Document:

<PAGE>
                                                                     EXHIBIT 4.2

                         SECURITIES PURCHASE AGREEMENT

        This SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of
December 14, 2001, is entered into by and among EntreMed, Inc., a Delaware
corporation, with headquarters located at 9640 Medical Center Drive, Rockville,
Maryland 20850 (the "COMPANY"), and the investors listed on Schedule 1 attached
hereto (individually, a "BUYER" and collectively, the "BUYERS").

        WHEREAS:

        A.      The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT");

        B.      The Company desires to sell and the Buyers desire to purchase,
upon the terms and conditions stated in this Agreement, shares of the Company's
Common Stock (the "COMMON STOCK"), par value $.01 per share (the "SHARES"), and
warrants, in substantially the same form attached hereto as Exhibit A (the
"WARRANTS"), to acquire shares of Common Stock (as exercised, collectively, the
"WARRANT SHARES"); and

        C.      Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, substantially in the form attached hereto as Exhibit B (the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder.

        NOW THEREFORE, the Company and the Buyers hereby agree as follows:

I.      PURCHASE AND SALE OF COMMON STOCK AND WARRANTS.

        A.      Purchase of Common Stock and Warrants. In connection with the
                offering by the Company of the Shares and Warrants to the
                Buyers, and subject to the satisfaction (or waiver) of the
                conditions set forth in Sections 5 and 6 below, the Company
                shall issue and sell to each Buyer and each Buyer severally
                agrees to purchase from the Company at the Closing (defined
                below) shares of Common Stock and Warrants for the aggregate
                purchase price set forth opposite such Buyer's name on Schedule
                1 (such Buyer's "COMMITTED AMOUNT") at the Price Per Unit
                (defined below). A "UNIT" shall consist of one (1) share of
                Common Stock and a warrant to acquire 0.25 (25/100) shares of
                Common Stock. Unless the Company elects to exercise its right to
                require the mandatory exercise thereof in accordance with its
                terms, each Warrant shall have a term of five (5) years, and an
                exercise price per share equal to $11.81. To determine the
                number of Units each Buyer shall purchase, such Buyer's
                Committed Amount shall

<PAGE>

                be divided by the Price Per Unit. The "PRICE PER UNIT" shall
                equal seven and 75/100 dollars ($7.75).

        B.      Closing; Closing Date. Subject to the satisfaction (or waiver)
                of the conditions contained in Sections 5 and 6, each Buyer's
                Committed Amount shall be paid to the Company by wire transfer
                of immediately available funds, and the Company shall thereupon
                issue a certificate representing the Shares (the "COMMON STOCK
                CERTIFICATES") and the Warrants purchased by such Buyer, duly
                executed on behalf of the Company and registered in the name of
                such Buyer or its designee. The Closing Date shall be such date
                as the Company and Pali Capital, LLC, the placement agent for
                the transactions contemplated by this Agreement, shall mutually
                agree, but in no event later than December 21, 2001 (such date
                being hereinafter referred to as the "CLOSING DATE"). The term
                "Closing" as used herein shall mean the delivery to the Closing
                Agent (defined below) of the Common Stock Certificates, the
                delivery of the Warrants, the payment of the Price Per Unit, and
                the delivery of such other documents and taking of such other
                actions as are required to be delivered or taken at the Closing
                pursuant to this Agreement. All payments contemplated by this
                Section 1(b) shall be deposited by wire transfer of immediately
                available funds as soon as practicable after the execution of
                this Agreement on the date hereof for such Buyer's benefit in an
                escrow account with The Bank of New York (the "ESCROW AGENT")
                and no interest shall be payable to such Buyer with respect to
                such funds. Payments will be returned promptly, without interest
                or deduction, if the purchase and sale of the Securities
                (defined below) contemplated by this Agreement is terminated for
                any reason.

II.     BUYER'S REPRESENTATIONS AND WARRANTIES.

                Each Buyer represents and warrants with respect to only itself
                that:

        A.      Investment Purpose. Such Buyer is acquiring the Shares and
                Warrants purchased hereunder, and any Warrant Shares
                subsequently purchased (such Shares, Warrants and Warrant Shares
                may also be referred to herein as the "SECURITIES"), for its own
                account for investment only and not with a view towards, or for
                resale in connection with, the public sale or distribution
                thereof, except pursuant to sales registered or exempted under
                the 1933 Act; provided, however, that by making the
                representations herein, such Buyer does not agree to hold any of
                the Securities for any minimum or other specific term and
                reserves the right to dispose of the Securities at any time in
                accordance with or pursuant to a registration statement or an
                exemption under the 1933 Act. Such Buyer does not have any
                agreement or understanding, directly or indirectly, with any
                person to distribute any of the Securities.

                                      -2-
<PAGE>

        B.      Accredited Investor Status. Such Buyer is an "accredited
                investor" as that term is defined in Rule 501(a) of Regulation
                D. Such Buyer is not registered as a broker-dealer under Section
                15 of the Exchange Act. Such Buyer is not an affiliate of the
                Company.

        C.      Reliance on Exemptions. Such Buyer understands that the
                Securities are being offered and sold to it in reliance on
                specific exemptions from the registration requirements of United
                States federal and state securities laws and that the Company is
                relying upon the truth and accuracy of, and such Buyer's
                compliance with, the representations, warranties, agreements,
                acknowledgments and understandings of such Buyer set forth
                herein in order to determine the availability of such exemptions
                and the eligibility of such Buyer to acquire such Securities.

        D.      Information. Such Buyer and its advisors, if any, have been
                furnished with all materials relating to the business, finances
                and operations of the Company and materials relating to the
                offer and sale of the Securities which have been requested by
                such Buyer. Such Buyer and its advisors, if any, have been
                afforded the opportunity to ask questions of the Company.
                Neither such inquiries nor any other due diligence
                investigations conducted by such Buyer or its advisors, if any,
                or its representatives shall modify, amend or affect such
                Buyer's right to rely on the Company's representations and
                warranties contained in Section 3 below. Such Buyer understands
                that its investment in the Securities involves a high degree of
                risk. Such Buyer has sought such accounting, legal and tax
                advice as it has considered necessary to make an informed
                investment decision with respect to its acquisition of the
                Securities.

        E.      No Governmental Review. Such Buyer understands that no United
                States federal or state agency or any other government or
                governmental agency has passed on or made any recommendation or
                endorsement of the Securities or the fairness or suitability of
                the investment in the Securities nor have such authorities
                passed upon or endorsed the merits of the offering of the
                Securities.

        F.      Transfer or Resale. Such Buyer understands that except as
                provided in the Registration Rights Agreement: (i) the
                Securities have not been and are not being registered under the
                1933 Act or any state securities laws, and may not be offered
                for sale, sold, assigned or transferred unless (A) subsequently
                registered thereunder, (B) such Buyer shall have delivered to
                the Company an opinion of counsel, in generally acceptable form,
                to the effect that such Securities to be sold, assigned or
                transferred may be sold, assigned or transferred pursuant to an
                exemption from such registration, or (C) such Buyer provides the
                Company with reasonable assurance that such Securities can be
                sold, assigned or transferred pursuant to Rule 144(k)
                promulgated under the 1933 Act, as amended, (or a successor rule
                thereto) ("RULE 144(k)").

                                      -3-
<PAGE>

        G.      Validity; Enforcement. This Agreement has been duly and validly
                authorized, executed and delivered on behalf of such Buyer and
                is a valid and binding agreement of such Buyer enforceable
                against such Buyer in accordance with its terms, subject as to
                enforceability to general principles of equity and to applicable
                bankruptcy, insolvency, reorganization, moratorium, liquidation
                and other similar laws relating to, or affecting generally, the
                enforcement of applicable creditors' rights and remedies.

        H.      Residency. Such Buyer is a resident of that country and state,
                if applicable, specified in its address on Schedule 1.

III.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                The Company represents and warrants to each of the Buyers that:

        A.      Organization and Qualification. The Company and its
                "SUBSIDIARIES" (which for purposes of this Agreement means any
                entity in which the Company, directly or indirectly, owns a
                controlling position of capital stock or holds a controlling
                position of an equity or similar interest), other than Cytokine
                Sciences, Inc., are corporations duly organized and validly
                existing in good standing under the laws of the jurisdiction in
                which they are incorporated, and have the requisite corporate
                power and authorization to own their properties and to carry on
                their business as now being conducted. Each of the Company and
                its Subsidiaries is duly qualified as a foreign corporation to
                do business and is in good standing in every jurisdiction in
                which its ownership of property or the nature of the business
                conducted by it makes such qualification necessary, except to
                the extent that the failure to be so qualified or be in good
                standing would not have a Material Adverse Effect. As used in
                this Agreement, "MATERIAL ADVERSE EFFECT" means any material
                adverse effect on the business, properties, assets, operations,
                results of operations or financial condition of the Company and
                its Subsidiaries, taken as a whole, or on the transactions
                contemplated hereby or by the agreements and instruments to be
                entered into in connection herewith, or on the authority or
                ability of the Company to perform its obligations under the
                Transaction Documents (defined below).

        B.      Authorization; Enforcement; Validity. (i) The Company has the
                requisite corporate power and authority to enter into and
                perform this Agreement, the Registration Rights Agreement and
                the Warrants and each of the other agreements entered into by
                the parties hereto in connection with the transactions
                contemplated by this Agreement (collectively, the "TRANSACTION
                DOCUMENTS"), and to issue the Securities in accordance with the
                terms hereof and thereof, (ii) the execution and delivery of the
                Transaction Documents by the Company and the consummation by it
                of the transactions contemplated hereby and thereby, including
                without limitation the issuance of the Common Stock and the
                Warrants and the

                                      -4-
<PAGE>

                reservation for issuance and the issuance of the Warrant Shares
                issuable upon exercise thereof, have been duly authorized by the
                Company's Board of Directors and no further consent or
                authorization is required by the Company, its Board of Directors
                or its stockholders, (iii) the Transaction Documents have been
                duly executed and delivered by the Company, and (iv) the
                Transaction Documents constitute the valid and binding
                obligations of the Company enforceable against the Company in
                accordance with their terms, except as such enforceability may
                be limited by general principles of equity or applicable
                bankruptcy, insolvency, reorganization, moratorium, liquidation
                or similar laws relating to, or affecting generally, the
                enforcement of creditors' rights and remedies.

        C.      Issuance of Securities. The Securities are duly authorized and,
                upon issuance in accordance with the terms hereof, shall be (i)
                validly issued, fully paid and non-assessable and (ii) free from
                all taxes, liens and charges with respect to the issue thereof.
                The Company has duly authorized and reserved for issuance upon
                exercise of the Warrants not less than 100% of the number of
                shares of Common Stock needed to provide for the issuance of the
                shares of Common Stock upon exercise of the Warrants. Upon
                exercise in accordance with the Warrants, the Warrant Shares
                will be validly issued, fully paid and nonassessable and free
                from all taxes, liens and charges with respect to the issue
                thereof, with the holders being entitled to all rights accorded
                to a holder of Common Stock. Assuming the accuracy of each
                Buyer's representations set forth in Section 2, the offer,
                issuance and sale by the Company of the Securities is, and the
                issuance by the Company of the Warrant Shares shall be, exempt
                from registration under the 1933 Act.

        D.      No Conflicts. The execution, delivery and performance of the
                Transaction Documents by the Company and the consummation by the
                Company of the transactions contemplated hereby and thereby
                (including, without limitation, the Company's issuance of the
                Securities and the reservation for issuance and issuance of the
                Warrant Shares) will not (i) result in a violation of the
                Company's Certificate of Incorporation, as amended and as in
                effect on the date hereof (the "CERTIFICATE OF INCORPORATION")
                or the Company's By-laws, as amended and as in effect on the
                date hereof (the "BY-LAWS"), or (ii) conflict with, or
                constitute a default (or an event which with notice or lapse of
                time or both would become a default) under, or give to others
                any rights of termination, amendment, acceleration or
                cancellation of, any agreement, indenture or instrument to which
                the Company or any of its Subsidiaries is a party, or result in
                a violation of any law, rule, regulation, order, judgment or
                decree (including (assuming the accuracy of the representations
                and warranties of each Buyer set forth in Section 2) federal and
                state securities laws and regulations and the rules and
                regulations of The Nasdaq National Market ("NASDAQ") applicable
                to the Company or any of its Subsidiaries or by which any
                property or asset of the Company or any of its Subsidiaries is
                bound or affected), except

                                      -5-
<PAGE>

                with respect to clause (ii), for such conflicts, defaults,
                terminations, amendments, accelerations, cancellations and
                violations as would not, individually or in the aggregate,
                reasonably be expected to result in a Material Adverse Effect.
                Neither the Company nor any of its Subsidiaries is in violation
                of any term of or in default under its Certificate of
                Incorporation or By-laws or their organizational charter or
                by-laws, and neither the Company nor any of its Subsidiaries is
                in violation or any term of or in default under any contract,
                agreement, mortgage, indebtedness, indenture, instrument,
                judgment, decree or order or any statute, rule or regulation
                applicable to the Company or its Subsidiaries (except for
                possible conflicts, defaults, terminations, amendments as would
                not, individually or in the aggregate, have a Material Adverse
                Effect). The business of the Company and its Subsidiaries is not
                being conducted, and shall not be conducted, in violation of any
                law, ordinance, regulation of any governmental entity, except
                for possible violations the sanctions which would not,
                individually or in the aggregate, have a Material Adverse
                Effect. Except as specifically contemplated by the Transaction
                Documents and as required under the 1933 Act and any applicable
                state securities laws, the Company is not required to obtain any
                consent, authorization or order of, or make any filing or
                registration with, any court or governmental agency or any
                regulatory or self-regulatory agency in order for it to execute,
                deliver or perform any of its obligations under or contemplated
                by the Transaction Documents in accordance with the terms hereof
                or thereof. All consents, authorizations, orders, filings and
                registrations which the Company is required to obtain prior to
                Closing pursuant to the preceding sentence have been obtained or
                effected or will be obtained or effected on or prior to the
                Closing Date. The Company and its Subsidiaries are unaware of
                any facts or circumstances which might give rise to any of the
                foregoing. The offer and sale of the Securities does not violate
                the rules and regulations of Nasdaq. The Company is not in
                violation of the listing requirements of Nasdaq and, other than
                as may be caused by fluctuations of its stock price, has no
                reason to believe that it will not in the foreseeable future
                continue to satisfy such listing requirements.

        E.      SEC Documents; Financial Statements. As of the Closing, the
                Company has filed all reports, schedules, forms, statements and
                other documents required to be filed by it with the SEC pursuant
                to the reporting requirements of the Securities Exchange Act of
                1934, as amended (the "1934 ACT") (all of the foregoing filed
                prior to the date hereof and all exhibits included therein and
                financial statements and schedules thereto and documents
                incorporated by reference therein being hereinafter referred to
                as the "SEC DOCUMENTS"). As of their respective dates, the SEC
                Documents complied in all material respects with the
                requirements of the 1934 Act and the rules and regulations of
                the SEC promulgated thereunder applicable to the SEC Documents,
                and none of the SEC Documents, at the time they were filed with
                the SEC, contained any untrue

                                      -6-
<PAGE>

                statement of a material fact or omitted to state a material fact
                required to be stated therein or necessary in order to make the
                statements therein, in light of the circumstances under which
                they were made, not misleading. As of their respective dates,
                the financial statements of the Company included in the SEC
                Documents complied as to form in all material respects with
                applicable accounting requirements and the published rules and
                regulations of the SEC with respect thereto. Such financial
                statements have been prepared in accordance with generally
                accepted accounting principles, consistently applied, during the
                periods involved (except (i) as may be otherwise indicated in
                such financial statements or the notes thereto, or (ii) in the
                case of unaudited interim statements, to the extent they may
                exclude footnotes or may be condensed or summary statements) and
                fairly present in all material respects the financial position
                of the Company as of the dates thereof and the results of its
                operations and cash flows for the periods then ended (subject,
                in the case of unaudited statements, to normal year-end audit
                adjustments). No other information provided by or on behalf of
                the Company to the Buyers which is not included in the SEC
                Documents contains any untrue statement of a material fact or
                omits to state any material fact necessary in order to make the
                statements therein, in the light of the circumstance under which
                they are or were made, not misleading. Neither the Company nor
                any of its Subsidiaries or any of their officers, directors,
                employees or agents have provided the Buyers with any material,
                nonpublic information.

        F.      Absence of Certain Changes. Since the most recent filing by the
                Company with the SEC, there has been no material adverse change
                and no material adverse development in the business, properties,
                operations, financial condition or results of operations of the
                Company and its Subsidiaries, taken as a whole, that could
                reasonably be expected to have or result in a Material Adverse
                Effect. The Company has not taken any steps, and does not
                currently expect to take any steps, to seek protection pursuant
                to any bankruptcy law nor does the Company or any of its
                Subsidiaries have any knowledge or reason to believe that its
                creditors intend to initiate involuntary bankruptcy proceedings.

        G.      Absence of Litigation. Except as set forth in the SEC Documents,
                there is no action, suit, proceeding, inquiry or investigation
                before or by any court, public board, government agency,
                self-regulatory organization or body pending or, to the
                knowledge of the Company or any of its Subsidiaries, threatened
                against or affecting the Company, the Common Stock, the Shares
                or any of the Company's Subsidiaries or any of the Company's or
                the Company's Subsidiaries' officers or directors in their
                capacities as such that would have a Material Adverse Effect.

        H.      Acknowledgment Regarding Buyers' Purchase of Common Stock and
                Warrants. The Company acknowledges and agrees that each of the
                Buyers is acting solely in the capacity of an arm's length
                purchaser with respect to

                                      -7-
<PAGE>

                the Transaction Documents and the transactions contemplated
                hereby and thereby. The Company further acknowledges that each
                Buyer is not acting as a financial advisor or fiduciary of the
                Company (or in any similar capacity) with respect to the
                Transaction Documents and the transactions contemplated hereby
                and thereby and any advice given by any of the Buyers or any of
                their respective representatives or agents in connection with
                the Transaction Documents and the transactions contemplated
                hereby and thereby is merely incidental to such Buyer's purchase
                of the Securities. The Company further represents to each Buyer
                that the Company's decision to enter into the Transaction
                Documents has been based solely on the independent evaluation by
                the Company and its representatives.

        I.      No Undisclosed Events, Liabilities, Developments or
                Circumstances. No event, liability, development or circumstance
                has occurred or exists, or is contemplated to occur, with
                respect to the Company or its Subsidiaries or their respective
                business, properties, prospects, operations or financial
                condition, that would be required to be disclosed by the Company
                under applicable securities laws on a registration statement
                filed with the SEC relating to an issuance and sale by the
                Company of Common Stock and which has not been publicly
                announced.

        J.      No General Solicitation. Neither the Company, nor any of its
                affiliates, nor any person acting on its or their behalf, has
                engaged in any form of general solicitation or general
                advertising (within the meaning of Regulation D under the 1933
                Act) in connection with the offer or sale of the Securities.

        K.      No Integrated Offering. Neither the Company, nor any of its
                affiliates, nor any person acting on its or their behalf has,
                directly or indirectly, made any offers or sales of any security
                or solicited any offers to buy any security, under circumstances
                that would require registration of any of the Securities under
                the 1933 Act or cause this offering of the Securities to be
                integrated with prior offerings by the Company for purposes of
                the 1933 Act or any applicable stockholder approval provisions,
                including, without limitation, under the rules and regulations
                of any exchange or automated quotation system on which any of
                the securities of the Company are listed or designated, nor will
                the Company or any of its Subsidiaries take any action or steps
                that would require registration of any of the Securities under
                the 1933 Act or cause the offering of the Securities to be
                integrated with other offerings so as to render invalid the
                exemption from registration provided under Regulation D.

        L.      Employee Relations. Neither the Company nor any of its
                Subsidiaries is involved in any union labor dispute nor, to the
                knowledge of the Company or any of its Subsidiaries, is any such
                dispute threatened.

                                      -8-
<PAGE>

        M.      Intellectual Property Rights. The Company and its Subsidiaries
                own or possess adequate rights or licenses to use all
                trademarks, trade names, service marks, service mark
                registrations, service names, patents, patent rights,
                copyrights, inventions, licenses, approvals, governmental
                authorizations, trade secrets and rights necessary to conduct
                their respective businesses as now conducted. None of the
                Company's trademarks, trade names, service marks, service mark
                registrations, service names, patents, patent rights,
                copyrights, inventions, licenses, approvals, government
                authorizations, trade secrets or other intellectual property
                rights material to the conduct of its business as now conducted
                have expired or terminated, or are expected to expire or
                terminate within two years from the date of this Agreement.
                Except as set forth in the SEC Documents, the Company and its
                Subsidiaries do not have any knowledge of any infringement by
                the Company or its Subsidiaries of trademark, trade name rights,
                patents, patent rights, copyrights, inventions, licenses,
                service names, service marks, service mark registrations, trade
                secret or other similar rights of others, or of any such
                development of similar or identical trade secrets or technical
                information by others and the Company and its Subsidiaries are
                unaware of any facts or circumstances which might give rise to
                any of the foregoing. The Company and its Subsidiaries have
                taken reasonable security measures to protect the secrecy,
                confidentiality and value of all of their intellectual
                properties.

        N.      Environmental Laws. The Company and its Subsidiaries (i) are in
                compliance with any and all applicable foreign, federal, state
                and local laws and regulations relating to the protection of
                human health and safety, the environment or hazardous or toxic
                substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
                LAWS"), (ii) have received all permits, licenses or other
                approvals required of them under applicable Environmental Laws
                to conduct their respective businesses and (iii) are in
                compliance with all terms and conditions of any such permit,
                license or approval.

        O.      Title. The Company and its Subsidiaries have good and marketable
                title in fee simple to all real property and good and marketable
                title to all personal property owned by them which is material
                to the business of the Company and its Subsidiaries, in each
                case free and clear of all liens, encumbrances and defects
                except such as are described in the SEC Documents or such as do
                not materially affect the value of such property and do not
                interfere with the use made and proposed to be made of such
                property by the Company and any of its Subsidiaries. Any real
                property and facilities held under lease by the Company and any
                of its Subsidiaries are held by them under valid, subsisting and
                enforceable leases with such exceptions as are not material and
                do not interfere with the use made and proposed to be made of
                such property and buildings by the Company and its Subsidiaries.

                                      -9-
<PAGE>

        P.      Insurance. The Company and each of its Subsidiaries are insured
                by insurers of recognized financial responsibility against such
                losses and risks and in such amounts as management of the
                Company believes to be prudent and customary in the businesses
                in which the Company and its Subsidiaries are engaged and the
                Company does not have any reason to believe it will not be able
                to renew its existing insurance coverage under substantially
                similar terms for the next two (2) years other than for
                increases in the premiums payable with respect to such insurance
                that would not, individually or in the aggregate, reasonably be
                expected to have a Material Adverse Effect.

        Q.      Regulatory Permits. The Company and its Subsidiaries possess all
                certificates, authorizations and permits issued by the
                appropriate federal, state or foreign regulatory authorities
                necessary to conduct their respective businesses as presently
                conducted, and neither the Company nor any such Subsidiary has
                received any notice of proceedings relating to the revocation or
                modification of any such certificate, authorization or permit.

        R.      Tax Status. The Company and each of its Subsidiaries has made or
                filed all federal and state income and all other tax returns,
                reports and declarations required by any jurisdiction to which
                it is subject (unless and only to the extent that the Company
                and each of its Subsidiaries has set aside on its books
                provisions reasonably adequate for the payment of all unpaid and
                unreported taxes) and has paid all taxes and other governmental
                assessments and charges that are material in amount, shown or
                determined to be due on such returns, reports and declarations,
                except those being contested in good faith and has set aside on
                its books provision reasonably adequate for the payment of all
                taxes for periods subsequent to the periods to which such
                returns, reports or declarations apply. There are no unpaid
                taxes in any material amount claimed to be due by the taxing
                authority of any jurisdiction, and the officers of the Company
                know of no basis for any such claim.

        S.      Transactions With Affiliates. Except as set forth in the SEC
                Documents filed at least ten days prior to the date hereof, none
                of the officers, control parties, control entities, directors,
                or employees of the Company is presently a party to any material
                transaction with the Company or any of its Subsidiaries (other
                than for services as employees, officers and directors),
                including any contract, agreement or other arrangement providing
                for the furnishing of services to or by, providing for rental of
                real or personal property to or from, or otherwise requiring
                payments to or from any officer, director or such employee or,
                to the knowledge of the Company, any corporation, partnership,
                trust or other entity in which any officer, director, or any
                such employee has a substantial interest or is an officer,
                director, trustee or partner.

                                      -10-
<PAGE>

        T.      Eligibility. The Company is currently eligible to register the
                resale of the Common Stock and Warrant Shares on a registration
                statement on Form S-3 under the 1933 Act.

        U.      Dilutive Effect. The Company acknowledges that its obligation to
                issue the Warrant Shares upon exercise of the Warrants in
                accordance with this Agreement and the Warrants, is absolute and
                unconditional regardless of the dilutive effect that such
                issuance may have on the ownership interests of other
                stockholders of the Company.

        V.      Company Acknowledgement. The Company acknowledges and agrees
                that no Buyer makes or has made any representations or
                warranties with respect to the transactions contemplated by this
                Agreement other than those specifically set forth in this
                Section 2.

IV.     COVENANTS.

        A.      Reasonable Best Efforts. Each party shall use its reasonable
                best efforts timely to satisfy each of the conditions to be
                satisfied by it as provided in Sections 5 and 6 of this
                Agreement.

        B.      Form D and Blue Sky. The Company agrees to file a Form D with
                respect to the Securities as required under Regulation D and to
                provide a copy thereof to each Buyer promptly after such filing.
                The Company shall, on or before the Closing Date, take such
                action as the Company shall reasonably determine is necessary in
                order to obtain an exemption for or to qualify the Securities
                for sale to the Buyers at the Closing pursuant to this Agreement
                under applicable securities or "Blue Sky" laws of the states of
                the United States, and shall provide evidence of any such action
                so taken to the Buyers on or prior to the Closing Date. The
                Company shall make all filings and reports relating the offer
                and sale of the Securities required under applicable securities
                or "Blue Sky" laws of the states of the United States following
                the Closing Date.

        C.      Reporting Status. Until the earlier of (i) the date which is one
                year after the date as of which the Investors (as that term is
                defined in the Registration Rights Agreement) may sell all of
                the Common Stock and Warrant Shares without restriction pursuant
                to Rule 144(k) promulgated under the 1933 Act (or successor
                thereto), or (ii) the date on which the Investors shall have
                sold all the Common Stock and Warrant Shares (the "REGISTRATION
                PERIOD"), the Company shall file all reports required to be
                filed with the SEC pursuant to the 1934 Act, and the Company
                shall not terminate its status as an issuer required to file
                reports under the 1934 Act even if the 1934 Act or the rules and
                regulations thereunder would otherwise permit such termination.

                                      -11-
<PAGE>

        D.      Use of Proceeds. The Company will use the proceeds from the sale
                of the Common Stock and Warrants for working capital needs and
                other general corporate purposes.

        E.      Right of First Refusal. Subject to the exceptions described
                below, the Company shall not negotiate or contract with any
                party for any equity financing (including any debt financing
                with an equity component) or issue in a transaction any equity
                securities of the Company or securities convertible or
                exchangeable into or for equity securities of the Company
                (including debt securities with an equity component and any
                equity line of credit) in any form ("FUTURE OFFERINGS") during
                the period beginning on the date hereof and ending on, and
                including, the date which is 90 days after the Effective Date
                (defined below), unless it shall have first delivered to each
                Buyer or a designee appointed by such Buyer written notice (the
                "FUTURE OFFERING NOTICE") describing the proposed Future
                Offering, including the terms and conditions thereof, and
                providing each Buyer an option to purchase up to its Aggregate
                Percentage (defined below) of the securities to be issued in
                such Future Offering, as of the date of delivery of the Future
                Offering Notice, in the Future Offering (the limitations
                referred to in this sentence is referred to as the "CAPITAL
                RAISING LIMITATIONS"). For purposes of this Section 4(e),
                "AGGREGATE PERCENTAGE" at any time with respect to any Buyer
                shall mean the percentage obtained by dividing (i) the aggregate
                number of the shares of Common Stock initially issued at the
                Closing to such Buyer by (ii) the aggregate number of the shares
                of Common Stock sold to the Buyers by the Company at the Closing
                in connection with the Offering. A Buyer can exercise its option
                to participate in a Future Offering by delivering written notice
                thereof to participate to the Company within five (5) business
                days after receipt of a Future Offering Notice, which notice
                shall state the quantity of securities being offered in the
                Future Offering that such Buyer will purchase, up to its
                Aggregate Percentage, and that number of securities it is
                willing to purchase in excess of its Aggregate Percentage. In
                the event that one or more Buyers fail to elect to purchase up
                to each such Buyer's Aggregate Percentage, then each Buyer which
                has indicated that it is willing to purchase a number of
                securities in such Future Offering in excess of its Aggregate
                Percentage shall be entitled to purchase its pro rata portion
                (determined in the same manner as described in the preceding
                sentence) of the securities in the Future Offering which one or
                more of the Buyers have not elected to purchase. In the event
                the Buyers fail to elect to fully participate in the Future
                Offering within the periods described in this Section 4(e), the
                Company shall have 45 days thereafter to sell the securities of
                the Future Offering that the Buyers did not elect to purchase,
                upon terms and conditions, no more favorable to the purchasers
                thereof than specified in the Future Offering Notice. In the
                event the Company has not sold such securities of the Future
                Offering within such 45 day period, the Company shall not
                thereafter issue or sell such securities without first offering
                such securities to the Buyers in the manner provided

                                      -12-
<PAGE>

                in this Section 4(e). Notwithstanding anything to the contrary
                set forth in this Agreement, the Capital Raising Limitations
                shall not apply to (i) any public offering of equity securities
                (including any debt financing with an equity component)
                (provided, however, that the exception contained in this clause
                (i) shall not apply to equity lines or similar transactions),
                (ii) a loan from a commercial bank which does not have any
                equity feature, (iii) any transaction involving the Company's
                issuance of securities as consideration (A) in any sale,
                acquisition, merger, consolidation, reorganization or similar
                transaction involving the Company or any Subsidiary, (B) for the
                acquisition of a business, product, license or other assets by
                the Company or any Subsidiary, or (C) strategic alliance
                involving the Company or any Subsidiary, (iv) the issuance of
                securities of the Company or any Subsidiary upon exercise or
                conversion of the options, warrants or other convertible
                securities outstanding as of the date hereof, (v) the grant of
                additional options or warrants, or the issuance of additional
                securities (and the issuance of securities of the Company or any
                Subsidiary upon exercise or conversion of such additional
                options or warrants), under any Company or Subsidiary stock
                option plan, restricted stock plan, stock purchase plan or any
                other agreement or contract for the benefit of the Company's or
                any Subsidiary's employees, consultants, agents or directors, or
                (vi) financing transactions by any Subsidiary of the Company
                that include as a component thereof the issuance by the Company
                of warrants to purchase Common Stock; provided, however, that
                Warrants to purchase no more than an aggregate of 25,000 shares
                of Common Stock (as adjusted to account for any stock splits,
                combinations, reclassifications or other similar transactions
                involving the Common Stock) may be issued in transactions
                contemplated by this clause (vi) and any such Subsidiary shall
                not transfer or distribute to the Company the proceeds of such
                financing. The Buyers shall not be required to participate in or
                exercise their right of first refusal with respect to a
                particular Future Offering in order to exercise their right of
                first refusal with respect to later Future Offerings.

        F.      Listing. The Company shall promptly secure the listing of all of
                the Registrable Securities (as that term is defined in the
                Registration Rights Agreement) on Nasdaq and shall maintain, so
                long as any other shares of Common Stock shall be so listed,
                such listing of all Registrable Securities from time to time
                issuable under the terms of the Transaction Documents. Neither
                the Company nor any of its Subsidiaries shall take any action
                which would be reasonably expected to result in the delisting or
                suspension of the Common Stock on Nasdaq. The Company shall
                promptly, and in no event later than the following business day,
                provide to each Buyer copies of any notices it receives from
                Nasdaq regarding the continued eligibility of the Common Stock
                for listing on Nasdaq. The Company shall pay all fees and
                expenses in connection with satisfying its obligations under
                this Section 4(f).

                                      -13-
<PAGE>

        G.      Reservation of Shares. The Company shall take all action
                necessary to at all times have authorized, and reserved for the
                purpose of issuance, no less than 100% of the number of shares
                of Common Stock needed to provide for the issuance of the shares
                of Common Stock upon exercise of all outstanding Warrants.

        H.      Issuance of Warrant Shares. The issuance of the Warrant Shares
                shall be duly authorized, and when issued in accordance with the
                Warrants, the Warrant Shares will be validly issued, fully paid
                and non-assessable and free of all taxes, liens, charges and
                preemptive rights with respect to the issue thereof.

        I.      Limitation on Filing Registration Statements. The Company shall
                not file a registration statement (other than (i) a Registration
                Statement (as defined in the Registration Rights Agreement),
                (ii) a registration statement relating solely to employee
                benefit plans or (iii) a registration statement on Form S-4
                relating to a merger, acquisition or similar transaction or
                corporate reorganization involving the Company or any
                Subsidiary) covering the sale or resale of shares of Common
                Stock with the SEC during the period beginning on the date
                hereof and ending on the Effective Date.

        J.      Independent Auditors. The Company shall, until at least three
                (3) years after the Closing Date, maintain as its independent
                auditors an accounting firm authorized to practice before the
                SEC.

        K.      Corporate Existence and Taxes. The Company shall, until at least
                the later of (i) the date that is three (3) years after the
                Closing Date or (ii) the exercise of all Warrants purchased
                pursuant to this Agreement, maintain its corporate existence in
                good standing (provided, however, that the foregoing covenant
                shall not prevent the Company from entering into any merger or
                corporate reorganization as long as the surviving entity in such
                transaction, if not the Company, has common stock listed for
                trading on Nasdaq, the New York Stock Exchange or the American
                Stock Exchange and shall pay all its taxes when due except for
                taxes which the Company disputes.

        L.      Filing of Form 8-K. On or before the first day after the Closing
                Date, the Company shall file a Form 8-K with the SEC describing
                the terms of the transactions contemplated by the Transaction
                Documents in the form required by the 1934 Act.

        M.      Legends.

                1.      Such Buyer understands and agrees that the certificates
                        or other instruments representing the Securities, except
                        as set forth below, shall bear a restrictive legend in
                        substantially the following form (and the Company shall
                        be entitled to issue a stop-transfer order

                                      -14-
<PAGE>

                        against transfer of such certificates if the Securities
                        represented by such certificates are not transferred in
                        accordance with the following legend):

        THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR
        APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
        INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
        ASSIGNED (1) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
        THE SECURITIES UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS,
        (2) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN GENERALLY ACCEPTABLE
        FORM, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR (3) UNLESS
        SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144(K) UNDER THE 1933
        ACT.

The legend set forth above shall be removed and the Company shall issue a
certificate, within three (3) trading days of a request thereof, without such
legend to the holder of the Securities upon which it is stamped or otherwise
imprinted if: (i) such Securities are registered for resale under the 1933 Act,
(ii) in connection with any transaction other than as described in clause (i),
such holder provides the Company with an opinion of counsel, in generally
acceptable form, to the effect that a public sale, assignment or transfer of the
Securities may be made without registration under the 1933 Act, or (iii) such
holder provides the Company with reasonable assurances that the Securities may
be sold pursuant to Rule 144(k).

                2.      If the Company fails to issue a certificate, without the
                        legend set forth in Section 4(m)(i) within three (3)
                        trading days following the request therefor as provided
                        in Section 4(m)(i), and if after such third (3rd)
                        trading day such holder purchases (in an open market
                        transaction or otherwise) shares of Common Stock to
                        deliver in satisfaction of a sale by such holder of the
                        shares that the holder anticipated receiving from the
                        Company (a "BUY-IN"), then the Company shall (i)
                        promptly honor its obligation to issue to such holder a
                        certificate without the legend set forth in Section
                        4(m)(i) and (ii) pay cash to such holder in an amount
                        equal to the excess (if any) of the total purchase price
                        (including brokerage commissions, if any) of the shares
                        of Common Stock so purchased over the product of (A)
                        such number of shares of Common Stock, times (B) the
                        closing sale price of the Common Stock on the date of
                        the event giving rise to the Company's obligation to
                        deliver such certificates.

        N.      Restrictions on Sales of Securities. Such Buyer has not and will
                not, prior to the earlier of (i) 90 days following the Closing
                Date or (ii) the date that

                                      -15-
<PAGE>

                the Registration Statement (as defined in the Registration
                Rights Agreement) required to be filed pursuant to Section 2(a)
                of the Registration Rights Agreement is first declared effective
                by the SEC (the "EFFECTIVE DATE"), when the trading price of the
                Common Stock is less than $9.00 per share, if then prohibited by
                law or regulation, sell, dispose of, or grant any rights with
                respect to (collectively, a "DISPOSITION"), the Shares or
                Warrant Shares, nor will such Buyer engage in any hedging or
                other transaction which is designed to result in a Disposition
                of Shares or Warrant Shares by such Buyer prior to such date. In
                addition, such Buyer represents that as of the date of this
                Agreement such Buyer does not have any existing short position
                in the Common Stock that was entered into subsequent to such
                Buyer obtaining knowledge of the transactions contemplated
                hereby nor has such Buyer executed any derivative instruments
                with any third party, which in either case is designed to
                dispose of the Shares or Warrant Shares prior to the earlier of
                (i) 90 days following the Closing Date or (ii) the Effective
                Date.

        O.      Limitations on Certain Sales of Securities by the Company.

                1.      Without the prior written consent of Buyers who then
                        hold at least two-thirds (2/3) of the shares of Common
                        Stock purchased pursuant to this Agreement and then
                        outstanding, from the Closing Date until the Effective
                        Date, the Company shall not engage in any offering of
                        its equity securities (including any public offering of
                        debt securities with an equity component), whether under
                        its existing shelf registration statement, a new
                        registration statement or otherwise; provided, however,
                        that the foregoing limitation shall not apply to (i) a
                        loan from a commercial bank which does not have any
                        equity feature, (ii) any transaction involving the
                        Company's issuance of securities as consideration (A) in
                        any sale, acquisition, merger, consolidation,
                        reorganization or similar transaction involving the
                        Company or any Subsidiary, (B) for the acquisition of a
                        business, product, license or other assets by the
                        Company or any Subsidiary, or (C) in any strategic
                        alliance involving the Company or any Subsidiary, (iii)
                        the issuance of securities of the Company or any
                        Subsidiary upon exercise or conversion of the options,
                        warrants or other convertible securities outstanding as
                        of the date hereof, (iv) the grant of additional options
                        or warrants, or the issuance of additional securities
                        (and the issuance of securities of the Company or any
                        Subsidiary upon exercise or conversion of such
                        additional options or warrants), under any Company or
                        Subsidiary stock option plan, restricted stock plan,
                        stock purchase plan or any other agreement or contract
                        for the benefit of the Company's or any Subsidiary's
                        employees, consultants, agents or directors, or (v)
                        financing transactions by any Subsidiary of the Company
                        that include as a component thereof the issuance by the
                        Company of warrants to purchase

                                      -16-
<PAGE>

                        Common Stock; provided, however, that Warrants to
                        purchase no more than an aggregate of 25,000 shares of
                        Common Stock (as adjusted to account for any stock
                        splits, combinations, reclassifications or other similar
                        transactions involving the Common Stock) may be issued
                        in transactions contemplated by this clause (v) and any
                        such Subsidiary shall not transfer or distribute to the
                        Company the proceeds of such financing.

                2.      Without the prior written consent of Buyers who then
                        hold at least two-thirds (2/3) of the shares of Common
                        Stock purchased pursuant to this Agreement and then
                        outstanding, during the thirty (30) day period
                        immediately following the Effective Date, the Company
                        shall not engage in a offering of its equity securities
                        (including any public offering of debt securities with
                        an equity component) at price per share that is less
                        than the Price Per Unit; provided, however, that the
                        foregoing limitation shall not apply to (i) a loan from
                        a commercial bank which does not have any equity
                        feature, (ii) any transaction involving the Company's
                        issuance of securities as consideration (A) in any sale,
                        acquisition, merger, consolidation, reorganization or
                        similar transaction involving the Company or any
                        Subsidiary, (B) for the acquisition of a business,
                        product, license or other assets by the Company or any
                        Subsidiary, or (C) in any strategic alliance involving
                        the Company or any Subsidiary, (iii) the issuance of
                        securities of the Company or any Subsidiary upon
                        exercise or conversion of the options, warrants or other
                        convertible securities outstanding as of the date
                        hereof, (iv) the grant of additional options or
                        warrants, or the issuance of additional securities (and
                        the issuance of securities of the Company or any
                        Subsidiary upon exercise or conversion of such
                        additional options or warrants), under any Company or
                        Subsidiary stock option plan, restricted stock plan,
                        stock purchase plan or any other agreement or contract
                        for the benefit of the Company's or any Subsidiary's
                        employees, consultants, agents or directors, or (v)
                        financing transactions by any Subsidiary of the Company
                        that include as a component thereof the issuance by the
                        Company of warrants to purchase Common Stock; provided,
                        however, that Warrants to purchase no more than an
                        aggregate of 25,000 shares of Common Stock (as adjusted
                        to account for any stock splits, combinations,
                        reclassifications or other similar transactions
                        involving the Common Stock) may be issued in
                        transactions contemplated by this clause (v) and any
                        such Subsidiary shall not transfer or distribute to the
                        Company the proceeds of such financing

V.      CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

                                      -17-
<PAGE>

        The obligation of the Company hereunder to issue and sell the Common
Stock and Warrants to each Buyer at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion by providing each Buyer with
prior written notice thereof:

        A.      Such Buyer shall have executed each of the Transaction Documents
                to which it is a party and delivered the same to the closing
                agent(s) (the "CLOSING AGENT") for the transactions contemplated
                by this Agreement.

        B.      The representations and warranties of such Buyer shall be true
                and correct in all material respects as of the date when made
                and as of the Closing Date as though made at that time (except
                for representations and warranties that speak as of a specific
                date), and such Buyer shall have performed, satisfied and
                complied in all material respects with the covenants, agreements
                and conditions required by this Agreement to be performed,
                satisfied or complied with by such Buyer at or prior to the
                Closing Date.

        C.      There shall not be in effect any law, rule or regulation
                prohibiting or restricting the transactions contemplated hereby,
                or requiring any consent or approval which shall not have been
                obtained.

VI.     CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.

        The obligation of each Buyer hereunder to purchase the Common Stock and
Warrants at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for each Buyer's sole benefit and may be waived by such Buyer at any time in its
sole discretion by providing the Company with prior written notice thereof:

        A.      The Company shall have executed each of the Transaction
                Documents to which it is a party and delivered the same to the
                Closing Agent.

        B.      The Company's common stock shall be authorized for quotation on
                Nasdaq and trading in Common Stock shall not have been suspended
                by the SEC or Nasdaq.

        C.      The representations and warranties of the Company shall be true
                and correct as of the date when made and as of the Closing Date
                as though made at that time (except for representations and
                warranties that speak as of a specific date) and the Company
                shall have performed, satisfied and complied with the covenants,
                agreements and conditions required by the Transaction Documents
                to be performed, satisfied or complied with by the Company at or
                prior to the Closing Date.

                                      -18-
<PAGE>

        D.      The Company shall have delivered to the Closing Agent the
                opinion of the Company's outside legal counsel, dated as of the
                Closing Date, in substantially the form of Exhibit C attached
                hereto.

        E.      The Company shall have made all filings, other than those
                contemplated by the Registration Rights Agreement, under all
                applicable federal and state securities laws necessary to
                consummate the issuance of the Securities pursuant to this
                Agreement in compliance with such laws.

        F.      The Company shall have executed and delivered to the Closing
                Agent (i) the shares of Common Stock being purchased by such
                Buyer at the Closing and (ii) the Warrants being purchased by
                such Buyer at the Closing.

        G.      The Company shall have made all filings under all applicable
                federal and state securities laws necessary to consummate the
                issuance of the Securities pursuant to this Agreement in
                compliance with such laws.

        H.      As of the Closing Date, the Company shall have reserved out of
                its authorized and unissued Common Stock, solely for the purpose
                of effecting the exercise of the Warrants, no less than 100% of
                the number of shares of Common Stock needed to provide for the
                issuance of the shares of Common Stock upon exercise of all
                outstanding Warrants.

        I.      The Company shall have delivered to the Closing Agent the
                following:

                1.      A certificate, executed by the Chief Executive Officer
                        of the Company, dated as of the Closing Date, confirming
                        that the representations and warranties described in
                        Section 6(c) were true and correct as of the date when
                        made and as of the Closing Date.

                2.      A certificate evidencing the incorporation and good
                        standing of the Company and TheraMed, Inc. in each such
                        corporation's state of incorporation issued by the
                        Secretary of State of such state of incorporation as of
                        a date within 10 days of the Closing Date;

                3.      A certified copy of the Certificate of Incorporation as
                        certified by the Secretary of State of the State of
                        Delaware within 10 days of the Closing Date; and

                4.      A secretary's certificate, dated as the Closing Date, as
                        to (A) resolutions of the Board of Directors and/or a
                        committee of the Board of Directors of the Company
                        consistent with Section 3(b)(ii) of this Agreement, (B)
                        the Certificate of Incorporation and (C) the Bylaws,
                        each as in effect at the Closing.

                                      -19-
<PAGE>

        J.      The Company shall have delivered to the Buyer such other
                documents relating to the transactions contemplated by this
                Agreement as the Buyer may reasonably request.

        K.      There shall not be in effect any law, rule or regulation
                prohibiting or restricting the transactions contemplated hereby,
                or requiring any consent or approval which shall not have been
                obtained.

        L.      Trading in securities generally on Nasdaq shall not have been
                suspended or limited, nor shall there be any major outbreak or
                escalation of hostilities involving the United States that in
                either case in the reasonable judgment of the Buyers makes it
                impracticable to purchase the Common Stock and Warrants.

        M.      The Company shall have reimbursed Cranshire Capital, L.P. and
                Vertical International for each such Buyer's out-of-pocket costs
                and expenses, including, without limitation, such Buyers'
                attorneys' fees and expenses, incurred by them in connection
                with the due diligence review of the transactions contemplated
                by this Agreement and of the Company, and the negotiation and
                preparation of the Transaction Documents and the consummation of
                the transactions contemplated thereby. Notwithstanding anything
                to the contrary contained in this Agreement, in no event shall
                the Company be required to reimburse such Buyers for
                out-of-pocket expenses to the extent that the aggregate
                out-of-pocket expenses of both such Buyers shall exceed $55,000.
                Subject to the maximum reimbursement provided for in the
                immediately preceding sentence, Cranshire Capital, L.P. and
                Vertical International may effect the reimbursement provided for
                in this Section 6(m) by reducing such Buyer's Committed Amount
                by up to one-half of the aggregate out-of-pocket costs and
                expenses incurred by such Buyers.

VII.    INDEMNIFICATION.

                In consideration of each Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each
other holder of the Securities and all of their stockholders, officers,
directors, employees and direct or indirect investors and any of the foregoing
person's agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "INDEMNITEES") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in

                                      -20-
<PAGE>

the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby or (c) any
cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.

VIII.   LIQUIDATED DAMAGES.

                The Company agrees that Buyers will suffer damages if the
Company (a) violates any material provision of or fails to fulfill any of its
material obligations or duties pursuant to the Transaction Documents (other than
the Registration Rights Agreement) and such violation or failure, directly or
indirectly, restricts the Buyers from selling, transferring or disposing of its
Shares or (b) violates the Company's covenants set forth in Section 4(d) (Use of
Proceeds), 4(e) (Right of First Refusal) or 4(i) (Limitation on Filing
Registration Statements) (a "COMPANY VIOLATION"), and that it would be difficult
to ascertain the extent of such damages. Accordingly, in the event of such
Company Violation, the Company hereby agrees to pay liquidated damages
("LIQUIDATED DAMAGES") to each Buyer, in cash, (x) upon the occurrence of a
Company Violation, an amount equal to one percent (1%) of the aggregate Price
Per Unit of the Units then held by such Buyer, and (y) if the Company Violation
has not been cured by the first month anniversary following the date of the
Company Violation, an amount equal to one percent (1%) of the Price Per Unit of
the Units then held by such Buyer and (z) on each monthly anniversary thereafter
until the Company Violation has been cured, an amount equal to one percent (1%)
of the aggregate Price Per Unit of the Units then held by such Buyer; provided,
however, that all periods referred to in clauses (y) and (z) above shall be
tolled during delays caused by the action or inaction of any Buyer, and the
Company shall have no liability in respect of any such delay. The Liquidated
Damages payable pursuant hereto shall be payable within five (5) business days
following the date of the Company Violation or the monthly anniversary thereof,
as the case may be. Notwithstanding anything to the contrary contained herein,
(x) Liquidated Damages shall not be payable under this Section 8 for more than
one Company Violation occurring or existing at any one time, (y) no Liquidated
Damages shall be payable under this Section 8 in respect of any Company
Violation which also constitutes a Registration Default under the Registration
Rights Agreement or is an exception from the definition of Registration Default
contained in the Registration Rights Agreement and (z) the Company shall have no
liability to any Buyer for any Liquidated Damages under this Section 8 at the
occurrence of a Company Violation or thereafter if the Company's violation of
any such material provision or failure to fulfill such material obligations is
caused by or results from any action or inaction of any such Buyer or any other
Buyer.

IX.     GOVERNING LAW; MISCELLANEOUS.

                                      -21-
<PAGE>

        A.      Governing Law; Jurisdiction; Jury Trial. This Agreement shall be
                governed by and construed in all respects by the internal laws
                of the State of New York (except for the proper application of
                the United States federal securities laws), without giving
                effect to any choice of law or conflict of law provision or rule
                (whether of the State of New York or any other jurisdictions)
                that would cause the application of the laws of any
                jurisdictions other than the State of New York. Each party
                hereby irrevocably submits to the exclusive jurisdiction of the
                state and federal courts sitting in the City of New York. EACH
                PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
                AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
                DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF
                THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. In any
                suit or action to enforce the provisions of this Agreement, the
                prevailing party shall be entitled to be reimbursed for all
                reasonable legal fees and expenses incurred by such party in
                connection with such suit or action.

        B.      Counterparts. This Agreement may be executed in two or more
                identical counterparts, all of which shall be considered one and
                the same agreement and shall become effective when counterparts
                have been signed by each party and delivered to the other party;
                provided that a facsimile signature shall be considered due
                execution and shall be binding upon the signatory thereto with
                the same force and effect as if the signature were an original,
                not a facsimile, signature.

        C.      Headings. The headings of this Agreement are for convenience of
                reference and shall not form part of, or affect the
                interpretation of, this Agreement.

        D.      Severability. If any provision of this Agreement shall be
                invalid or unenforceable in any jurisdiction, such invalidity or
                unenforceability shall not affect the validity or enforceability
                of the remainder of this Agreement in that jurisdiction or the
                validity or enforceability of any provision of this Agreement in
                any other jurisdiction.

        E.      Entire Agreement; Amendments. This Agreement supersedes all
                other prior oral or written agreements between the Buyers, the
                Company, their affiliates and persons acting on their behalf
                with respect to the matters discussed herein, and this Agreement
                and the instruments referenced herein contain the entire
                understanding of the parties with respect to the matters covered
                herein and therein and, except as specifically set forth herein
                or therein, neither the Company nor any Buyer makes any
                representation, warranty, covenant or undertaking with respect
                to such matters. No provision of this Agreement may be amended
                other than by an instrument in writing signed by the Company and
                holders of at least

                                      -22-
<PAGE>

                two-thirds (2/3) of the shares of Common Stock purchased
                pursuant to this Agreement and then outstanding, and, except as
                otherwise provided herein, no provision hereof may be waived
                other than by an instrument in writing signed by the party
                against whom enforcement is sought.

        F.      Notices. Any notices, consents, waivers or other communications
                required or permitted to be given under the terms of this
                Agreement must be in writing and will be deemed to have been
                delivered: (i) upon receipt, when delivered personally; (ii)
                upon receipt, when sent by facsimile (provided confirmation of
                transmission is mechanically or electronically generated and
                kept on file by the sending party); or (iii) one business day
                after deposit with a nationally recognized overnight delivery
                service, in each case properly addressed to the party to receive
                the same. The addresses and facsimile numbers for such
                communications shall be:

                If to the Company:

                        EntreMed, Inc.
                        9640 Medical Center Drive
                        Rockville, MD 20850
                        Telephone: (301) 217-9858
                        Facsimile: (301) 217-9594
                        Attention: John W. Holaday, Ph.D.

                With a copy to:

                        Arnold & Porter
                        1600 Tysons Boulevard, Ste. 900
                        McLean, VA 22102
                        Telephone: (703) 720-7005
                        Facsimile: (703) 720-7399
                        Attention: Robert B. Ott, Esq.

If to a Buyer, to it at the address and facsimile number set forth on Schedule 1
with copies to such Buyer's legal representative as set forth on Schedule 1, or
at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.

        G.      Successors and Assigns. This Agreement shall be binding upon and
                inure to the benefit of the parties and their respective
                successors and assigns, including any purchasers of the Common
                Stock. A Buyer may assign some or all of its rights hereunder
                without the consent of the Company; provided, however, that any
                such assignment shall not release such Buyer from its
                obligations hereunder unless such obligations are assumed by
                such assignee and the Company has consented to such assignment
                and assumption.

                                      -23-
<PAGE>

        H.      No Third Party Beneficiaries. This Agreement is intended for the
                benefit of the parties hereto and their respective permitted
                successors and assigns, and is not for the benefit of, nor may
                any provision hereof be enforced by, any other person.

        I.      Survival. Unless this Agreement is terminated under Section
                9(l), the representations and warranties of the Company and the
                agreements and covenants set forth in Sections 3, 4 and 9, the
                indemnification provisions set forth in Section 7, and the
                liquidated damages provisions in Section 8 shall survive the
                Closing. Each Buyer shall be responsible only for its own
                representations, warranties, agreements and covenants hereunder.

        J.      Publicity. The Company and each Buyer shall have the right to
                approve before issuance any press releases or any other public
                statements with respect to the transactions contemplated hereby;
                provided, however, that the Company shall be entitled, without
                the prior approval of any Buyer, to make any press release or
                other public disclosure with respect to such transactions as is
                required by applicable law and regulations. Notwithstanding the
                foregoing sentence, Cranshire Capital, L.P. and Vertical
                Ventures, L.L.C. shall be consulted by the Company in connection
                with the preparation of the Form 8-K required to be filed
                pursuant to Section 4(m) and in no event shall the press release
                filed as an exhibit to such 8-K identify any particular Buyer
                hereunder without the Company first having received the written
                consent of such Buyer.

        K.      Further Assurances. Each party shall do and perform, or cause to
                be done and performed, all such further acts and things, and
                shall execute and deliver all such other agreements,
                certificates, instruments and documents, as the other party may
                reasonably request in order to carry out the intent and
                accomplish the purposes of this Agreement and the consummation
                of the transactions contemplated hereby.

        L.      Termination. In the event that the Closing shall not have
                occurred with respect to a Buyer on or before three (3) business
                days from the date hereof due to the Company's or such Buyer's
                failure to satisfy the conditions set forth in Sections 5 and 6
                above (and the nonbreaching party's failure to waive such
                unsatisfied condition(s)), the nonbreaching party shall have the
                option to terminate this Agreement with respect to such
                breaching party at the close of business on such date without
                liability of any party to any other party.

        M.      Placement Agent. The Company acknowledges that it has engaged
                Pali Capital LLC as placement agent in connection with the sale
                of the Shares and Warrants. The Company shall be responsible for
                the payment of any placement agent's fees or broker's
                commissions relating to or arising out of the transactions
                contemplated hereby. The Company shall pay, and hold each Buyer
                harmless against, any liability, loss or expense (including,

                                      -24-
<PAGE>

                without limitation, attorneys' fees and out of pocket expenses)
                arising in connection with any such claim.

        N.      No Strict Construction. The language used in this Agreement will
                be deemed to be the language chosen by the parties to express
                their mutual intent, and no rules of strict construction will be
                applied against any party.

        O.      Remedies. Each Buyer and each holder of the Securities shall
                have all rights and remedies set forth in the Transaction
                Documents and all rights and remedies which such holders have
                been granted at any time under any other agreement or contract
                and all of the rights which such holders have under any law. Any
                person having any rights under any provision of this Agreement
                shall be entitled to enforce such rights specifically (without
                posting a bond or other security), to recover damages by reason
                of any breach of any provision of this Agreement and to exercise
                all other rights granted by law.

        P.      Payment Set Aside. To the extent that the Company makes a
                payment or payments to the Buyers hereunder or pursuant to the
                Transaction Documents or the Buyers enforce or exercise their
                rights hereunder or thereunder, and such payment or payments or
                the proceeds of such enforcement or exercise or any part thereof
                are subsequently invalidated, declared to be fraudulent or
                preferential, set aside, recovered from, disgorged by or are
                required to be refunded, repaid or otherwise restored to the
                Company, a trustee, receiver or any other person under any law
                (including, without limitation, any bankruptcy law, state or
                federal law, common law or equitable cause of action), then to
                the extent of any such restoration the obligation or part
                thereof originally intended to be satisfied shall be revived and
                continued in full force and effect as if such payment had not
                been made or such enforcement or setoff had not occurred.

        Q.      Non-Public Information. The Company confirms that as long as any
                Buyer owns Securities, neither the Company nor any other person
                acting on its behalf will provide any of such Buyer or its
                agents or counsel with any information that constitutes or might
                constitute material non-public information, unless such Buyer
                shall have agreed to execute a written agreement regarding the
                confidentiality and use of such information. The Company
                understands and confirms that the Buyers shall be relying on the
                foregoing representations in effecting transactions in
                securities of the Company.

                            [Signature Pages Follow]

                                      -25-
<PAGE>

        IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.

                                            COMPANY:

                                            ENTREMED, INC.

                                            By:    /s/ John W. Holaday, PhD
                                               ---------------------------------
                                            Name:  John W. Holaday, PhD
                                            Title: Chairman and CEO

                         [COUNTERPART SIGNATURE PAGE TO
                         SECURITIES PURCHASE AGREEMENT]
<PAGE>

                                            BUYER:

                                            CRANSHIRE CAPITAL, L.P.

                                            By:    Downsview Capital, Inc.,
                                                   the General Partner

                                                   By:    /s/ Mitchell P. Kopin
                                                      --------------------------
                                                   Name:  Mitchell P. Kopin
                                                   Title: President

                                            BUYER:

                                            EURAM CAP STRAT "A" FUND LIMITED

                                            By:    JMJ Capital, Inc., the
                                                   Investment Manager

                                                   By:    /s/ Mitchell P. Kopin
                                                      --------------------------
                                                   Name:  Mitchell P. Kopin
                                                   Title: President

                                            BUYER:

                                            CLEVELAND OVERSEAS LTD.

                                            By: Primeway S.A., Director

                                            By:    /s/ Beat Kunz
                                               -----------------
                                            Name:      Beat Kunz

                                            BUYER:

                                            WINCHESTER GLOBAL TRUST
                                            COMPANY LIMITED AS TRUSTEE FOR
                                            CADUCEUS CAPITAL TRUST

                                            By:    /s/ Samuel D. Isaly
                                               ---------------------------------
                                            Name:  Samuel D. Isaly
                                            Title: Managing Partner,
                                                   OriMed Advisors LLC

                                            BUYER:

                                            CADUCEUS CAPITAL II, L.P.

                                            By:    /s/ Samuel D. Isaly
                                               ---------------------------------
                                            Name:  Samuel D. Isaly
                                            Title: Managing Partner,
                                                   OriMed Advisors LLC

<PAGE>

                                            BUYER:

                                            PW EUCALYPTUS FUND, L.L.C.

                                            By:    /s/ Samuel D. Isaly
                                               ---------------------------------
                                            Name:  Samuel D. Isaly
                                            Title: Managing Partner,
                                                   OriMed Advisors LLC

                                            BUYER:

                                            PW EUCALYPTUS FUND, LTD.

                                            By:    /s/ Samuel D. Isaly
                                               ---------------------------------
                                            Name:  Samuel D. Isaly
                                            Title: Managing Partner,
                                                   OriMed Advisors LLC

                                            BUYER:

                                            DMG LEGACY FUND LLC
                                            By: DMG Advisors LLC, Managing
                                                Member

                                            By:    /s/ Andrew Wilder
                                               ---------------------------------
                                            Name:  Andrew Wilder
                                            Title: Chief Financial Officer

                                            BUYER:

                                            DMG LEGACY INSTITUTIONAL FUND LLC
                                            By: DMG Advisors LLC, Managing
                                                Member

                                            By:    /s/ Andrew Wilder
                                               ---------------------------------
                                            Name:  Andrew Wilder
                                            Title: Chief Financial Officer

                                            BUYER:

                                            DMG LEGACY INTERNATIONAL LTD.
                                            By: DMG Advisors LLC, Investment
                                                Advisor

                                            By:    /s/ Andrew Wilder
                                               ---------------------------------
                                            Name:  Andrew Wilder
                                            Title: Chief Financial Officer

<PAGE>

                                            BUYER:

                                            EDJ Limited

                                            By:    /s/ Jeffrey Porter
                                               ---------------------------------
                                            Name:  Jeffrey Porter
                                            Title: Trading Advisor

                                            BUYER:

                                            Arnold S. Gumowitz

                                            By:    /s/ Arnold S. Gumowitz
                                               ---------------------------------
                                            Name:  Arnold S. Gumowitz

                                            BUYER:

                                            MAPLE BANK GMBH-MILAN BRANCH

                                            By:    /s/ Myles Marmion
                                               ---------------------------------
                                            Name:  M.C. Marmion
                                            Title: Authorized Signatory

                                            BUYER:

                                            PORTER PARTNERS, L.P.

                                            By:    /s/ Jeffrey Porter
                                               ---------------------------------
                                            Name:  Jeffrey Porter
                                            Title: General Partners

                                            BUYER:

                                            S.A.C. CAPITAL ASSOCIATES, LLC
                                            BY: S.A.C. Capital Advisors, LLC

                                            By:    /s/ Peter Nussbaum
                                               ---------------------------------
                                            Name:  Peter Nussbaum
                                            Title: General Counsel

<PAGE>

                                            BUYER:

                                            THOMAS SERVICE

                                            By:    /s/ Thomas Service
                                               ---------------------------------
                                            Name:  Thomas Service

                                            BUYER:

                                            STEELHEAD INVESTMENTS, LTD.

                                            By:    /s/ Kevin O'Neal
                                               ---------------------------------
                                            Name:  Kevin O'Neal
                                            Title: Authorized Signatory

                                            BUYER:

                                            VERTICAL INTERNATIONAL LTD.

                                            By:    /s/ Kenneth Henderson
                                               ---------------------------------
                                            Name:  Kenneth Henderson
                                            Title: Authorized Signatory

                                            BUYER:

                                            ZLP MASTER FUND, LTD

                                            By:    /s/ Stuart J. Zimmer
                                               ---------------------------------
                                            Name:  Stuart J. Zimmer
                                            Title: Director<PAGE>

                                                                     EXHIBIT 4.3

                          REGISTRATION RIGHTS AGREEMENT

        This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
December 14, 2001, is entered into by and among EntreMed, Inc., a Delaware
corporation, with headquarters located at 9640 Medical Center Drive, Rockville,
Maryland 20850 (the "COMPANY"), and the undersigned buyers (each, a "BUYER" and
collectively, the "BUYERS").

        WHEREAS:

        A.      Pursuant to a Securities Purchase Agreement, dated the date
                hereof (the "SECURITIES PURCHASE AGREEMENT"), among the Company
                and the Buyers, the Company has agreed to sell and the Buyers
                have agreed to purchase units of securities of the Company (the
                "UNITS") consisting of (i) the Company's Common Stock, par value
                $.01 per share (the "COMMON SHARES"), and (ii) Warrants (the
                "WARRANTS") to purchase shares of Common Stock (the "WARRANT
                SHARES"); and

        B.      To induce the Buyers to execute and deliver the Securities
                Purchase Agreement, the Company has agreed to provide certain
                registration rights under the Securities Act of 1933, as
                amended, and the rules and regulations thereunder, or any
                similar successor statute (collectively, the "1933 ACT").

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyers hereby agree as follows:

                1.      DEFINITIONS

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

                        a.      "INVESTOR" means a Buyer, any transferee or
                                assignee thereof to whom a Buyer assigns its
                                rights under this Agreement and who agrees to
                                become bound by the provisions of this Agreement
                                in accordance with Section 10 and any transferee
                                or assignee thereof to whom a transferee or
                                assignee assigns its rights under this Agreement
                                and who agrees to become bound by the provisions
                                of this Agreement in accordance with Section 10.

                        b.      "MATERIALLY DETRIMENTAL" means, in the good
                                faith judgment of the Board of Directors of the
                                Company as set forth in a certificate signed by
                                the Chief Executive Officer, Vice
                                President-Finance or General Counsel of the
                                Company, the filing in question would be
                                materially

<PAGE>

                                detrimental to the Company by reason of (i) any
                                proceeding before, or material event involving,
                                the Food and Drug Administration, or (ii) any
                                proposal or plan of the Company or any of its
                                Subsidiaries to engage in any sale, acquisition,
                                merger, consolidation, reorganization, tender
                                offer or similar transaction.

                        c.      "PERSON" means a corporation, a limited
                                liability company, an association, a
                                partnership, an organization, a business, an
                                individual, a governmental or political
                                subdivision thereof or a governmental agency or
                                any other entity.

                        d.      "REGISTER," "REGISTERED," and "REGISTRATION"
                                refer to a registration effected by preparing
                                and filing one or more Registration Statements
                                (defined below) in compliance with the 1933 Act
                                and pursuant to Rule 415 under the 1933 Act or
                                any successor rule providing for offering
                                securities on a continuous basis ("RULE 415"),
                                and the declaration or ordering of effectiveness
                                of such Registration Statement(s) by the United
                                States Securities and Exchange Commission (the
                                "SEC").

                        e.      "REGISTRABLE SECURITIES" means (i) the Common
                                Shares purchased by the Buyers pursuant to the
                                Securities Purchase Agreement, (ii) the Warrant
                                Shares issued or issuable upon exercise of the
                                Warrants and (iii) any shares of capital stock
                                issued or issuable with respect to such Common
                                Shares, Warrants or Warrant Shares as a result
                                of any stock split, stock dividend,
                                recapitalization, exchange or similar event or
                                otherwise, without regard to any limitation on
                                the exercise of the Warrants.

                        f.      "REGISTRATION STATEMENT" means a registration
                                statement of the Company filed under the 1933
                                Act and pursuant to Rule 415.

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.

                2.      REGISTRATION

                        a.      Shelf Registration. The Company shall prepare,
                                and, as soon as practicable, but in no event
                                later than thirty (30) calendar days after the
                                Closing Date (the "FILING DATE"), file with the
                                SEC a Registration Statement or Registration
                                Statements (as is necessary), containing the
                                Plan of Distribution set forth hereto as Exhibit
                                B, on Form S-3 (or

                                       2
<PAGE>

                                if such form is unavailable, such other form as
                                is available for registration) covering the
                                resale of all of the Registrable Securities. The
                                Company shall use its reasonable best efforts to
                                have the Registration Statement declared
                                effective by the SEC as soon as practicable, but
                                in no event later than the earlier of (i) five
                                (5) business days after the Company is advised
                                orally or in writing by the SEC that the SEC
                                will not review or has no further comments
                                concerning the Registration Statement and (ii)
                                the ninetieth (90th) calendar day after the
                                Closing Date (the "EFFECTIVENESS DATE").

                        b.      Piggy-Back Registrations. If at any time prior
                                to the expiration of the Registration Period (as
                                defined in Section 3(a)) the Registrable
                                Securities are not already covered by an
                                effective Registration Statement and the Company
                                proposes to file with the SEC a Registration
                                Statement relating to an offering for its own
                                account or the account of others under the 1933
                                Act of any of its securities (other than on Form
                                S-4 or Form S-8 (or their equivalents at such
                                time) relating to securities to be issued solely
                                in connection with any sale, acquisition,
                                merger, consolidation, reorganization or similar
                                transaction of any entity or business or equity
                                securities issuable in connection with stock
                                option or other employee benefit plans) the
                                Company shall promptly send to each Investor
                                written notice of the Company's intention to
                                file a Registration Statement and of such
                                Investor's rights under this Section 2(b) and,
                                if within twenty (20) days after receipt of such
                                notice, such Investor shall so request in
                                writing, the Company shall include in such
                                Registration Statement all or any part of the
                                Registrable Securities such Investor requests to
                                be registered, subject to the priorities set
                                forth in Section 2(b) below. No right to
                                registration of Registrable Securities under
                                this Section 2(b) shall be construed to limit
                                any registration required under Section 2(a).
                                The obligations of the Company under this
                                Section 2(b) may be waived by the Buyers. If an
                                offering in connection with which an Investor is
                                entitled to registration under this Section 2(b)
                                is an underwritten offering, then each Investor
                                whose Registrable Securities are included in
                                such Registration Statement shall, unless
                                otherwise agreed by the Company, offer and sell
                                such Registrable Securities in an underwritten
                                offering using the same underwriter or
                                underwriters and, subject to the provisions of
                                this Agreement, on the same terms and conditions
                                as other shares of Common Stock included in such
                                underwritten offering. If a registration

                                       3
<PAGE>

                                pursuant to this Section 2(b) is to be an
                                underwritten public offering and the managing
                                underwriter(s) advise the Company in writing,
                                that in their reasonable good faith opinion,
                                marketing or other factors dictate that a
                                limitation on the number of shares of Common
                                Stock which may be included in the Registration
                                Statement is necessary to facilitate and not
                                adversely affect the proposed offering, then the
                                Company shall include in such registration: (1)
                                first, all securities the Company proposes to
                                sell for its own account, (2) second, up to the
                                full number of securities proposed to be
                                registered for the account of the holders of
                                securities entitled to inclusion of their
                                securities in the Registration Statement by
                                reason of demand registration rights, and (3)
                                third, the securities requested to be registered
                                by the Investors and other holders of securities
                                entitled to participate in the registration, as
                                of the date hereof, drawn from them pro rata
                                based on the number each has requested to be
                                included in such registration.

                        c.      Allocation of Registrable Securities. The
                                initial number of Registrable Securities
                                included in any "piggyback" Registration
                                Statement under Section 2(b) and each increase
                                in the number of Registrable Securities included
                                therein shall be allocated pro rata among the
                                Investors based on the number of Registrable
                                Securities held, or which could be held, by each
                                Investor at the time the Registration Statement
                                covering such initial number of Registrable
                                Securities or increase thereof is declared
                                effective by the SEC.

                        d.      Legal Counsel. The Investors shall have the
                                right to select one (1) legal counsel to review
                                and oversee at the Buyers' expense any offering
                                pursuant to this Section 2 ("LEGAL COUNSEL"),
                                which shall be Robinson Silverman Pearce
                                Aronsohn & Berman LLP or such other counsel as
                                hereafter designated by the holders of a
                                majority of Registrable Securities. The Company
                                shall reasonably cooperate with Legal Counsel in
                                performing the Company's obligations under this
                                Agreement.

                        e.      Ineligibility for Form S-3. In the event that
                                Form S-3 is not available for any registration
                                of Registrable Securities hereunder, the Company
                                shall (i) register the sale of the Registrable
                                Securities on another appropriate form, if any,
                                and (ii) undertake to register the Registrable
                                Securities on Form S-3 as soon as such form is
                                available, provided that the Company shall
                                maintain the effectiveness of the

                                       4
<PAGE>

                                Registration Statement then in effect until such
                                time as a Registration Statement on Form S-3
                                covering the Registrable Securities has been
                                declared effective by the SEC.

                        f.      Rule 416. The Company and the Investors each
                                acknowledge that each Registration Statement
                                prepared in accordance hereunder shall include
                                an indeterminate number of Registrable
                                Securities pursuant to Rule 416 under the 1933
                                Act so as to cover any and all Registrable
                                Securities which may become issuable to prevent
                                dilution resulting from stock splits, stock
                                dividends or similar transactions in accordance
                                with the provisions contained in the Warrants
                                (collectively, the "RULE 416 SECURITIES"). In
                                this regard, the Company agrees to use
                                reasonable efforts to ensure that the maximum
                                number of Registrable Securities which may be
                                registered pursuant to Rule 416 under the 1933
                                Act are covered by each Registration Statement.

                        g.      Sufficient Number of Shares Registered. In the
                                event the number of shares available under a
                                Registration Statement filed pursuant to Section
                                2(a) is insufficient to cover all of the
                                Registrable Securities (a "DEFICIT FAILURE"),
                                the Company shall amend the Registration
                                Statement, or file a new Registration Statement
                                (on the short form available therefor, if
                                applicable), or both, so as to cover at least
                                one hundred percent (100%) of such Registrable
                                Securities in each case, as soon as practicable,
                                but in any event not later than fifteen (15)
                                days after the necessity therefor arises. The
                                Company shall use its reasonable best efforts to
                                cause such amendment and/or new Registration
                                Statement to become effective as soon as
                                practicable following the filing thereof. For
                                purposes of the foregoing provision, the number
                                of shares available under a Registration
                                Statement shall be deemed "insufficient to cover
                                all of the Registrable Securities" if at any
                                time the number of Registrable Securities is
                                greater than the number of shares of Common
                                Stock available for resale under such
                                Registration Statement. For purposes of the
                                calculation set forth in the foregoing sentence,
                                any restrictions on the exercisability of the
                                Warrants shall be disregarded and such
                                calculation shall assume that the Warrants are
                                then exercisable into shares of Company Common
                                Stock.

                3.      RELATED OBLIGATIONS

                                       5
<PAGE>

        Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(b) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a) or 2(g),
the Company will use its reasonable best efforts to effect the registration of
the Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following obligations:

                        a.      Registration. The Company shall promptly prepare
                                and file with the SEC a Registration Statement
                                with respect to the Registrable Securities as
                                provided in Section 2(a), and shall keep such
                                Registration Statement effective pursuant to
                                Rule 415 at all times until the earlier of (i)
                                the date on which the Investors shall have sold
                                all the Registrable Securities or (ii) the date
                                on which all Registrable Securities may be sold
                                without volume restrictions pursuant to Rule
                                144(k) promulgated under the 1933 Act (the
                                "REGISTRATION PERIOD"), which Registration
                                Statement (including any amendments or
                                supplements thereto and prospectuses contained
                                therein) shall not contain any untrue statement
                                of a material fact or omit to state a material
                                fact required to be stated therein, or necessary
                                to make the statements therein, in light of the
                                circumstances in which they were made, not
                                misleading.

                        b.      Amendments. The Company shall prepare and file
                                with the SEC such amendments (including
                                post-effective amendments) and supplements to a
                                Registration Statement and the prospectus used
                                in connection with such Registration Statement,
                                which prospectus is to be filed pursuant to Rule
                                424 promulgated under the 1933 Act, as may be
                                necessary to keep such Registration Statement
                                effective at all times during the Registration
                                Period, and, during such period, comply with the
                                provisions of the 1933 Act with respect to the
                                disposition of all Registrable Securities of the
                                Company covered by such Registration Statement
                                until such time as all of such Registrable
                                Securities shall have been disposed of in
                                accordance with the intended methods of
                                disposition by the seller or sellers thereof as
                                set forth in such Registration Statement.

                        c.      Legal Counsel Review. The Company shall permit
                                Legal Counsel to review and comment upon a
                                Registration Statement and all amendments and
                                supplements thereto at least seven (7) days
                                prior to their filing with the SEC, and not file
                                any document in a form to which Legal Counsel
                                reasonably objects. The Company shall not submit
                                a request for acceleration of the effectiveness
                                of a

                                       6
<PAGE>

                                Registration Statement or any amendment or
                                supplement thereto without the prior approval of
                                Legal Counsel, which approval shall not be
                                unreasonably withheld. The Company shall furnish
                                to Legal Counsel, without charge, (i) any
                                correspondence from the SEC or the staff of the
                                SEC to the Company or its representatives
                                relating to any Registration Statement, (ii)
                                promptly after the same is prepared and filed
                                with the SEC, one (1) copy of any Registration
                                Statement and any amendment(s) thereto,
                                including financial statements and schedules,
                                all documents incorporated therein by reference
                                and all exhibits and (iii) upon the
                                effectiveness of any Registration Statement, one
                                (1) copy of the prospectus included in such
                                Registration Statement and all amendments and
                                supplements thereto.

                        d.      Disclosure Materials. The Company shall furnish
                                to each Investor whose Registrable Securities
                                are included in any Registration Statement,
                                without charge, (i) promptly after the same is
                                prepared and filed with the SEC, at least one
                                (1) copy of such Registration Statement and any
                                amendment(s) thereto, including financial
                                statements and schedules, all documents
                                incorporated therein by reference and all
                                exhibits, (ii) upon the effectiveness of any
                                Registration Statement, ten (10) copies of the
                                prospectus included in such Registration
                                Statement and all amendments and supplements
                                thereto (or such other number of copies as such
                                Investor may reasonably request) and (iii) such
                                other documents, including copies of any
                                preliminary or final prospectus, as such
                                Investor may reasonably request from time to
                                time in order to facilitate the disposition of
                                the Registrable Securities owned by such
                                Investor.

                        e.      State Securities Laws. If state securities law
                                registration or qualification is required, the
                                Company shall use reasonable efforts to (i)
                                register and qualify the Registrable Securities
                                covered by a Registration Statement under such
                                state securities or "blue sky" laws of such
                                jurisdictions in the United States as Legal
                                Counsel or any Investor reasonably requests,
                                (ii) prepare and file in those jurisdictions,
                                such amendments (including post-effective
                                amendments) and supplements to such
                                registrations and qualifications as may be
                                necessary to maintain the effectiveness thereof
                                during the Registration Period, (iii) take such
                                other actions as may be necessary to maintain
                                such registrations and qualifications in effect
                                at all times during the Registration Period, and
                                (iv) take all other actions reasonably necessary

                                       7
<PAGE>

                                or advisable to qualify the Registrable
                                Securities for sale in such jurisdictions;
                                provided, however, that the Company shall not be
                                required in connection therewith or as a
                                condition thereto to (x) qualify to do business
                                in any jurisdiction where it would not otherwise
                                be required to qualify but for this Section
                                3(e), (y) subject itself to general taxation in
                                any such jurisdiction, or (z) file a general
                                consent to service of process in any such
                                jurisdiction. The Company shall promptly notify
                                Legal Counsel and each Investor who holds
                                Registrable Securities of the receipt by the
                                Company of any notification with respect to the
                                suspension of the registration or qualification
                                of any of the Registrable Securities for sale
                                under the securities or "blue sky" laws of any
                                jurisdiction in the United States or its receipt
                                of actual notice of the initiation or
                                threatening of any proceeding for such purpose.

                        f.      Underwriting Agreement. In the event the
                                Investors who hold a majority of the Registered
                                Securities being offered in an offering are
                                entitled to select underwriters for such
                                offering, the Company agrees to enter into and
                                to perform its obligations under an underwriting
                                agreement, in usual and customary form,
                                including, without limitation, customary
                                indemnification and contribution obligations,
                                with the underwriters of such offering.

                        g.      Notification. As promptly as practicable after
                                becoming aware of such event, the Company shall
                                notify Legal Counsel and each Investor in
                                writing of the happening of any event as a
                                result of which the prospectus included in a
                                Registration Statement, as then in effect,
                                includes an untrue statement of a material fact
                                or omission to state a material fact required to
                                be stated therein or necessary to make the
                                statements therein, in light of the
                                circumstances under which they were made, not
                                misleading, and promptly prepare a supplement or
                                amendment to such Registration Statement to
                                correct such untrue statement or omission, and
                                deliver ten (10) copies of such supplement or
                                amendment to Legal Counsel and each Investor (or
                                such other number of copies as Legal Counsel or
                                such Investor may reasonably request). The
                                Company shall also promptly notify Legal Counsel
                                and each Investor in writing (i) when a
                                prospectus or any prospectus supplement or
                                post-effective amendment has been filed, and
                                when a Registration Statement or any
                                post-effective amendment has become effective
                                (notification of such effectiveness shall be
                                delivered to Legal Counsel within one (1) day of
                                such

                                       8
<PAGE>

                                effectiveness by facsimile or by overnight
                                mail), (ii) of any request by the SEC for
                                amendments or supplements to a Registration
                                Statement or related prospectus or related
                                information, and (iii) of the Company's
                                reasonable determination that a post-effective
                                amendment to a Registration Statement would be
                                appropriate.

                        h.      Stop-Order and Suspension. The Company shall use
                                its reasonable best efforts to prevent the
                                issuance of any stop order or other suspension
                                of effectiveness of a Registration Statement, or
                                the suspension of the qualification of any of
                                the Registrable Securities for sale in any
                                jurisdiction and, if such an order or suspension
                                is issued, to obtain the withdrawal of such
                                order or suspension at the earliest possible
                                moment and to notify Legal Counsel and each
                                Investor who holds Registrable Securities being
                                sold (and, in the event of an underwritten
                                offering, the managing underwriters) of the
                                issuance of such order and the resolution
                                thereof or its receipt of actual notice of the
                                initiation or threat of any proceeding for such
                                purpose.

                        i.      Confidential Information. The Company shall hold
                                in confidence and not make any disclosure of
                                information concerning an Investor provided to
                                the Company unless (i) disclosure of such
                                information is necessary to comply with federal
                                or state securities laws, (ii) the disclosure of
                                such information is necessary to avoid or
                                correct a misstatement or omission in any
                                Registration Statement, (iii) the release of
                                such information is ordered pursuant to a
                                subpoena or other final, non-appealable order
                                from a court or governmental body of competent
                                jurisdiction, or (iv) such information has been
                                made generally available to the public other
                                than by disclosure in violation of this
                                Agreement or any other agreement. The Company
                                agrees that it shall, upon learning that
                                disclosure of such information concerning an
                                Investor is sought in or by a court or
                                governmental body of competent jurisdiction or
                                through other means, give prompt written notice
                                to such Investor and allow such Investor, at the
                                Investor's expense, to undertake appropriate
                                action to prevent disclosure of, or to obtain a
                                protective order for, such information.

                        j.      Listing. The Company shall use its reasonable
                                best efforts either to (i) cause all the
                                Registrable Securities covered by a Registration
                                Statement to be listed on each securities
                                exchange on which securities of the same class
                                or series issued by the Company are then listed,
                                if any, if the listing

                                       9
<PAGE>

                                of such Registrable Securities is then permitted
                                under the rules of such exchange, or (ii) secure
                                designation and quotation of all the Registrable
                                Securities covered by the Registration Statement
                                on The Nasdaq National Market System or, if,
                                despite the Company's best efforts to satisfy
                                the preceding clause (i) or (ii), the Company is
                                unsuccessful in satisfying the preceding clause
                                (i) or (ii), to secure the inclusion for
                                quotation on The Nasdaq SmallCap Market for such
                                Registrable Securities and, without limiting the
                                generality of the foregoing, to arrange for at
                                least two (2) market makers to register with the
                                National Association of Securities Dealers, Inc.
                                ("NASD") as such with respect to such
                                Registrable Securities. The Company shall pay
                                all fees and expenses in connection with
                                satisfying its obligation under this Section
                                3(j).

                        k.      Certificates. The Company shall cooperate with
                                the Investors who hold Registrable Securities
                                being offered to facilitate the timely
                                preparation and delivery of certificates (not
                                bearing any restrictive legend) representing the
                                Registrable Securities to be offered pursuant to
                                a Registration Statement and enable such
                                certificates to be in such denominations or
                                amounts, as the case may be, as the Investors
                                may reasonably request and registered in such
                                names as the Investors may request.

                        l.      Transfer Agent. The Company shall provide a
                                transfer agent and registrar, which may be the
                                same Person, of all such Registrable Securities
                                not later than the effective date of such
                                Registration Statement.

                        m.      Reasonable Best Efforts. The Company shall use
                                its reasonable best efforts to cause the
                                Registrable Securities covered by the applicable
                                Registration Statement to be registered with or
                                approved by such other governmental agencies or
                                authorities as may be necessary to consummate
                                the disposition of such Registrable Securities.

                        n.      Compliance with Securities Laws. The Company
                                shall otherwise use its reasonable best efforts
                                to comply with all applicable rules and
                                regulations of the SEC in connection with any
                                registration hereunder and the Company shall use
                                its reasonable best efforts to file with the SEC
                                in a timely manner all reports and documents
                                required of the Company under the 1933 Act and
                                the Securities Exchange Act of 1934, as amended
                                (the "1934 ACT").

                                       10
<PAGE>

                        o.      Confirmation. In addition to any notice required
                                to be delivered to Legal Counsel and to the
                                Investors pursuant to Section 3(g), within three
                                (3) business days after the Registration
                                Statement which includes the Registrable
                                Securities is ordered effective by the SEC, the
                                Company shall cause legal counsel for the
                                Company to deliver to the transfer agent for
                                such Registrable Securities confirmation,
                                substantially in the form set forth as Exhibit
                                A, that the Registration Statement has been
                                declared effective by the SEC.

                        p.      Disposition. The Company shall take all other
                                reasonable actions necessary to expedite and
                                facilitate disposition by the Investors of
                                Registrable Securities pursuant to a
                                Registration Statement.

                        q.      Limitation on Registration Statement.
                                Notwithstanding anything to the contrary
                                contained in this Agreement, the Registration
                                Statement required to be filed pursuant to
                                Section 2(a) shall register only the Registrable
                                Securities.

                4.      OBLIGATIONS OF THE INVESTORS

                        a.      At least seven (7) days prior to the first
                                anticipated filing date of the Registration
                                Statement, the Company shall notify each
                                Investor in writing of the information the
                                Company requires from each such Investor if such
                                Investor elects to have any of such Investor's
                                Registrable Securities included in such
                                Registration Statement. It shall be a condition
                                precedent to the obligations of the Company to
                                complete the registration pursuant to this
                                Agreement with respect to the Registrable
                                Securities of a particular Investor that such
                                Investor shall furnish to the Company such
                                information regarding itself and the Registrable
                                Securities held by it as shall be reasonably
                                required to effect the registration of such
                                Registrable Securities and shall execute such
                                documents in connection with such registration
                                as the Company may reasonably request.

                        b.      Each Investor by such Investor's acceptance of
                                the Registrable Securities agrees to cooperate
                                with the Company as reasonably requested by the
                                Company in connection with the preparation and
                                filing of any Registration Statement hereunder,
                                unless such Investor has notified the Company in
                                writing of such Investor's election to exclude
                                all of such Investor's Registrable Securities
                                from such Registration Statement.

                                       11
<PAGE>

                        c.      In the event any Investor elects to participate
                                in an underwritten public offering pursuant to
                                Section 2, each such Investor agrees to enter
                                into and to perform such Investor's obligations
                                under an underwriting agreement, in usual and
                                customary form, including, without limitation,
                                customary indemnification and contribution
                                obligations, with the managing underwriter of
                                such offering and take such other actions as are
                                reasonably required in order to expedite or
                                facilitate the disposition of the Registrable
                                Securities.

                5.      EXPENSES OF REGISTRATION

        All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company
and, in the event the Company fails to comply with the reasonable requests of
Legal Counsel made pursuant to Section 3(c) of this Agreement, the fees and
disbursements of Legal Counsel, shall be paid by the Company.

                6.      INDEMNIFICATION

        In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

                        a.      To the fullest extent permitted by law, the
                                Company will, and hereby does, indemnify, hold
                                harmless and defend (i) each Investor who holds
                                such Registrable Securities, and (ii) the
                                directors, officers, partners, employees,
                                agents, representatives of, and each Person, if
                                any, who controls any Investor within the
                                meaning of the 1933 Act or 1934 Act, and any
                                underwriter (as defined in the 1933 Act) for the
                                Investors, and the directors and officers of,
                                and each Person, if any, who controls, any such
                                underwriter within the meaning of the 1933 Act
                                or the 1934 Act (each, an "INDEMNIFIED PERSON"),
                                subject to Section 6(d) with respect to the
                                number of legal counsel, against any losses,
                                claims, damages, liabilities, judgments, fines,
                                penalties, charges, costs, attorneys' fees,
                                amounts paid in settlement or expenses, joint or
                                several, (collectively, "INDEMNIFIED DAMAGES")
                                incurred in investigating, preparing or
                                defending any action, claim, suit, inquiry,
                                proceeding, investigation or appeal taken from
                                the foregoing by or before any court or
                                governmental, administrative or other regulatory
                                agency, body or the SEC, whether pending or
                                threatened, whether or not an indemnified party
                                is or may

                                       12
<PAGE>

                                be a party thereto (collectively, "CLAIMS"), to
                                which any of them may become subject insofar as
                                such Claims (or actions or proceedings, whether
                                commenced or threatened, in respect thereof)
                                arise out of or are based upon: (i) any untrue
                                statement or alleged untrue statement of a
                                material fact in a Registration Statement or any
                                post-effective amendment thereto or in any
                                filing made in connection with the qualification
                                of the offering under the securities or other
                                "blue sky" laws of any jurisdiction in which
                                Registrable Securities are offered, or the
                                omission or alleged omission to state a material
                                fact required to be stated therein or necessary
                                to make the statements therein not misleading,
                                (ii) any untrue statement or alleged untrue
                                statement of a material fact contained in any
                                preliminary prospectus if used prior to the
                                effective date of such Registration Statement,
                                or contained in the final prospectus (as amended
                                or supplemented, if the Company files any
                                amendment thereof or supplement thereto with the
                                SEC) or the omission or alleged omission to
                                state therein any material fact necessary to
                                make the statements made therein, in light of
                                the circumstances under which the statements
                                therein were made, not misleading, or (iii) any
                                violation or alleged violation by the Company of
                                the 1933 Act, the 1934 Act, any state securities
                                law, or any rule or regulation thereunder
                                relating to the offer or sale of the Registrable
                                Securities pursuant to a Registration Statement
                                (the matters in the foregoing clauses (i)
                                through (iii) being, collectively,
                                "VIOLATIONS"). Subject to the restrictions set
                                forth in Section 6(d) with respect to the number
                                of legal counsel, the Company shall reimburse
                                each Indemnified Person promptly as such
                                expenses are incurred and are due and payable,
                                for any reasonable legal fees or other
                                reasonable expenses incurred by them in
                                connection with investigating or defending any
                                such Claim. Notwithstanding anything to the
                                contrary contained herein, the indemnification
                                agreement contained in this Section 6(a): (i)
                                shall not apply to a Claim by an Indemnified
                                Person arising out of or based upon a Violation
                                which occurs in reliance upon and in conformity
                                with information furnished in writing to the
                                Company by such Indemnified Person expressly for
                                use in connection with the preparation of the
                                Registration Statement or any such amendment
                                thereof or supplement thereto, if such
                                prospectus was timely made available by the
                                Company pursuant to Section 3(d); (ii) with
                                respect to any preliminary prospectus, shall not
                                inure to the benefit of any such Person from
                                whom the

                                       13
<PAGE>

                                Person asserting any such Claim purchased the
                                Registrable Securities that are the subject
                                thereof (or to the benefit of any Person
                                controlling such Person) if the untrue statement
                                or omission of material fact contained in the
                                preliminary prospectus was corrected in the
                                prospectus, as then amended or supplemented, if
                                such prospectus was timely made available by the
                                Company pursuant to Section 3(d), and the
                                Indemnified Person was promptly advised in
                                writing not to use the incorrect prospectus
                                prior to the use giving rise to a violation and
                                such Indemnified Person, notwithstanding such
                                advice, used it; (iii) shall not be available to
                                the extent such Claim is based on a failure of
                                the Investor to deliver or to cause to be
                                delivered the prospectus made available by the
                                Company, if such prospectus was timely made
                                available by the Company pursuant to Section
                                3(d); and (iv) shall not apply to amounts paid
                                in settlement of any Claim if such settlement is
                                effected without the prior written consent of
                                the Company, which consent shall not be
                                unreasonably withheld. Such indemnity shall
                                remain in full force and effect regardless of
                                any investigation made by or on behalf of the
                                Indemnified Person and shall survive the
                                transfer of the Registrable Securities by the
                                Investors pursuant to Section 10.

                        b.      In connection with any Registration Statement in
                                which an Investor is participating, each such
                                Investor agrees to severally and not jointly
                                indemnify, hold harmless and defend, to the same
                                extent and in the same manner as is set forth in
                                Section 6(a), the Company, each of its
                                directors, each of its officers who signs the
                                Registration Statement, its employees and
                                agents, and each Person, if any, who controls
                                the Company within the meaning of the 1933 Act
                                or the 1934 Act (collectively and together with
                                an Indemnified Person, an "INDEMNIFIED PARTY"),
                                against any Claim or Indemnified Damages to
                                which any Indemnified Party may become subject,
                                under the 1933 Act, the 1934 Act or otherwise,
                                insofar as such Claim or Indemnified Damages
                                arise out of or are based upon any Violation, in
                                each case to the extent, and only to the extent,
                                that such Violation occurs in reliance upon and
                                in conformity with written information furnished
                                to the Company by such Investor expressly for
                                use in connection with such Registration
                                Statement; and, subject to Section 6(d), such
                                Investor will reimburse any legal or other
                                expenses reasonably incurred by them in
                                connection with investigating or defending any
                                such Claim; provided,

                                       14
<PAGE>

                                however, that the indemnity agreement contained
                                in this Section 6(b) and the agreement with
                                respect to contribution contained in Section 7
                                shall not apply to amounts paid in settlement of
                                any Claim if such settlement is effected without
                                the prior written consent of such Investor,
                                which consent shall not be unreasonably
                                withheld; provided, further, however, that the
                                Investor shall be liable under this Section 6(b)
                                for only that amount of a Claim or Indemnified
                                Damages as does not exceed the net proceeds to
                                such Investor as a result of the sale of
                                Registrable Securities pursuant to such
                                Registration Statement. Such indemnity shall
                                remain in full force and effect regardless of
                                any investigation made by or on behalf of such
                                Indemnified Party and shall survive the transfer
                                of the Registrable Securities by the Investors
                                pursuant to Section 10. Notwithstanding anything
                                to the contrary contained herein, the
                                indemnification agreement contained in this
                                Section 6(b) with respect to any preliminary
                                prospectus shall not inure to the benefit of any
                                Indemnified Party if the untrue statement or
                                omission of material fact contained in the
                                preliminary prospectus was corrected on a timely
                                basis in the prospectus, as then amended or
                                supplemented, or the Indemnified Party failed to
                                utilize such corrected prospectus.

                        c.      The Company shall be entitled to receive
                                indemnities from underwriters, selling brokers,
                                dealer managers and similar securities industry
                                professionals participating in any distribution,
                                to the same extent as provided above, with
                                respect to information such Persons so furnished
                                in writing expressly for inclusion in the
                                Registration Statement.

                        d.      Promptly after receipt by an Indemnified Person
                                or Indemnified Party under this Section 6 of
                                notice of the commencement of any action or
                                proceeding (including any governmental action or
                                proceeding) involving a Claim, such Indemnified
                                Person or Indemnified Party shall, if a Claim in
                                respect thereof is to be made against any
                                indemnifying party under this Section 6, deliver
                                to the indemnifying party a written notice of
                                the commencement thereof, and the indemnifying
                                party shall have the right to participate in,
                                and, to the extent the indemnifying party so
                                desires, jointly with any other indemnifying
                                party similarly noticed, to assume control of
                                the defense thereof with counsel mutually
                                satisfactory to the indemnifying party and the
                                Indemnified Person or the Indemnified Party, as
                                the case may be; provided, however, that an
                                indemnifying

                                       15
<PAGE>

                                party shall not be entitled to assume such
                                defense and an Indemnified Person or Indemnified
                                Party shall have the right to retain its own
                                counsel with the reasonable fees and expenses to
                                be paid by the indemnifying party, if, in the
                                reasonable opinion of counsel retained by the
                                indemnifying party, the representation by such
                                counsel of the Indemnified Person or Indemnified
                                Party and the indemnifying party would be
                                inappropriate due to actual or potential
                                differing interests between such Indemnified
                                Person or Indemnified Party and any other party
                                represented by such counsel in such proceeding,
                                or the actual or potential defendants in, or
                                targets of, any such action include both the
                                Indemnified Person or Indemnified Party and the
                                indemnifying party, and any such Indemnified
                                Person or Indemnified Party reasonably
                                determines that there may be legal defenses
                                available to such Indemnified Person to such
                                indemnifying party. The indemnifying party shall
                                pay reasonable fees for only one (1) separate
                                legal counsel for the Indemnified Person or
                                Indemnified Party, as applicable, and such legal
                                counsel shall be selected by Investors holding a
                                majority in interest of the Registrable
                                Securities included in the Registration
                                Statement to which the Claim relates, if the
                                Investors are entitled to indemnification
                                hereunder, or by the Company, if the Company is
                                entitled to indemnification hereunder, as
                                applicable. The Indemnified Party or Indemnified
                                Person shall cooperate fully with the
                                indemnifying party in connection with any
                                negotiation or defense of any such action or
                                claim by the indemnifying party and shall
                                furnish to the indemnifying party all
                                information reasonably available to the
                                Indemnified Party or Indemnified Person which
                                relates to such action or claim. The
                                indemnifying party shall keep the Indemnified
                                Party or Indemnified Person fully apprised at
                                all times as to the status of the defense or any
                                settlement negotiations with respect thereto. No
                                indemnifying party shall be liable for any
                                settlement of any action, claim or proceeding
                                effected without its written consent; provided,
                                however, that the indemnifying party shall not
                                unreasonably withhold, delay or condition its
                                consent. No indemnifying party shall, without
                                the consent of the Indemnified Party or
                                Indemnified Person, consent to entry of any
                                judgment or enter into any settlement or other
                                compromise which does not include as an
                                unconditional term thereof the giving by the
                                claimant or plaintiff to such Indemnified Party
                                or Indemnified Person of a release from all
                                liability in respect to such claim or
                                litigation. Following

                                       16
<PAGE>

                                indemnification as provided for hereunder, the
                                indemnifying party shall be subrogated to all
                                rights of the Indemnified Party or Indemnified
                                Person with respect to all third parties, firms
                                or corporations relating to the matter for which
                                indemnification has been made. The failure to
                                deliver written notice to the indemnifying party
                                within a reasonable time of the commencement of
                                any such action shall not relieve such
                                indemnifying party of any liability to the
                                Indemnified Person or Indemnified Party under
                                this Section 6, except to the extent that the
                                indemnifying party is prejudiced in its ability
                                to defend such action.

                        e.      The indemnification required by this Section 6
                                shall be made by periodic payments of the amount
                                thereof during the course of the investigation
                                or defense, as and when bills are received or
                                Indemnified Damages are incurred.

                        f.      The indemnity agreements contained herein shall
                                be in addition to (i) any cause of action or
                                similar right of the Indemnified Party or
                                Indemnified Person against the indemnifying
                                party or others, and (ii) any liabilities the
                                indemnifying party may be subject to pursuant to
                                the law.

                7.      CONTRIBUTION

        To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

                8.      REPORTS UNDER THE 1934 ACT

        With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:

                        a.      make and keep public information available, as
                                those terms are understood and defined in Rule
                                144;

                        b.      file with the SEC in a timely manner all reports
                                and other documents required of the Company
                                under the 1933 Act and the 1934 Act so long as
                                the Company remains subject

                                       17
<PAGE>

                                to such requirements (it being understood that
                                nothing herein shall limit the Company's
                                obligations under Section 4(c) of the Securities
                                Purchase Agreement) and the filing of such
                                reports and other documents is required for the
                                applicable provisions of Rule 144; and

                        c.      furnish to each Investor so long as such
                                Investor owns Registrable Securities, promptly
                                upon request, (i) a written statement by the
                                Company that it has complied with the reporting
                                requirements of Rule 144, the 1933 Act and the
                                1934 Act, (ii) a copy of the most recent annual
                                or quarterly report of the Company and such
                                other reports and documents so filed by the
                                Company, and (iii) such other information as may
                                be reasonably requested to permit the investors
                                to sell such securities pursuant to Rule 144
                                without registration.

                9.      LIQUIDATED DAMAGES

        If: (a) any Registration Statement required to be filed pursuant to
Section 2(a) is not filed on or prior to the Filing Date, (b) unless waived by
the Investors, the Company files such Registration Statement without affording
Legal Counsel the opportunity to review and comment on the same as required by
Section 3(c), or (c) the Company fails to file with the SEC a request for
acceleration in accordance with Rule 461 promulgated under the 1933 Act, within
five (5) business days after the Company is advised orally or in writing by the
SEC that the SEC will not review or has no further comments concerning the
Registration Statement, or (d) a Registration Statement filed hereunder is not
declared effective by the SEC on or prior to the Effectiveness Date, or (e)
after a Registration Statement is filed with and declared effective by the SEC,
such Registration Statement ceases to be effective as to all Registrable
Securities to which it is required to relate at any time prior to the expiration
of the Registration Period without being succeeded within ten (10) trading days,
or if it would be Materially Detrimental, twenty (20) trading days, by an
amendment to such Registration Statement or by a subsequent Registration
Statement filed with and declared effective by the SEC, or (f) an amendment to a
Registration Statement is not filed by the Company with the SEC within ten (10)
trading days, or if it would be Materially Detrimental, twenty (20) trading
days, of the SEC's notifying the Company that such amendment is required in
order for such Registration Statement to be declared or remain effective, or (g)
the Common Stock is not listed or quoted, or is suspended from trading, on
Nasdaq for a period of ten (10) trading days in any 12 month period (which need
not be consecutive trading days), (any such failure or breach being referred to
as an "REGISTRATION DEFAULT," and, (w) for purposes of clause (a), (b) or (d),
the date on which such Registration Default occurs, (x) for purposes of clause
(c), the date on which such five (5) day period is exceeded, (y) for purposes of
clauses (e) and (f) the date on which the applicable trading day-period is
exceeded, or (z) for purposes of clause (g) the date on which such ten (10)
trading day period is exceeded, being referred to as an "EVENT DATE"), then the
Company shall pay to each Holder an amount, in cash, as liquidated damages
("LIQUIDATED DAMAGES")

                                       18
<PAGE>

(x) upon the occurrence of a Registration Default, an amount equal to one
percent (1%) of the aggregate Price Per Unit of the Units then held by such
Buyer, and (y) if the Registration Default has not been cured by the first month
anniversary following the date of the Registration Default, an amount equal to
one percent (1%) of the aggregate Price Per Unit of the Units then held by such
Buyer and (z) on each monthly anniversary thereafter until the Registration
Default has been cured, an amount equal to one percent (1%) of the aggregate
Price Per Unit of the Units then held by such Buyer; provided, however, that all
periods referred to in clauses (y) and (z) above shall be tolled during delays
caused by the action or inaction of any Buyer, and the Company shall have no
liability in respect of any such delay. The Liquidated Damages payable pursuant
hereto shall be payable within five (5) business days following the date of the
Registration Default or the monthly anniversary thereof, as the case may be.
Notwithstanding anything to the contrary contained herein, (x) Liquidated
Damages shall not be payable under this Section 9 for more than one Registration
Default occurring or existing at any one time, (y) no Liquidated Damages shall
be payable under this Section 9 in respect of any Registration Default which
also constitutes a Company Violation under the Securities Purchase Agreement or
is an exception from the liquidated damages provisions contained in Section 8 of
the Securities Purchase Agreement, or (z) that the Company shall have no
liability to any Investor for any Liquidated Damages at the occurrence of a
Registration Default or thereafter if the Company's violation of any such
material provision or failure to fulfill such material obligations is caused by
or results from any action or inaction of any such Investor or any other
Investor.

                10.     ASSIGNMENT OF REGISTRATION RIGHTS

        The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of all or any portion of Registrable Securities if:
(i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act and applicable state securities laws; provided, however, that the transferee
or assignee may subsequently transfer or assign all or any portion of the
Registrable Securities if an exemption from registration under the 1933 Act is
applicable to such transfer or assignment; (iv) at or before the time the
Company receives the written notice contemplated by clause (ii) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein; and (v) such transfer shall have been made
in accordance with the applicable requirements of the Securities Purchase
Agreement.

                                       19
<PAGE>

                11.     AMENDMENT OF REGISTRATION RIGHTS

        Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who then hold two-thirds (2/3) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 11 shall be binding
upon each Investor and the Company. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.

                12.     MISCELLANEOUS

                        a.      A Person is deemed to be a holder of Registrable
                                Securities whenever such Person owns or is
                                deemed to own of record such Registrable
                                Securities. If the Company receives conflicting
                                instructions, notices or elections from two or
                                more Persons with respect to the same
                                Registrable Securities, the Company shall act
                                upon the basis of instructions, notice or
                                election received from the registered owner of
                                such Registrable Securities.

                        b.      Any notices, consents, waivers or other
                                communications required or permitted to be given
                                under the terms of this Agreement must be in
                                writing and will be deemed to have been
                                delivered: (i) upon receipt, when delivered
                                personally; (ii) upon receipt, when sent by
                                facsimile (provided confirmation of transmission
                                is mechanically or electronically generated and
                                kept on file by the sending party); or (iii) one
                                (1) business day after deposit with a nationally
                                recognized overnight delivery service, in each
                                case properly addressed to the party to receive
                                the same. The addresses and facsimile numbers
                                for such communications shall be:

        If to the Company:

                EntreMed, Inc.
                9640 Medical Center Drive
                Rockville, MD 20850
                Telephone:   (301) 217-9858
                Facsimile:   (301) 217-9594
                Attention:   John W. Holaday, Ph.D.

                                       20
<PAGE>

        With a copy to:

                Arnold & Porter
                1600 Tysons Boulevard, Ste. 900
                McLean, VA 22102
                Telephone:   (703) 720-7005
                Facsimile:   (703) 720-7399
                Attention:   Robert B. Ott, Esq.

        If to Legal Counsel:

                Robinson Silverman Pearce Aronsohn & Berman LLP
                1290 Avenue of the Americas
                New York, NY 10104
                Telephone:   (212) 541-2000
                Facsimile:   (212) 541-4630
                Attention:   Eric L. Cohen

If to a Buyer, to it at the address and facsimile number set forth on the
Schedule of Buyers attached hereto, with copies to such Buyer's representatives
as set forth on the Schedule of Buyers, or at such other address and/or
facsimile number and/or to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days
prior to the effectiveness of such change.

                        c.      Failure of any party to exercise any right or
                                remedy under this Agreement or otherwise, or
                                delay by a party in exercising such right or
                                remedy, shall not operate as a waiver thereof.

                        d.      This Agreement shall be governed by and
                                construed in all respects by the internal laws
                                of the State of New York (except for the proper
                                application of the United States federal
                                securities laws), without giving effect to any
                                choice of law or conflict of law provision or
                                rule (whether of the State of New York or any
                                other jurisdictions) that would cause the
                                application of the laws of any jurisdictions
                                other than the State of New York. Each party
                                hereby irrevocably submits to the exclusive
                                jurisdiction of the state and federal courts
                                sitting the City of New York, for the
                                adjudication of any dispute hereunder. If any
                                provision of this Agreement shall be invalid or
                                unenforceable in any jurisdiction, such
                                invalidity or unenforceability shall not affect
                                the validity or enforceability of the remainder
                                of this Agreement in that jurisdiction or the
                                validity or enforceability of any provision of
                                this Agreement in any other jurisdiction. In any
                                suit or action to enforce the provisions of this
                                Agreement, the prevailing party shall be
                                entitled to be

                                       21
<PAGE>

                                reimbursed for all reasonable legal fees and
                                expenses incurred by such party in connection
                                with such suit or action.

                        e.      This Agreement, the Securities Purchase
                                Agreement and the Warrants constitute the entire
                                agreement among the parties hereto with respect
                                to the subject matter hereof and thereof. There
                                are no restrictions, promises, warranties or
                                undertakings, other than those set forth or
                                referred to herein and therein. This Agreement,
                                the Securities Purchase Agreement and the
                                Warrants supersede all prior agreements and
                                understandings among the parties hereto with
                                respect to the subject matter hereof and
                                thereof.

                        f.      Subject to the requirements of Section 10, this
                                Agreement shall inure to the benefit of and be
                                binding upon the permitted successors and
                                assigns of each of the parties hereto.

                        g.      The headings in this Agreement are for
                                convenience of reference only and shall not
                                limit or otherwise affect the meaning hereof.

                        h.      This Agreement may be executed in identical
                                counterparts, each of which shall be deemed an
                                original but all of which shall constitute one
                                and the same agreement. This Agreement, once
                                executed by a party, may be delivered to the
                                other party hereto by facsimile transmission of
                                a copy of this Agreement bearing the signature
                                of the party so delivering this Agreement.

                        i.      Each party shall do and perform, or cause to be
                                done and performed, all such further acts and
                                things, and shall execute and deliver all such
                                other agreements, certificates, instruments and
                                documents, as the other party may reasonably
                                request in order to carry out the intent and
                                accomplish the purposes of this Agreement and
                                the consummation of the transactions
                                contemplated hereby.

                        j.      All consents and other determinations to be made
                                by the Investors pursuant to this Agreement
                                shall be made, unless otherwise specified in
                                this Agreement, by Investors holding a majority
                                of the Registrable Securities, determined as if
                                all of the Warrants then outstanding have been
                                converted into Registrable Securities without
                                regard to any limitation on exercise of the
                                Warrants.

                                       22
<PAGE>

                        k.      The language used in this Agreement will be
                                deemed to be the language chosen by the parties
                                to express their mutual intent and no rules of
                                strict construction will be applied against any
                                party.

                        l.      This Agreement is intended for the benefit of
                                the parties hereto and their respective
                                permitted successors and assigns, and is not for
                                the benefit of, nor may any provision hereof be
                                enforced by, any other Person.

                            [signature pages follow]

                                       23
<PAGE>

        IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

                                        COMPANY:

                                        ENTREMED, INC.

                                        By:    /s/ John W. Holaday, PhD
                                           ---------------------------------
                                        Name:  John W. Holaday, PhD
                                        Title: Chairman and CEO

<PAGE>

                                        BUYER:

                                        CRANSHIRE CAPITAL, L.P.

                                        By:   Downsview Capital, Inc.,
                                              the General Partner

                                              By:    /s/ Mitchell P. Kopin
                                                  ------------------------------
                                              Name:  Mitchell P. Kopin
                                              Title: President

                                        BUYER:

                                        EURAM CAP STRAT "A" FUND LIMITED

                                        By:   JMJ Capital, Inc., the Investment
                                              Manager

                                              By:   /s/ Mitchell P. Kopin
                                                 -------------------------------
                                              Name:     Mitchell P. Kopin
                                              Title:    President

                                        BUYER:

                                        CLEVELAND OVERSEAS LTD.

                                        By:  Primeway S.A., Director

                                        By:    /s/ Beat Kunz
                                           -----------------
                                        Name:      Beat Kunz

                                        BUYER:

                                        WINCHESTER GLOBAL TRUST
                                        COMPANY LIMITED AS TRUSTEE FOR
                                        CADUCEUS CAPITAL TRUST

                                        By:    /s/ Samuel D. Isaly
                                           -------------------------------------
                                        Name:  Samuel D. Isaly
                                        Title: Managing Partner,
                                               OriMed Advisors LLC

                                        BUYER:

                                        CADUCEUS CAPITAL II, L.P.

                                        By:    /s/ Samuel D. Isaly
                                           -------------------------------------
                                        Name:  Samuel D. Isaly
                                        Title: Managing Partner,
                                               OriMed Advisors LLC

<PAGE>

                                        BUYER:

                                        PW EUCALYPTUS FUND, L.L.C.

                                        By:    /s/ Samuel D. Isaly
                                           -------------------------------------
                                        Name:  Samuel D. Isaly
                                        Title: Managing Partner,
                                               OriMed Advisors LLC

                                        BUYER:

                                        PW EUCALYPTUS FUND, LTD.

                                        By:    /s/ Samuel D. Isaly
                                           -------------------------------------
                                        Name:  Samuel D. Isaly
                                        Title: Managing Partner,
                                               OriMed Advisors LLC

                                        BUYER:

                                        DMG LEGACY FUND LLC
                                        By:  DMG Advisors LLC, Managing Member

                                        By:     /s/ Andrew Wilder
                                           -------------------------------------
                                        Name:       Andrew Wilder
                                        Title:      Chief Financial Officer

                                        BUYER:

                                        DMG LEGACY INSTITUTIONAL FUND LLC
                                        By:  DMG Advisors LLC, Managing Member

                                        By:    /s/ Andrew Wilder
                                           -------------------------------------
                                        Name:      Andrew Wilder
                                        Title:     Chief Financial Officer

                                        BUYER:

                                        DMG LEGACY INTERNATIONAL LTD.
                                        By:  DMG Advisors LLC, Investment
                                             Advisor

                                        By:    /s/ Andrew Wilder
                                           -------------------------------------
                                        Name:      Andrew Wilder
                                        Title:     Chief Financial Officer

<PAGE>

                                        BUYER:

                                        EDJ Limited

                                        By:    /s/ Jeffrey Porter
                                           -------------------------------------
                                        Name:      Jeffrey Porter
                                        Title:     Trading Advisor

                                        BUYER:

                                        Arnold S. Gumowitz

                                        By:   /s/ Arnold S. Gumowitz
                                           -------------------------------------
                                        Name:     Arnold S. Gumowitz

                                        BUYER:

                                        MAPLE BANK GMBH-MILAN BRANCH

                                        By:    /s/ Myles Marmion
                                           -------------------------------------
                                        Name:      M.C. Marmion
                                        Title:     Authorized Signatory

                                        BUYER:

                                        PORTER PARTNERS, L.P.

                                        By:    /s/ Jeffrey Porter
                                           -------------------------------------
                                        Name:      Jeffrey Porter
                                        Title:     General Partner

                                        BUYER:

                                        S.A.C. CAPITAL ASSOCIATES, LLC
                                        BY:  S.A.C. Capital Advisors, LLC

                                        By:    /s/ Peter Nussbaum
                                           -------------------------------------
                                        Name:      Peter Nussbaum
                                        Title:     General Counsel

<PAGE>

                                        BUYER:

                                        THOMAS SERVICE

                                        By:   /s/ Thomas Service
                                           -------------------------------------
                                        Name:     Thomas Service

                                        BUYER:

                                        STEELHEAD INVESTMENTS, LTD.

                                        By:    /s/ Kevin O'Neal
                                           -------------------------------------
                                        Name:      Kevin O'Neal
                                        Title:     Authorized Signatory

                                        BUYER:

                                        VERTICAL INTERNATIONAL LTD.

                                        By:    /s/ Kenneth Henderson
                                           -------------------------------------
                                        Name:      Kenneth Henderson
                                        Title:     Authorized Signatory

                                        BUYER:

                                        ZLP MASTER FUND, LTD

                                        By:    /s/ Stuart J. Zimmer
                                           -------------------------------------
                                        Name:      Stuart J. Zimmer
                                        Title:     Director

<PAGE>

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[TRANSFER AGENT]

Attn:
     ---------------------------

        Re: EntreMed, Inc.

Ladies and Gentlemen:

        We are counsel to EntreMed, Inc., a Delaware corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "PURCHASE AGREEMENT") entered into by and
among the Company and the buyers named therein (collectively, the "HOLDERS")
pursuant to which the Company issued to the Holders shares of its common stock,
par value $.01 per share (the "COMMON SHARES"), and Warrants exercisable into
its Common Stock (the "WARRANT SHARES"). Pursuant to the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Holders
(the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the Common Shares and Warrant Shares,
under the Securities Act of 1933, as amended (the "1933 ACT"). In connection
with the Company's obligations under the Registration Rights Agreement, on
_________, 2001, the Company filed a Registration Statement on Form S-3 (File
No. _____________) (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.

        In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us [by telephone/in writing] that the SEC has entered an
order declaring the Registration Statement effective under the 1933 Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.

                                        Very truly yours,
                                        [ISSUER'S COUNSEL]

                                        By:
                                           ------------------------------

cc:     [Legal Counsel]

<PAGE>

                                                                       EXHIBIT B

                              PLAN OF DISTRIBUTION

        The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:

        ordinary brokerage transactions and transactions in which the
        broker-dealer solicits purchasers;

        block trades in which the broker-dealer will attempt to sell the shares
        as agent but may position and resell a portion of the block as principal
        to facilitate the transaction;

        purchases by a broker-dealer as principal and resale by the
        broker-dealer for its account;

        an exchange distribution in accordance with the rules of the applicable
        exchange;

        privately negotiated transactions;

        short sales;

        broker-dealers may agree with the Selling Stockholders to sell a
        specified number of such shares at a stipulated price per share;

        a combination of any such methods of sale; and

        any other method permitted pursuant to applicable law.

        The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

        The Selling Stockholders may also engage in short sales against the box,
puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.

        Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

                                      B-1

<PAGE>

        The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.

        The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

        The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the Shares or Warrants or shares of Common
Stock issuable upon exercise of Warrants owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act amending the list of Selling
Stockholders to include the pledgee, transferee or other successors in interest
as Selling Stockholders under this prospectus.

        The Selling Stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus.

                                      B-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]