward to Seller copies of any reports received
from or on behalf of Celgene in any way relating to Applicable Net Sales,
Celgene Cumulative Net Sales and/or the Net Celgene Payments within 10
business days after receipt thereof by Buyer. In the event that the New
Thalidomide Agreement is hereafter amended, modified or terminated, Buyer
shall promptly notify Seller of such event and shall provide to Seller copies
of such documents, books and records as shall relate to the calculation to
amounts due Seller under Section 2.05 hereof or this Section 2.06, including
copies of any amendment or modification of the New Thalidomide Agreement or,
if the New Thalidomide Agreement is terminated, of any agreement made in
substitution of the New Thalidomide Agreement. Buyer shall keep full and
accurate books of account containing all particulars relevant to its receipt
of Applicable Net Celgene Payments and other records that may be necessary for
the purpose of determining whether and when any

                                     -7-

<PAGE>   11

amounts are payable by Buyer to Seller under Section 2.05 hereof or this
Section 2.06. Such books of account shall be kept at a place of business in
the United States and shall be open for inspection by an independent certified
public accountant reasonably acceptable to Buyer upon reasonable notice during
normal business hours at Seller's expense, for the sole purpose of verifying
compliance with this Agreement; provided, however, that Buyer shall have no
obligation to open such books of account for inspection until the earlier to
occur of (i) such time as any amounts are payable by Buyer to Seller or (ii)
such time as Seller reasonably believes that any payments should have been
made to Seller by Buyer under Section 2.05 hereof or this Section 2.06. In the
event the inspection determines that amounts due Seller for any period have
been underpaid by five percent (5%) or more, then Buyer shall pay for all
costs of the inspection. All information and data reviewed in the inspection
shall be used only for the purpose of verifying royalties and shall be treated
as confidential information. No inspection by an agent of Seller shall occur
more frequently than once during any twelve (12) month period.

         2.07.    OFFSET. Notwithstanding anything to the contrary in Sections
2.05 and 2.06, the provisions of this Section 2.07 shall apply. If Seller owes
any amount to Buyer or its Affiliates pursuant to Article VII of this
Agreement, and such amount shall have been finally determined by written
agreement with Seller or by final judgment for which the time of appeal has
expired, then Buyer shall be entitled to offset against any amount payable to
Seller under Section 2.05 or 2.06 the amount so owed to Buyer or its
Affiliates. If Buyer or any of its Affiliates has claimed any amount from
Seller pursuant to Article VII of this Agreement, but there shall not yet be
any such written agreement or final judgment, Buyer shall pay to an escrow
agent, which shall be a financial institution located in the United States
with which neither Buyer nor Seller has a material relationship, out of the
amount payable pursuant to Section 2.05 or 2.06, an amount equal to the amount
claimed by Buyer or its Affiliates, such amount to be held in escrow subject
to joint instructions from Buyer and Seller. If it shall be agreed or
determined that Seller owes Buyer or its Affiliates any amount, then Buyer and
Seller shall execute joint instructions to the escrow agent to deliver, out of
the funds held in escrow, such amount to Buyer and the remaining amount, if
any, to Seller. If it shall be agreed or determined that Seller owes no amount
to Buyer or its Affiliates, then Buyer and Seller shall execute joint
instructions to the escrow agent to deliver the entire amount of the funds
held in escrow to Seller. Buyer shall bear the costs of the escrow agent if
Seller is entitled to the escrowed funds. Seller shall bear the costs of the
escrow agent if Buyer or its Affiliates are entitled to the escrowed funds. If
any portion of the escrowed funds are payable to Buyer, then the costs of the
escrow agent shall be borne pro rata, the largest portion by the Person paid
the smallest portion of the escrowed funds.

                                 ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller hereby represents and warrants to Buyer, as of the date hereof
and as of the Closing Date, that:

         3.01.    EXISTENCE AND POWER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all corporate powers and

                                     -8-

<PAGE>   12

all material licenses, authorizations, consents and approvals required to
enter into and perform this Agreement and the transactions contemplated
hereby.

         3.02.    CORPORATE AUTHORIZATION. The execution, delivery and
performance by Seller of the Transaction Documents to which it is a party, and
the consummation by Seller of the transactions contemplated thereby, are
within Seller's corporate powers and have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by, and constitutes the legal, valid and binding
agreement of Seller, enforceable against Seller in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and to equitable principles.
Effective at the Closing, the other Transaction Documents to which Seller is a
party will have been duly executed and delivered by, and will constitute the
legal, valid and binding agreements of Seller, enforceable against Seller in
accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and to equitable principles.

         3.03.    GOVERNMENTAL AUTHORIZATION.  The execution, delivery and
performance by Seller of the Transaction Documents to which it is a party do
not require any notice to, action or consent by, or in respect of, or filing
with, any Governmental Authority.

         3.04.    NON-CONTRAVENTION. (a) The execution, delivery and
performance by Seller of the Transaction Documents to which it is a party do
not and will not (i) contravene or conflict with the organizational or
constitutional documents of Seller; (ii) contravene or conflict with or
constitute a violation of any provision of any law, rule or regulation binding
upon or applicable to Seller or the Celgene Payments; (iii) contravene or
conflict with or constitute a violation of any judgment, injunction, order or
decree binding upon or applicable to Seller or the Celgene Payments; (iv)
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Seller, or to a
loss of any benefit relating to, the Celgene Payments, except as contemplated
by the Transaction Documents; (v) require the consent or permission of any
Person, other than the Celgene Consent and the CMCC Consent; or (vi) result in
the creation or imposition of any Lien on the Net Celgene Payments, except as
contemplated by the Transaction Documents.

         (b)      Seller has not granted, and there does not exist, any Lien
on the Celgene Payments or on any amounts payable to Seller under the Celgene
Agreement, except for any rights of Celgene under the Celgene Agreement and
any rights of CMCC under the CMCC Agreement.

         3.05.    LITIGATION. There is no action, suit, investigation or
proceeding (or any basis therefor) pending or, to the knowledge of Seller,
threatened before any Governmental Authority or arbitrator to which Seller is
a party that has or could materially and adversely affect the Celgene
Payments. To Seller's knowledge, there is no action, suit, investigation or
proceeding (or any basis therefor) pending or threatened before any
Governmental Authority or arbitrator, to which Seller is not a party, that has
or could materially and adversely affect the Celgene Payments. Seller has not
received notice in writing of any claim made by any Person with

                                     -9-

<PAGE>   13

respect to, or of any action, suit or other proceeding relating to, the
Celgene Payments. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Seller, threatened against or
affecting, Seller before any Governmental Authority or arbitrator which in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated hereby or which could reasonably be expected to
materially and adversely affect Seller's ability to perform its obligations
under this Agreement.

         3.06.    COMPLIANCE WITH LAWS. Seller is not in violation of, nor has
Seller violated, and to the knowledge of Seller, Seller is not under
investigation with respect to nor has Seller been threatened to be charged
with or given notice of any violation of, any law, rule, ordinance or
regulation, or judgment, order or decree entered by any Governmental Authority
which violation, after the Closing, could materially and adversely affect
Buyer's right, title and interest to the Net Celgene Payments.

         3.07.    NO PRIOR TRANSFER. Seller has not assigned and has not in
any other way conveyed, transferred or encumbered all or any portion of its
right, title and interest to the Net Celgene Payments. Celgene has made all
payments required to be made to date under the Celgene Agreement. Seller has
not received any notice from Celgene that could reasonably be construed to
mean that any future payment from Celgene will not be timely made under the
Celgene Agreement.

         3.08.    CELGENE AGREEMENT. (a) Terms Unmodified. A true, correct and
complete copy of the Celgene Agreement is attached hereto as Exhibit A. The
Celgene Agreement is in full force and effect in the form attached hereto as
Exhibit A, and has not been altered or modified in any respect. Seller has not
consented to any sublicense by Celgene of its rights under the Celgene
Agreement. Except as set forth on Schedule 3.08(a) hereto, Seller has not
granted any material waiver under the Celgene Agreement. Celgene has not been
released, in whole or in part, from any of its obligations under the Celgene
Agreement.

         (b)      Payments. Attached hereto as Exhibit B are true and correct
copies of all accounting reports provided to Seller by Celgene under the
Celgene Agreement since December 9, 1998. Except for the reports included in,
and such other correspondence as may be further identified in Exhibit B, there
has been no correspondence or other communication in writing provided to
Seller by Celgene since December 9, 1998, the subject matter of which could
reasonably be interpreted to mean that Celgene intends to take any action, or
any event has occurred or circumstance is existing, that could materially and
adversely affect the Net Celgene Payments. To Seller's knowledge, there have
been no sales by Third Parties in excess of $1,000,000 per year of the Product
(each as defined in the Celgene Agreement).

         (c)      No Defenses. No right of rescission, set-off, counterclaim
or defense (including any off-set pursuant to Section 7.3(g) of the Celgene
Agreement) has been asserted by Celgene under the Celgene Agreement. To
Seller's knowledge, no event has occurred or circumstance exists that would
entitle Celgene to exercise any right of rescission, set-off, counterclaim or
defense, including any off-set pursuant to Section 7.3(g) of the Celgene
Agreement or as of the

                                     -10-

<PAGE>   14

Closing, that section of the New Thalidomide Agreement that is equivalent to
Section 7.3(g) of the Celgene Agreement.

         (d)      No Satisfaction or Discharge; Entire Agreement. Except as
contemplated by this Agreement, the Celgene Agreement has not been satisfied,
discharged, canceled, terminated, subordinated or rescinded, in whole or in
part. The Celgene Agreement is the entire agreement between Seller and Celgene
relating to the subject matter thereof and, other than the CMCC Agreement and
the Transaction Documents, constitutes the only agreement or instrument to
which Seller is a party that relates to the Celgene Payments.

         (e)      Validity and Enforceability of Celgene Agreement. The
Celgene Agreement is the legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and to equitable principles.

         (f)      No Material Adverse Effect. Except as set forth on Schedule
3.08(f) hereto, to Seller's knowledge, there has not been any event or
development, and there does not exist any set of circumstances, which could
reasonably be expected to have a material adverse effect on the Celgene
Payments.

         (g)      No Notice of Infringement. Except as set forth on Appendix D
to the Celgene Agreement and Schedule 3.08(g), to Seller's knowledge, there
does not exist any Third Party patent or patent application that contains any
interfering subject matter, nor any issued Third Party patents that would be
infringed by the making, using, selling, offering for sale, or importing by
Celgene of Products covered by the EntreMed Existing Patent Rights or the
EntreMed Existing Technology Rights in any country in the Territory, nor by
the exercise by Celgene of any right granted to it under the Celgene
Agreement. All capitalized terms used in this Section 3.08(g) but not defined
herein shall have the meanings ascribed to such terms in the Celgene
Agreement.

         3.09.    CMCC AGREEMENT. (a) Terms Unmodified. A true, correct and
complete copy of the CMCC Agreement is attached hereto as Exhibit C. The CMCC
Agreement is in full force and effect in the form attached hereto as Exhibit C,
and has not been altered or modified in any respect. Other than pursuant to the
Celgene Agreement, Seller has not sublicensed any rights under the CMCC
Agreement. Seller has not granted any material waiver under the CMCC Agreement.
CMCC has not been released, in whole or in part, from any of its material
obligations under the CMCC Agreement. Except for the transactions contemplated
hereby, Seller has not received any notice of CMCC's intention to terminate the
CMCC Agreement, in whole or in part, or requesting any amendment, alteration or
modification of the CMCC Agreement or any sublicense or assignment thereunder.
Except as set forth on Schedule 3.09(a), which is intended to be an appendix to
the New Thalidomide Agreement, there are no Patent Rights under the CMCC
Agreement.


         (b)      Payments. Seller has made all payments required to be made
to CMCC under the CMCC Agreement prior to the date hereof and will make all
payments required to be made to

                                     -11-

<PAGE>   15


CMCC under the CMCC Agreement prior to the Closing Date. There has been no
correspondence or other communication in writing provided to Seller by CMCC, the
subject matter of which could reasonably be interpreted to mean that CMCC
intends to take any action, or any event has occurred or circumstance is
existing, that could materially and adversely affect the Net Celgene Payments.

         (c)      No Satisfaction or Discharge; Entire Agreement. The CMCC
Agreement has not been satisfied, discharged, canceled, terminated,
subordinated or rescinded, in whole or in part. The CMCC Agreement is the
entire agreement between Seller and CMCC relating to the subject matter
thereof and, other than the Celgene Agreement, constitutes the only agreement
or instrument to which Seller is a party that relates to the Net Celgene
Payments.

         (d)      Validity and Enforceability of CMCC Agreement. The CMCC
Agreement is the legal, valid and binding obligation of Seller enforceable
against Seller in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and to equitable principles.

         (e)      License. Seller has, pursuant to the CMCC Agreement, the
exclusive worldwide right and license to use, lease and sell the Licensed
Products (which are sublicensed to Celgene pursuant to the Celgene Agreement),
and to practice the Licensed Processes (which are sublicensed to Celgene
pursuant to the Celgene Agreement) to the end of the term for which the Patent
Rights are granted unless sooner terminated. On the Closing Date, after
consummation of the transactions contemplated by this Agreement, Seller will
no longer have any such right or license. To the knowledge of Seller, Seller,
CMCC and each inventor of the Patent Rights has complied with the PTO duty of
candor and good faith in dealing with the PTO, including the duty to disclose
to the PTO all information known to be material to the patentability of each
claim of the Patent Rights.

         3.10.    FINDERS' FEES. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of Seller who might be entitled to any fee or commission from Buyer or
any of its Affiliates upon consummation of the transactions contemplated by
this Agreement.


                                  ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer hereby represents and warrants to Seller that:

         4.01.    ORGANIZATION AND EXISTENCE.  Buyer is a company, duly and
validly organized and existing under the laws of Hungary and has all
applicable powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.

                                     -12-

<PAGE>   16

         4.02.    CORPORATE AUTHORIZATION. The execution, delivery and
performance by Buyer of the Transaction Documents to which it is a party, and
the consummation by Buyer of the transactions contemplated thereby, are within
Buyer's corporate powers and have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed
and delivered by, and constitutes the legal, valid and binding agreement of,
Buyer, enforceable against Buyer in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and to equitable principles. Effective at
the Closing, the other Transaction Documents to which Buyer is a party will
have been duly executed and delivered by, and will constitute the legal, valid
and binding agreements of Buyer, enforceable against Buyer in accordance with
their terms, subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and to equitable
principles.

         4.03.    GOVERNMENTAL AUTHORIZATION.  The execution, delivery and
performance by Buyer of this Agreement does not require any notice to, action
or consent by, or in respect of, or filing with, any Governmental Authority.

         4.04.    NON-CONTRAVENTION. The execution, delivery and performance
by Buyer of this Agreement does not and will not (i) contravene or conflict
with the organizational documents of Buyer, (ii) contravene or conflict with
or constitute a violation of any provision of any law, rule or regulation
binding upon or applicable to Buyer, (iii) contravene or conflict with or
constitute a violation of any judgment, injunction, order or decree binding
upon or applicable to Buyer, (iv) constitute a default under or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of Buyer or (v) require the consent or permission of any Person.

         4.05.    FINDERS' FEES.  There is no investment banker, broker,
finder or other intermediary that has been retained by or is authorized to act
on behalf of Buyer who might be entitled to any fee or commission from Seller
upon consummation of the transactions contemplated by this Agreement.

         4.06.    LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer, threatened against
or affecting, Buyer before any Governmental Authority or arbitrator which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay
the transactions contemplated hereby or which could reasonably be expected to
materially and adversely affect Buyer's ability to perform its obligations
under this Agreement.

         4.07.    ABILITY TO PERFORM OBLIGATIONS.  There has not been filed
with respect to Buyer a petition in bankruptcy, insolvency, receivership or
similar proceedings.  Buyer has sufficient assets to perform its obligations
under this Agreement.

                                     -13-

<PAGE>   17


                                  ARTICLE V

                                  COVENANTS

         Buyer and Seller agree that:

         5.01.    PRESERVATION OF THE CELGENE PAYMENTS.  From the date hereof
until the Closing Date, Seller shall not:

         (a)      sell, lease, license, sublicense, assign, transfer or
otherwise dispose of, or incur or suffer to exist any Lien on, the Celgene
Payments, or agree to commit to do any of the foregoing; or

         (b)      take or agree or commit to take any action that would make
any representation and warranty of Seller hereunder inaccurate at, or as of
any time prior to, the Closing Date.

         5.02.    ACCESS TO INFORMATION. From the date hereof until the
Closing Date, Seller (a) will give Buyer, its Affiliates, counsel and
accountants (collectively, "Buyer's Consultants") reasonable commercial access
during normal business hours to the offices, properties, books and records of
Seller related to the Celgene Payments; and (b) will furnish to Buyer and
Buyer's Consultants such information relating to the Celgene Payments as such
Persons may reasonably request.

         5.03.    NOTICES OF CERTAIN EVENTS.  From the date hereof until the
Closing Date, Seller shall promptly notify Buyer of:

         (a)      any notice or other communication from any person or entity
that the consent of such person or entity is or may be required in connection
with the transactions contemplated by this Agreement;

         (b)      any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement
or from Celgene or CMCC to the extent that such notice or communication
relates to the Celgene Payments, and expressly excluding any notices or
communication which do not relate to thalidomide; and

         (c)      any actions, suits, claims, investigations or proceedings to
its knowledge commenced or threatened against, relating to or involving or
otherwise affecting the Celgene Agreement, the CMCC Agreement or the Celgene
Payments.

         5.04.    [RESERVED.]

         5.05.    COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES. Subject
to the terms and conditions of this Agreement, each party will use its
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary under applicable laws and
regulations to consummate the transactions contemplated by this Agreement;

                                     -14-

<PAGE>   18

provided that Buyer shall not be obligated to pay any amount of money or
deliver any goods or services to Seller or any third party except as otherwise
expressly provided in this Agreement. Buyer and Seller agree to execute and
deliver such other documents, certificates, agreements and other writings
(including any UCC filings requested by Buyer) and to take such other actions
as may be reasonably necessary in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.

         5.06.    SELLER'S CONTINUING COVENANTS.

         (a)      If Celgene should exercise its right to reduce any royalty
payments pursuant to Section 7.3(g) of the Celgene Agreement or that section
of the New Thalidomide Agreement that is equivalent to Section 7.3(g) of the
Celgene Agreement, and such exercise results in a reduction in any Net Celgene
Payments, then Seller shall, promptly after notice from Buyer that such right
to reduce royalty payments has been exercised, pay to Buyer the amount that
Celgene applied in such reduction. Seller's obligations under this Section
5.06(a) shall expire on the due date, if it shall occur, for payment of the
Contingent Purchase Price pursuant to Section 2.05(a) hereof.

         (b)      From and after the Closing Date until such time as Buyer
shall have received the last Net Celgene Payment under the New Thalidomide
Agreement (or any amendment, modification or successor agreement thereto),
Seller shall:

                  (i)      Upon the request of Buyer, from time to time
         execute, acknowledge and deliver, or cause to be executed,
         acknowledged and delivered, such further instruments and take such
         further action as may be reasonably necessary to effectuate the
         intention, performance and provisions of this Agreement;

                  (ii)     Provide Buyer, as promptly as practicable (and in
         any event within three business days of Seller's receipt thereof), of
         (A) copies of any correspondence or other written communication from
         CMCC relating to thalidomide or from Celgene relating to thalidomide
         and (B) notice (in writing in reasonable detail) of any oral
         communication from CMCC or Celgene which could reasonably be
         understood to be a material development with respect to thalidomide;
         and

                  (iii)    Cooperate and provide assistance as reasonably
         requested and to the extent reasonably necessary in connection with
         any litigation, arbitration or other proceeding (whether threatened,
         existing, initiated, or contemplated prior to, on or after the date
         hereof) to which Buyer, its affiliates or any of its officers,
         directors, shareholders, agents or employees is or may become a party
         or is or may become otherwise directly or indirectly affected or as
         to which any such Persons have a direct or indirect interest relating
         to this Agreement, the Net Celgene Payments or the transactions
         described herein or therein. With respect to the foregoing
         obligations, it is understood that, as result of the New Thalidomide
         Agreement, Buyer may bring actions against Celgene directly and,
         therefore, it is expected that the need for Seller's cooperation and
         assistance, if any, will be limited. Buyer shall reimburse Seller for
         reasonable out-of-pocket expenses (including

                                     -15-

<PAGE>   19

         the reasonable fees and expenses of counsel) incurred by Seller in
         connection with the foregoing cooperation and assistance.

         5.07.    BUYER'S CONTINUING COVENANTS. From and after the Closing
Date, upon the request of Seller, from time to time execute, Buyer shall
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such further instruments and take such further action as may be reasonably
necessary to effectuate the intention, performance and provisions of this
Agreement.

         5.08.    CASH RECEIVED. At and after the Closing, if, notwithstanding
the provisions of the Transaction Documents, in respect of the transactions
contemplated hereby, Seller shall receive any Net Celgene Payment, Seller
shall pay over to Buyer such Net Celgene Payment.

         5.09.    NOTICE OF PAYMENTS. Prior to the Closing Date, Seller will
notify Buyer of the receipt by Seller of any payment from Celgene under
Sections 4.1, 4.2 or 4.3 of the Celgene Agreement and of any payment by Seller
pursuant to the CMCC Agreement.


                                  ARTICLE VI

                            CONDITIONS TO CLOSING

         6.01.    CONDITIONS TO OBLIGATION OF BUYER.  The obligation of Buyer
to effect the Closing shall be subject to the satisfaction of each of the
following conditions, any of which may be waived by Buyer in its sole
discretion:

         (a)      Seller shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions required
to be performed and complied by it under this Agreement prior to the Closing
Date and Buyer shall have received a certificate executed by a duly authorized
officer of Seller to such effect on the Closing Date.

         (b)      The representations and warranties of Seller contained in
Article III which are qualified as to materiality shall be true and correct,
and the representations and warranties of Seller which are not qualified as to
materiality shall be true and correct in all material respects, in each case,
as of the date of this Agreement and as of the Closing Date as though made at
and as of the Closing Date, except to the extent any such representation or
warranty expressly speaks of a particular date, in which case it shall be true
and correct as of such date, and Buyer shall have received a certificate
executed by a duly authorized officer of Seller to such effect on the Closing
Date.

         (c)      There shall not have been issued and be in effect any order,
decree or judgment of any Governmental Authority enjoining, preventing or
restricting the consummation of the transactions contemplated hereby.

                                     -16-

<PAGE>   20

         (d)      There shall not have been instituted or pending any action
or proceeding (other than any actions or proceedings that are demonstrably
frivolous) by any Governmental Authority or any other Person (i) challenging
or seeking to make illegal, to delay materially or otherwise directly or
indirectly to restrain or prohibit the consummation of the transactions
contemplated hereby, or seeking to obtain material damages in connection with
the transactions contemplated hereby, or (ii) seeking to restrain or prohibit
Buyer's acquisition or future receipt of the Net Celgene Payments.

         (e)      There shall not have occurred any event or development, and
there shall not be existing any circumstance, which could reasonably be
expected to materially and adversely affect future expected Net Sales or the
Celgene Payments.

         (f)      Buyer shall have received an opinion of counsel to Seller in
substantially the form attached hereto as Exhibit D.

         (g)      Buyer shall have received the Celgene Consent duly executed
and delivered by the parties thereto.

         (h)      Buyer shall have received the CMCC Consent duly executed and
delivered by the parties thereto.

         (i)      Buyer shall have received the New Thalidomide Agreement duly
executed and delivered by the parties thereto.

         (j)      Buyer and Seller shall have entered into a mutually
satisfactory agreement pursuant to which Buyer and Seller shall identify those
sections of the New Thalidomide Agreement that are equivalent to those
sections of the Celgene Agreement, for purposes of the definitions of
"Applicable Net Celgene Payments", "Applicable Net Sales", "Celgene Payments",
"Net Celgene Payments" and "Shared Net Sales", Section 3.08(c) and Section
5.06 hereof.

         6.02.    CONDITIONS TO OBLIGATION OF SELLER.  The obligation of
Seller to effect the Closing shall be subject to the satisfaction of each of
the following conditions, any of which may be waived by Seller in its sole
discretion:

         (a)      Buyer shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions required
to be performed and complied by it under this Agreement prior to the Closing
Date and Seller shall have received a certificate executed by a duly
authorized officer of Buyer to such effect on the Closing Date.

         (b)      The representations and warranties of Buyer contained in
Article IV which are qualified as to materiality shall be true and correct,
and the representations and warranties of Buyer which are not qualified as to
materiality shall be true and correct in all material respects, in each case,
as of the date of this Agreement and as of the Closing Date as though made at
and as of the Closing Date, except to the extent any such representation or
warranty expressly speaks of

                                     -17-

<PAGE>   21

a particular date, in which case it shall be true and correct as of such date,
and Seller shall have received a certificate executed by a duly authorized
officer of Buyer to such effect on the Closing Date.

         (c)      There shall not have been issued and be in effect any order,
decree or judgment of any Governmental Authority enjoining, preventing or
restricting the consummation of the transactions contemplated hereby.

         (d)      There shall not have been instituted or pending any action
or proceeding (other than any actions or proceedings that are demonstrably
frivolous) by any Governmental Authority or any other Person (i) challenging
or seeking to make illegal, to delay materially or otherwise directly or
indirectly to restrain or prohibit the consummation of the transactions
contemplated hereby, or seeking to obtain material damages in connection with
the transactions contemplated hereby, or (ii) seeking to restrain or prohibit
Buyer's acquisition or future receipt of the Net Celgene Payments.

         (e)      Seller shall have received the Guaranty duly executed by the
parties thereto.

         (f)      Seller shall have received the New Analog Agreement duly
executed and delivered by the parties thereto.

         (g)      Seller shall have received the IPO Agreement duly executed
by the parties thereto.

         (h)      Seller shall have received the Celgene Consent duly executed
and delivered by the parties thereto.

         (i)      Seller shall have received the CMCC Consent duly executed
and delivered by the parties thereto.

         (j)      Seller shall have received the New Thalidomide Agreement
duly executed and delivered by the parties thereto.

         (k)      Buyer and Seller shall have entered into a mutually
satisfactory agreement pursuant to which Buyer and Seller shall identify those
sections of the New Thalidomide Agreement that are equivalent to those
sections of the Celgene Agreement, for purposes of the definitions of
"Applicable Net Celgene Payments", "Applicable Net Sales", "Celgene Payments",
"Net Celgene Payments" and "Shared Net Sales", Section 3.08(c) and Section
5.06 hereof.

                                     -18-

<PAGE>   22


                                 ARTICLE VII

                          SURVIVAL; INDEMNIFICATION

         7.01.    SURVIVAL. The representations, warranties, covenants and
agreements of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith shall survive the Closing for a period of five years; provided that
(i) the representations and warranties in Sections 3.01, 3.02, 3.07, 3.08,
3.09, 4.01 and 4.02 and the agreements in Article II, this Article VII,
Article VIII and Section 9.03 shall survive the Closing indefinitely; and (ii)
each of the covenants and agreements in Article V shall survive for the period
of time stated in such covenant or agreement or, if no such period is
specified, indefinitely; provided that any expiration shall not terminate or
limit in any manner whatsoever any liabilities any person has or may have
hereunder for criminal activity, willful misstatements, willful omissions,
willful breaches, willful nonfulfillments and willful violations or for common
law fraud. Notwithstanding the time limits set forth above, any covenant,
agreement, representation or warranty in respect of which indemnity may be
sought under Section 7.02 shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence if notice of the inaccuracy or
breach thereof giving rise to such right to indemnity shall have been given to
the party against whom such indemnity may be sought prior to such time and
such notice was delivered in accordance with the procedures described in
Section 7.03 below. The covenants, agreements, representations and warranties
of Seller and the rights and remedies that may be exercised by Buyer shall not
be limited, diminished or otherwise affected by or as a result of any
information that may have been provided, any investigation or examination that
may have been made by, or any knowledge of, Buyer or any other party on behalf
of Buyer.

         7.02.    INDEMNIFICATION.

         (a)      Seller hereby indemnifies Buyer and its Affiliates against
and agrees to hold each of them harmless from any and all damage, loss,
liability and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with
any action, suit or proceeding) (collectively, "Loss") incurred or suffered by
Buyer or any of its Affiliates arising out of any misrepresentation or breach
of warranty, covenant or agreement made or to be performed by Seller pursuant
to this Agreement, including any failure by Seller to satisfy any of the
Excluded Liabilities and Obligations. A misrepresentation or breach of
warranty of the last sentence of Section 3.09(e) hereof shall be deemed not to
have occurred except upon the issuance of a non-appealable final determination
or judgment by the PTO or any court of competent jurisdiction in an action not
initiated by Buyer to the effect that Seller, CMCC or any inventor of the
Patent Rights failed to comply with the PTO duty of candor and good faith in
dealing with the PTO, including the duty to disclose to the PTO all
information known to be material to the patentability of each claim of the
Patent Rights.

         (b)      Buyer hereby indemnifies Seller and its Affiliates against
and agrees to hold each of them harmless from any and all Loss incurred or
suffered by Seller or any of its Affiliates

                                     -19-

<PAGE>   23

arising out of any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by Buyer pursuant to this Agreement.

         7.03.    PROCEDURES; NO WAIVER; EXCLUSIVITY. The party seeking
indemnification under Section 7.02 (the "Indemnified Party") agrees to give
prompt notice to the party against whom indemnity is sought (the "Indemnifying
Party") of the assertion of any claim, or the commencement of any suit, action
or proceeding in respect of which indemnity may be sought under such Section;
provided, that the failure to give such notice shall not affect the
Indemnified Party's rights hereunder except to the extent the Indemnifying
Party is materially prejudiced by such failure. The Indemnifying Party may,
and at the request of the Indemnified Party shall, participate in and control
the defense of any third party suit, action or proceeding at its own expense.
The Indemnifying Party shall not be liable under Section 7.02 for any
settlement effected without its prior consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder; provided
that such consent may not be unreasonably withheld.


                                 ARTICLE VIII

                                 TERMINATION

         8.01.    GROUNDS FOR TERMINATION.  This Agreement may be terminated
at any time prior to the Closing:

         (a)      by mutual written agreement of Buyer and Seller; or

         (b)      by either Buyer or Seller if the Closing shall not have been
consummated on or before July 15, 2001 due to non-satisfaction of a condition
set forth in Section 6.01 or 6.02 hereof that has not been waived; provided,
that neither Buyer nor Seller shall have the right to terminate this Agreement
pursuant to this Section 8.01(b) if such party has failed to perform its
obligations hereunder.

         8.02     EFFECT OF TERMINATION. If this Agreement is terminated as
permitted by Section 8.01, such termination shall be without liability of any
party (or any stockholder, director, officer, employee, agent, consultant or
representative of such party) to any other party to this Agreement; provided,
that if such termination shall result from the breach by a party of the terms
of this Agreement, which breach results in the failure of a condition to the
performance of the obligations of another party, such party shall be fully
liable for any and all Losses incurred or suffered by the other party as a
result of such failure or breach.

                                     -20-

<PAGE>   24


                                  ARTICLE IX

                                MISCELLANEOUS

         9.01.    NOTICES.  All notices, requests and other communications to
any party hereunder shall be in writing (including telex, telecopy, or similar
writing) and shall be given,

         (a)      if to Buyer, to:

                  c/o Royalty Pharma Management
                  675 Third Avenue
                  Suite 3000
                  New York, NY 10017
                  USA
                  Attention:        Pablo Legorreta
                                    David Madden
                  Telephone:        (917) 368-0020
                  Telecopy:         (917) 368-0021

                  with copies to:

                  Testa, Hurwitz & Thibeault, LLP
                  125 High Street
                  Boston, MA  02110
                  USA
                  Attention:        F. George Davitt, Esq.
                  Telephone:        (617) 248-7000
                  Telecopy:         (617) 248-7100

                  Homburger
                  Weinbergstrasse 56/58
                  CH-8006 Zurich
                  Switzerland
                  Attention:        Claude Lambert
                  Telephone:        +41-1-265 35 35
                  Telecopy:         +41-1-265 35 11

         (b)      if to Seller, to:

                  EntreMed, Inc.
                  9640 Medical Center Drive
                  Rockville, MD  20850
                  USA
                  Attention:        Thomas P. Russo
                  Telephone:        (301) 217-9858

                                     -21-

<PAGE>   25

                  Telecopy:         (301) 217-9594

                  with copies to:

                  EntreMed, Inc.
                  9640 Medical Center Drive
                  Rockville, MD  20850
                  USA
                  Attention:        Donald S. Brooks, Esq.
                  Telephone:        (561) 998-4774
                  Telecopy:         (561) 998-2960

                  Arnold & Porter
                  555 12th Street NW
                  Washington, DC  20004-1202
                  USA
                  Attention:        Kenneth Schwartz, Esq.
                  Telephone:        (202) 942-5595
                  Telecopy:         (202) 942-5999


or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by fax prior to 1:00 p.m. (New York time) or
on the date five business days after dispatch by certified or registered mail
if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01.

         9.02.    AMENDMENTS; NO WAIVERS.  (a) Any provisions of this
Agreement may be amended or waived if, and only if, such amendment or waiver
is in writing and signed by all parties hereto, or, in the case of a waiver,
by the party against whom the waiver is to be effective.

         (b)      No failure or delay by either Buyer or Seller in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.

         9.03.    EXPENSES.  Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost or expense.

         9.04.    SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Without

                                     -22-

<PAGE>   26

limiting the generality of the foregoing, nothing herein shall prohibit or
restrict Buyer from assigning any of its rights and obligations hereunder.

         9.05.    GOVERNING LAW; JURISDICTION, ETC.  (a) THIS AGREEMENT SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.

         (b)      EACH OF BUYER AND SELLER HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY AND ASSETS, TO THE
EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE
UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, NEW YORK, AND ANY APPELLATE
COURT THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, AND BUYER AND SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. BUYER AND SELLER HEREBY
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY APPLICABLE LAW. EACH OF BUYER AND SELLER
HEREBY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF SUCH NEW
YORK STATE AND FEDERAL COURTS. BUYER AND SELLER AGREE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THAT PROCESS MAY BE SERVED ON BUYER OR SELLER IN
THE SAME MANNER THAT NOTICES MAY BE GIVEN PURSUANT TO SECTION 9.01 HEREOF.
BUYER HEREBY APPOINTS, IN THE CASE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN
THE COURTS OF OR IN THE STATE OF NEW YORK, CT CORPORATION SYSTEMS, WITH
OFFICES ON THE DATE HEREOF AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, TO
RECEIVE, FOR IT AND ON ITS BEHALF, SERVICE OF PROCESS IN THE STATE OF NEW YORK
WITH RESPECT THERETO, PROVIDED THAT BUYER MAY APPOINT ANY OTHER PERSON WITH
OFFICES IN THE STATE OF NEW YORK TO REPLACE SUCH AGENT FOR SERVICE OF PROCESS
UPON DELIVERY TO SELLER OF NOTICE PURSUANT TO SECTION 9.01 HEREOF.

         (c)      EACH OF BUYER AND SELLER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY
DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN
ANY NEW YORK STATE OR FEDERAL COURT. EACH OF BUYER AND SELLER HEREBY
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

                                     -23-

<PAGE>   27

         (d)      IT IS FURTHER UNDERSTOOD AND AGREED THAT MONEY DAMAGES WOULD
NOT BE A SUFFICIENT REMEDY FOR ANY BREACH OF THIS AGREEMENT BY SELLER AND THAT
BUYER MAY BE ENTITLED TO EQUITABLE RELIEF, INCLUDING INJUNCTION AND SPECIFIC
PERFORMANCE, AS A REMEDY FOR ANY SUCH BREACH. SUCH REMEDIES SHALL NOT BE
DEEMED TO BE THE EXCLUSIVE REMEDIES FOR A BREACH BY SELLER BUT SHALL BE IN
ADDITION TO ALL OTHER REMEDIES AVAILABLE AT LAW OR EQUITY TO BUYER.

         (e)      BUYER AND SELLER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR CLAIM (WHETHER IN CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

         9.06.    COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have
received a counterpart hereof signed by the other party hereto.

         9.07.    ENTIRE AGREEMENT. This Agreement and the Exhibits hereto
constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto. None of this Agreement, nor any provision
hereof, is intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.

         9.08.    CAPTIONS.  The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.

                [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]



                                     -24-


<PAGE>   28


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.


                                     ENTREMED, INC.


                                     By: /s/ James D. Johnson
                                         ------------------------------------
                                         Name:  James Dean Johnson
                                         Title: General Counsel



                                     BIOVENTURE INVESTMENTS KFT


                                     By: /s/ I Zentai
                                         ------------------------------------
                                         Name:  Istvan Zentai
                                         Title: Managing Director


                                     By:
                                         ------------------------------------
                                         Name:
                                         Title:


                                     -25-