Document:

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                                                                    EXHIBIT 10.5

               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

       Amended and Restated Registration Rights Agreement dated as of May 30,
2001 among CAI CAPITAL PARTNERS AND COMPANY II, L.P., a limited partnership
formed under the laws of the Province of Ontario (the "CANADIAN PARTNERSHIP"),
CAI PARTNERS AND COMPANY II, L.P., a limited partnership formed under the laws
of the Province of Ontario (the "U.S. PARTNERSHIP"), CAI CAPITAL PARTNERS AND
COMPANY II-C, L.P., a limited partnership formed under the laws of the Province
of Ontario ("II-C") and CAI MANAGERS & CO., L.P., a limited partnership formed
under the laws of the State of Delaware and, collectively with the Canadian
Partnership, the U.S. Partnership and II-C , the "CAI ENTITIES" and each a "CAI
ENTITY"), 597858 B.C. LTD., a corporation incorporated under the laws of the
Province of British Columbia ("B.C."), as agent, ONTARIO TEACHERS' PENSION PLAN
BOARD, an entity existing under the laws of the Province of Ontario (the
"INSTITUTIONAL INVESTOR"), MDA HOLDINGS CORPORATION, ("HOLDCO"), a wholly-owned
subsidiary of ORBITAL SCIENCES CORPORATION, a corporation incorporated under the
laws of the State of Delaware ("ORBITAL") and MACDONALD, DETTWILER AND
ASSOCIATES LTD., a corporation amalgamated under the laws of Canada (the
"CORPORATION").

RECITALS:

(a)    The parties hold or may hold common shares (the "COMMON SHARES") in the
       capital of the Corporation.

(b)    The CAI Entities, B.C., Orbital and the Corporation entered into a
       subscription agreement dated as of December 22, 1999, as amended June 29,
       2000 pursuant to which the CAI Entities and B.C. originally acquired an
       equity interest in the Corporation (the "SUBSCRIPTION AGREEMENT").

(c)    The Corporation granted certain registration rights to the CAI Entities,
       B.C. and Orbital which were set forth in Schedule "F" attached to the
       Subscription Agreement (the "REGISTRATION RIGHTS AGREEMENT").

(d)    Following the closing of the Subscription Agreement, Orbital transferred
       all of the Common Shares held by it in the Corporation to its
       wholly-owned subsidiary, Holdco.

(e)    The CAI Entities, B.C. and the Institutional Investor entered into a
       letter agreement dated April 12, 2001 (the "PURCHASE AGREEMENT") with
       Holdco to purchase 12,350,000 of 18,000,000 Common Shares of the
       Corporation held by Holdco (the "PURCHASED SHARES").

(f)    The CAI Entities and B.C. were granted an option to purchase, and
       ancillary rights in respect of, the balance of the 5,650,000 Common
       Shares held by Holdco

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       pursuant to an Amended and Restated Option Agreement dated May 30, 2001
       among Holdco, Orbital, the CAI Entities and B.C.

(g)    The CAI Entities, B.C., the Institutional Investor, Holdco and the
       Corporation have entered into this Agreement for the purpose of setting
       forth the registration rights applicable to certain Common Shares and
       related matters.

       In consideration of the foregoing and the mutual agreements contained
herein (the receipt and adequacy of which are acknowledged), the parties agree
as follows:

                                   ARTICLE 1
                  DEFINITIONS AND PRINCIPLES OF INTERPRETATION

SECTION 1.1   DEFINITIONS

       The terms defined in this Article 1 shall for all purposes of this
Agreement have the meanings herein specified unless the subject matter or
context otherwise requires:

       "ACT" means the Canada Business Corporations Act, as amended;

       "ADDITIONAL PIGGYBACK RIGHTS" has the meaning specified in Section
       2.1(f)(ii);

       "AFFILIATE" shall mean with respect to any Person, any other Person
       directly or indirectly controlling or controlled by or under direct or
       indirect common control with such Person;

       "AMENDED AND RESTATED OPTION AGREEMENT" means the amended and restated
       option agreement dated as of May 30, 2001 among the CAI Entities, B.C.,
       Holdco and Orbital in which Holdco granted an option to purchase the
       Remaining Shares and certain ancillary rights to the CAI Entities and
       B.C.;

       "B.C." means 597858 B.C. Ltd., a corporation incorporated under the laws
       of the Province of British Columbia;

       "BOARD" shall mean the board of directors of the Corporation;

       "CAI ENTITIES" means CAI Capital Partners and Company II, L. P., CAI
       Partners and Company II, L. P., CAI Capital Partners and Company II-C,
       L.P. and CAI Managers & Co., L.P.;

       "CANADIAN PROSPECTUS" shall mean a prospectus prepared in accordance with
       applicable Canadian Securities Laws for the purposes of qualifying
       securities for distribution or distribution to the public, as the case
       may be, in any province or territory of Canada;

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       "CANADIAN SECURITIES LAWS" shall mean the statutes and regulations
       applicable to the trading of securities in any province or territory of
       Canada including applicable rules, policy statements and blanket rulings
       and orders promulgated by Canadian securities regulatory authorities;

       "CLOSING DATE" shall mean May 30, 2001, the date the purchase and sale of
       the Common Shares of the Corporation pursuant to the Purchase Agreement
       is completed;

       "COMMISSION" shall mean the United States Securities and Exchange
       Commission;

       "CONTROLLED" means controlled within the meaning of the Act, and
       "Control" has a similar meaning.

       "CORPORATION" means MacDonald, Dettwiler & Associates Ltd.;

       "CORPORATION SECURITIES" has the meaning specified in Section 2.3(b)(i);

       "DEMAND EXERCISE NOTICE" has the meaning specified in Section 2.1(a);

       "DEMAND REGISTRATION" has the meaning specified in Section 2.1(a);

       "DEMAND REGISTRATION REQUESTS" has the meaning specified in Section
       2.1(a);

       "DOLLARS" shall mean, unless otherwise indicated, Canadian dollars, and
       the symbol "C$" shall refer to Canadian dollars;

       "EXCHANGE ACT" shall mean the United States Securities Exchange Act of
       1934, as amended, and the rules and regulations of the Commission
       thereunder, all as the same shall be in effect at the relevant time;

       "EXERCISING PERSON" has the meaning specified in Section 2.9(a);

       "HOLDCO" means MDA Holdings Corporation, a wholly-owned subsidiary of
       Orbital;

       "HOLDER" or "HOLDERS" shall mean (subject to Section 3.11) (i) each
       Investor while it holds Registrable Securities and (ii) each Person or
       Persons holding Registrable Securities as a result of a transfer or
       assignment made pursuant to Sections 2.2(1), (2) or (6), Sections 2.3 of
       the Resale Restrictions Agreement (as such Sections are in effect on the
       date hereof) or Persons to whom the CAI Entities or B.C., as the case may
       be, Transfer their rights under the Institutional Option Agreement or
       their Remaining Shares pursuant to Sections 3.13(1) and (2) of the Resale
       Restrictions Agreement (as such Sections are in effect on the date
       hereof);

       "INITIATING HOLDERS" has the meaning specified in Section 2.1(a);

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       "INSTITUTIONAL INVESTOR" means the Ontario Teachers' Pension Plan Board;

       "INSTITUTIONAL OPTION AGREEMENT" means the option agreement dated as of
       May 30, 2001 between, among others, the CAI Entities, B.C. and the
       Institutional Investor.

       "INVESTOR SECURITIES" has the meaning specified in Section 2.3(b)(ii);

       "INVESTORS" means CAI Capital Partners and Company II, L.P., CAI Partners
       and Company II, L.P., CAI Capital Partners and Company II-C, L.P., CAI
       Managers & Co., L.P., B.C. and the Institutional Investor;

       "ISSUE PRICE" means $7.50 per Common Share for Common Shares issued
       pursuant to the Subscription Agreement.

       "MAJOR HOLDER" has the meaning specified in Section 2.4(a);

       "ORBITAL" means Orbital Sciences Corporation, a corporation incorporated
       under the laws of the State of Delaware;

       "PERSON" means an individual, corporation, limited liability company,
       body corporate, partnership, limited partnership, joint venture,
       association, trust or unincorporated organization, any trustee, executor,
       administrator or other legal representative, or any government or
       governmental entity;

       "REGISTER" "REGISTERED" and "REGISTRATION" shall refer to a registration
       effected by preparing and filing a registration statement (including the
       prospectus contained therein) in compliance with the U.S. Securities Act
       and the declaration or ordering of the effectiveness of such registration
       statement by the Commission. In addition, unless inconsistent with the
       context:

              (i)    the term "registration" and any references to the act of
                     registering includes the qualification under Canadian
                     Securities Laws of a Canadian Prospectus for which a final
                     receipt has been issued in respect of a distribution or
                     distribution to the public, as the case may be, of Common
                     Shares;

              (ii)   the term "registered" as applied to any Common Shares
                     includes a distribution or distribution to the public, as
                     the case may be, of any Common Shares so qualified;

              (iii)  the term "registration statement" includes a Canadian
                     Prospectus;

              (iv)   any references to a registration statement having become
                     effective, or similar references, shall include a Canadian
                     Prospectus for

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                     which a final receipt has been obtained from the relevant
                     Canadian securities regulatory authorities; and

              (v)    the provisions of this Agreement shall be applied, mutatis
                     mutandis, to any proposed distribution of Common Shares
                     hereunder in any province or territory of Canada or to
                     which the prospectus requirements under any of the Canadian
                     Securities Laws shall otherwise apply;

       "REGISTRABLE SECURITIES" shall mean

              (i)    any Common Shares (which for greater certainty includes the
                     Purchased Shares) held as of the date hereof by the
                     Investors or Holdco;

              (ii)   any Remaining Shares acquired pursuant to the Amended and
                     Restated Option Agreement by the CAI Entities and B.C.;

              (iii)  any additional Common Shares acquired by the CAI Entities
                     or B.C., as the case may be, pursuant to the Institutional
                     Option Agreement;

              (iv)   any Common Shares issued or issuable, directly or
                     indirectly, upon any subdivision, combination or
                     reclassification of such Common Shares (which for greater
                     certainty includes the Purchased Shares), additional Common
                     Shares and Remaining Shares, if applicable, or share
                     dividends in respect of such Common Shares, additional
                     Common Shares and the Remaining Shares, if applicable,
                     referenced in clauses (i), (ii) and (iii) above.

       As to any particular Registrable Securities, such securities shall cease
       to be Registrable Securities when (i) a registration statement with
       respect to the sale of such securities shall have been declared effective
       under the applicable Securities Laws and such securities shall have been
       disposed of in accordance with such registration statement; (ii) such
       securities shall have been resold by the Holder thereof pursuant to Rule
       144 (or any successor provision) under the U.S. Securities Act and in
       compliance with the requirements of Rule 144 and are not subject to any
       resale restrictions in the hands of any subsequent holder or holders
       under any Canadian Securities Laws; or (iii) such securities shall have
       been otherwise transferred and new certificates not subject to resale
       restrictions in the hands of any subsequent holder or holders under the
       Securities Laws and not bearing any legend restricting further transfer
       shall have been delivered by the Corporation, and no other applicable and
       legally binding restriction on transfer under Securities Laws shall
       exist;

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       "REMAINING SHARES" means the balance of 5,650,000 Common Shares of the
       Corporation held by Holdco following the Closing Date which Common Shares
       are optioned to (and subject to other rights in favour of) the CAI
       Entities and B.C. pursuant to the Amended and Restated Option Agreement;

       "RESALE RESTRICTIONS AGREEMENT" means the resale restrictions agreement
       dated as of May 30, 2001 among the CAI Entities, B.C. and the
       Institutional Investor;

       "SECTION 2.1 SALE NUMBER" has the meaning specified in Section 2.3(a);

       "SECTION 2.2 SALE NUMBER" has the meaning specified in Section 2.3(b);

       "SECURITIES" has the meaning specified in Section 2.3(b)(i);

       "SECURITIES LAWS" shall mean, collectively, the U.S. Securities Act, the
       U.S. Exchange Act, as amended, and the Canadian Securities Laws;

       "U.S. EXCHANGE ACT" shall mean the U.S. Securities Exchange Act of 1934,
       as amended, and the rules and regulations of the Commission thereunder,
       all as the same shall be in effect at the relevant time;

       "U.S. SECURITIES ACT" shall mean the United States Securities Act of
       1933, as amended, and the rules and regulations of the Commission
       thereunder, all as the same shall be in effect at the relevant time; and

       "VALID BUSINESS REASON" has the meaning specified in Section 2.1(e)(iii).

                                   ARTICLE 2
                              REGISTRATIONS RIGHTS

SECTION 2.1   DEMAND REGISTRATIONS

       (a)    Subject to Section 2.1(e), Section 2.1(f), Section 2.3 and Section
              2.7 below, at any time and from time to time after the Closing
              Date, one or more Investors or Holdco shall have the right to
              require the Corporation to file a registration statement in any
              Canadian jurisdiction and/or in the United States (if the
              Corporation has listed its securities on an exchange in the United
              States or on the NASDAQ Stock Market or has otherwise become
              subject to the reporting requirements of the U.S. Securities Act
              or the U.S. Exchange Act) covering all or part of their respective
              Registrable Securities, by delivering a written request to the
              Corporation specifying the number of Registrable Securities to be
              included in such registration by such Investor(s) or Holdco, as
              applicable, and the intended method of distribution thereof. All
              requests pursuant to this Section 2.1 are referred to as "DEMAND
              REGISTRATION REQUESTS", and the registrations requested are
              referred to as "DEMAND REGISTRATIONS". With respect to any Demand

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              Registration, the Person (being an Investor or Holdco) that
              together with its Affiliates holds a majority of the Registrable
              Securities in respect of which such demand for registration is
              being made shall be referred to as the "INITIATING HOLDERS". As
              promptly as practicable, but no later than ten days after receipt
              of a Demand Registration Request, the Corporation shall give
              written notice (the "DEMAND EXERCISE NOTICE") of such Demand
              Registration Request to all Holders and Holdco.

       (b)    The Corporation, subject to Section 2.3 and Section 2.7, shall
              include in a Demand Registration the Registrable Securities of any
              Holder or Holdco who shall have made a written request to the
              Corporation for inclusion in such registration (which request
              shall specify the maximum number of Registrable Securities
              intended to be disposed of by such Holder or Holdco, as
              applicable) within 30 days after the date of the Demand Exercise
              Notice.

       (c)    The Corporation shall, as soon as practicable following a Demand
              Registration Request, determine the intended method of
              distribution, including the jurisdiction(s) for distribution, and
              use its reasonable best efforts to effect registration of the
              Registrable Securities under the Securities Laws of the relevant
              jurisdiction(s) for distribution in accordance with such intended
              method of distribution.

       (d)    Any Holder or Holdco shall have the right to withdraw its request
              for inclusion of its Registrable Securities in any registration
              statement pursuant to this Section 2.1 by giving written notice to
              the Corporation of its request to withdraw; provided, however,
              that:

              (i)    such request must be made in writing prior to the execution
                     of the underwriting agreement (or such other similar
                     agreement) with respect to such registration; and

              (ii)   such withdrawal shall be irrevocable and, after making such
                     withdrawal, a Holder or Holdco, as applicable, shall no
                     longer have any right to include Registrable Securities in
                     the registration as to which such withdrawal was made;

              and if such withdrawal is made by an Investor or Holdco, as the
              case may be, that initiated the Demand Registration Request in
              accordance with this Section 2.1(d), then such withdrawal shall
              count as a Demand Registration for such Investor or Holdco, as the
              case may be, pursuant to Section 2.1(e)(iv) of this Agreement.

       (e)    The Demand Registration rights granted under Section 2.1 are
              subject to the following limitations:

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              (i)    the Corporation shall not be required to cause a
                     registration pursuant to Section 2.1 if the Demand
                     Registration Request is in respect of less than one million
                     five hundred thousand (1,500,000) Registrable Securities
                     (after giving effect to any withdrawal pursuant to Section
                     2.1(d) hereof);

              (ii)   the Corporation shall not be required to cause a
                     registration pursuant to Section 2.1 to be declared
                     effective within a period of (A) 180 days after the
                     effective date of any registration statement of the
                     Corporation filed pursuant to a Demand Registration Request
                     or (B) 90 days after the effective date of any other
                     registration statement of the Corporation contemplated by
                     Section 2.2; provided, however, that the provisions of this
                     Section 2.1(e)(ii) shall only apply to the first
                     registration statement in any twelve-month period;

              (iii)  if the Board, in its good faith judgement, determines that
                     any registration of Registrable Securities should not be
                     made or continued because it would materially interfere
                     with any material financing, acquisition, corporate
                     reorganization or merger or other transaction involving the
                     Corporation, including Radarsat-3 and National Land
                     Information Services (a "VALID BUSINESS REASON"),

                     (A)    the Corporation may postpone filing a registration
                            statement relating to a Demand Registration Request
                            until such Valid Business Reason no longer exists,
                            but in no event for more than 90 days during any
                            12-month period;

                     (B)    in case a registration statement has been filed
                            relating to a Demand Registration Request, the
                            Corporation may cause such registration statement to
                            be withdrawn and its effectiveness terminated or the
                            Board may postpone amending or supplementing such
                            registration statement until the Valid Business
                            Reason no longer exists, but in no event for more
                            than 90 days during any 12-month period (such period
                            of postponement or withdrawal under subclauses (A)
                            or (B) of this paragraph (d), the "POSTPONEMENT
                            PERIOD"); and

                     (C)    the Corporation shall give written notice of its
                            determination to postpone or withdraw a registration
                            statement and of the fact that the Valid Business
                            Reason for such postponement or withdrawal no longer
                            exists, in each case, promptly after the occurrence
                            thereof; and

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              (iv)   the Corporation shall not be required to effect a
                     registration pursuant to this Section 2.1 with respect to
                     more than two Demand Registration Requests from each of (A)
                     the CAI Entities, collectively, (B) B.C., (C) the
                     Institutional Investor, and (D) Holdco; however, in the
                     event that there has not been a bona fide underwritten
                     secondary and/or treasury public offering within 12 months
                     following the Closing Date, then the CAI Entities, B.C. and
                     the Institutional Investor only, shall have in the
                     aggregate, one additional Demand Registration Right which
                     shall be subject to the limits set forth in Section 2.1(e),
                     Section 2.1(f), Section 2.3 and Section 2.7 herein
                     exercisable by any one of the Investors upon 7 days' notice
                     to the other Investors prior to the exercise of such Demand
                     Registration.

                     If the Corporation shall give any notice of postponement or
                     withdrawal of any registration statement, the Corporation
                     shall not, during the Postponement Period register any
                     Common Shares, other than pursuant to a registration
                     statement on Form S-4 or S-8 (or an equivalent registration
                     form then in effect) under the U. S. Securities Act or
                     other than pursuant to a Canadian Prospectus filed (a) in
                     connection with a take-over bid, merger, amalgamation or
                     arrangement transaction including the Corporation or any of
                     its Affiliates, or (b) in order to qualify Common Shares
                     for distribution to employees of the Corporation and its
                     subsidiaries, in each case under Canadian Securities Laws,
                     if required. Each Holder and Holdco agrees that, upon
                     receipt of any notice from the Corporation that the
                     Corporation has determined to withdraw any registration
                     statement pursuant to clause (iii) above, such party will
                     discontinue its disposition of Registrable Securities
                     pursuant to such registration statement and, if so directed
                     by the Corporation, will deliver to the Corporation all
                     copies, other than permanent file copies, then in such
                     party's possession, of the registration statement covering
                     such Registrable Securities that was in effect at the time
                     of receipt of such notice. If the Corporation shall have
                     withdrawn or prematurely terminated a registration
                     statement filed under Section 2.1 (whether pursuant to this
                     paragraph (d) or as a result of any stop order, injunction
                     or other order or requirement of the Commission, any
                     Canadian securities regulatory authority or any other
                     governmental agency or court), the Corporation shall not be
                     considered to have effected an effective registration for
                     the purposes of this Agreement until the Corporation shall
                     have filed a new registration statement covering the
                     Registrable Securities covered by the withdrawn
                     registration statement and such

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                     registration statement shall have been declared effective
                     and shall not have been withdrawn.

       (f)    The Corporation, subject to Section 2.3 and Section 2.7, may elect
              to include in any registration statement and offering made
              pursuant to Section 2.1,

              (i)    authorized but unissued Common Shares issued from the
                     Corporation's treasury; and

              (ii)   any other Common Shares which are requested to be included
                     in such registration pursuant to the exercise of piggyback
                     registration rights granted by the Corporation after the
                     date hereof in accordance with the terms of this Agreement
                     ("ADDITIONAL PIGGYBACK RIGHTS");

              provided, however, that such inclusion shall be permitted only the
              extent that it is pursuant to, and subject to the terms of the
              underwriting agreement or arrangements entered into by the
              Initiating Holders.

SECTION 2.2   PIGGYBACK REGISTRATIONS

       (a)    If at any time, the Corporation proposes or is required to
              register any of its Common Shares under the Securities Laws of
              those jurisdictions selected by the Corporation (other than
              pursuant to a registration statement on Form S-4 or S-8 (or an
              equivalent registration form then in effect) under the U. S.
              Securities Act or other than pursuant to a Canadian Prospectus
              filed (a) in connection with a take-over bid, merger, amalgamation
              or arrangement transaction including the Corporation or any of its
              Affiliates, or (b) in order to qualify Common Shares for
              distribution to employees of the Corporation and its subsidiaries,
              in each case under Canadian Securities Laws, if required, or other
              than in connection with a Demand Registration under Section 2.1 of
              this Agreement), whether or not for its own account, the
              Corporation shall give prompt written notice of its intention to
              do so to each Holder of record and to Holdco. Upon the written
              request of any Holder or Holdco, made within 20 days following the
              date of any such written notice (which request shall specify the
              maximum number of Registrable Securities intended to be disposed
              of by each such Holder or Holdco), the Corporation shall, subject
              to Section 2.2(b), Section 2.3 and Section 2.7 hereof, use its
              reasonable best efforts to cause all the Registrable Securities of
              the Holders or Holdco, as applicable, which have so requested the
              registration thereof, to be registered under such Securities Laws
              (with the securities which the Corporation at the time proposes to
              register) to permit the sale or other disposition by the Holders
              and Holdco, as applicable, of the Registrable Securities to be so
              registered. No registration effected under this

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              Section 2.2(a) shall relieve the Corporation of its obligations to
              effect Demand Registrations under Section 2.1. Each Holder and
              Holdco shall be entitled to have its Common Shares included in an
              unlimited number of registrations pursuant to this Section 2.2(a).

       (b)    If at any time after giving written notice of its intention to
              register any Common Shares and prior to the effective date of the
              registration statement filed in connection with such registration,
              the Corporation shall determine for any reason not to register or
              to delay completion of registration of such Common Shares, the
              Corporation may, at its election, give written notice of such
              determination to all Holders and Holdco, and

              (i)    in the case of a determination not to complete a
                     registration, shall be relieved of its obligation to
                     register any Registrable Securities in connection with such
                     abandoned registration, without prejudice, however, to the
                     rights of Holders and Holdco under Section 2.1; and

              (ii)   in the case of a determination to delay such registration
                     of its Common Shares, shall be permitted to delay the
                     completion of registration of such Registrable Securities
                     for the same period as the delay in registering such other
                     Common Shares.

       (c)    Any Holder or Holdco shall have the right to withdraw its request
              for inclusion of its Registrable Securities in any registration
              statement pursuant to this Section 2.2 by giving written notice to
              the Corporation of its request to withdraw; provided, however,
              that:

              (i)    such request must be made in writing prior to the execution
                     of the underwriting agreement (or such other similar
                     agreement) with respect to such registration; and

              (ii)   such withdrawal shall be irrevocable and, after making such
                     withdrawal, the Holder(s) or Holdco, as applicable, shall
                     no longer have any right to include Registrable Securities
                     in the registration as to which such withdrawal was made.

SECTION 2.3   ALLOCATION OF SECURITIES INCLUDED IN REGISTRATION STATEMENT

       (a)    If any requested registration pursuant to Section 2.1 involves an
              underwritten offering and if the lead managing underwriter shall
              advise the Corporation that, in its view, the number of Common
              Shares requested to be included in such registration (including
              those Common Shares requested by the Corporation to be included in
              such registration) exceeds the largest number (the "SECTION 2.1
              SALE NUMBER") that can be sold in an orderly manner in such
              offering within a price range acceptable

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              to the Initiating Holders, the Corporation shall include in such
              registration:

              (i)    all Registrable Securities requested to be registered by
                     all Investors pursuant to Section 2.1; provided, however,
                     that, if the number of Registrable Securities requested to
                     be registered by all Investors pursuant to Section 2.1
                     exceeds the Section 2.1 Sale Number, then the number of
                     Registrable Securities requested by all Investors to be
                     registered pursuant to Section 2.1 which shall be included
                     in such registration shall be allocated on a pro rata
                     basis, based on the number of Registrable Securities owned
                     by each Investor requesting registration pursuant to
                     Section 2.1 in relation to the number of Registrable
                     Securities then owned by all Investors requesting
                     registration pursuant to Section 2.1;

              (ii)   to the extent that the number of Registrable Securities of
                     the Investors requested to be registered pursuant to
                     Section 2.1 is less than the Section 2.1 Sale Number, all
                     Registrable Securities requested to be registered by all
                     Holders (that are not Investors) pursuant to Section 2.1;
                     provided, however, that if the number of Registrable
                     Securities requested to be registered by all Holders (that
                     are not Investors) pursuant to Section 2.1 exceeds the
                     Section 2.1 Sale Number less the number of Registrable
                     Securities of the Investors requested to be registered,
                     then the number of Registrable Securities requested to be
                     registered by all Holders (that are not Investors) which
                     shall be included in such registration shall be allocated
                     on a pro rata basis, based on the number of Registrable
                     Securities owned by each Holder (that is not an Investor)
                     requesting registration pursuant to Section 2.1 in relation
                     to the number of Registrable Securities then owned by all
                     Holders (that are not Investors) requesting registration
                     pursuant to Section 2.1; and

              (iii)  to the extent that the number of Registrable Securities of
                     the Holders (including the Investors) requested to be
                     registered pursuant to Section 2.1 is less than the Section
                     2.1 Sale Number, all (or such lesser number sufficient to
                     aggregate the Section 2.1 Sale Number when added to the
                     number of Registrable Securities of the Holders (including
                     the Investors) requested to be registered pursuant to
                     Section 2.1) of the Registrable Securities requested to be
                     registered by Holdco pursuant to Section 2.1; and

              (iv)   to the extent that the number of Registrable Securities of
                     the Holders (including the Investors) and Holdco requested
                     to be registered pursuant to Section 2.1 is less than the
                     Section 2.1 Sale

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                     Number, all (or such lesser number sufficient to aggregate
                     the Section 2.1 Sale Number when added to the number of
                     Registrable Securities of the Holders (including the
                     Investors) and Holdco requested to be registered pursuant
                     to Section 2.1) of the Common Shares that the Corporation
                     proposes to register; and

              (v)    to the extent that the number of Registrable Securities
                     and/or Common Shares, as the case may be, of the Holders
                     (including the Investors), Holdco and the Corporation
                     requested to be registered pursuant to Section 2.1 is less
                     than the Section 2.1 Sale Number, all (or such lesser
                     number sufficient to aggregate the Section 2.1 Sale Number
                     when added to the number of Registrable Securities and/or
                     Common Shares, as the case may be, of the Holders
                     (including the Investors), Holdco and the Corporation
                     requested to be registered pursuant to Section 2.1) of the
                     Common Shares that a holder or holders of Additional
                     Piggyback Rights proposes to register.

       If, as a result of the proration provisions of this Section 2.3(a), any
       Holder or Holdco shall not be entitled to include all Registrable
       Securities in a registration that such Holder or Holdco, as applicable,
       has requested be registered, such Holder or Holdco, as applicable, may
       elect to withdraw its request to include Registrable Securities in such
       registration or may reduce the number requested to be included; provided,
       however, that: (A) such request must be made in writing prior to the
       execution of the underwriting agreement with respect to such
       registration, and (B) such withdrawal shall be irrevocable and, after
       making such withdrawal, such Holder or Holdco, as applicable, shall no
       longer have any right to include Registrable Securities in the
       registration as to which such withdrawal was made.

       (b)    If any registration pursuant to Section 2.2 involves an
              underwritten offering and the lead managing underwriter shall
              advise the Corporation that, in its view, the number of Common
              Shares requested to be included in such registration exceeds the
              number (the "SECTION 2.2 SALE NUMBER") that can be sold in an
              orderly manner in such registration within a price range
              acceptable to the Corporation, the Corporation shall include in
              such registration:

              (i)    all Common Shares that the Corporation proposes to register
                     for its own account ("CORPORATION SECURITIES");

              (ii)   to the extent that the number of Corporation Securities is
                     less than the Section 2.2 Sale Number, all Registrable
                     Securities requested to be registered by all Investors
                     pursuant to Section 2.2 ("INVESTOR SECURITIES"); provided,
                     however, that, if the number of such

<PAGE>   14
                                     - 14 -

                     Registrable Securities exceeds the Section 2.2 Sale Number
                     less the number of Corporation Securities, then the number
                     of Registrable Securities requested to be registered by all
                     Investors which shall be included in such registration
                     shall be allocated on a pro rata basis, based on the number
                     of Registrable Securities owned by each Investor requesting
                     registration pursuant to Section 2.2 in relation to the
                     number of Registrable Securities then owned by all
                     Investors requesting registration pursuant to Section 2.2;
                     and

              (iii)  to the extent the number of Corporation Securities and
                     Investor Securities is less than the Section 2.2 Sale
                     Number, all Registrable Securities requested to be
                     registered by all other Holders (that are not Investors)
                     pursuant to Section 2.2; provided however, if the number of
                     such Registrable Securities exceeds the Section 2.2 Sale
                     Number less the number of (A) Corporation Securities and
                     (B) Investor Securities, then the number of Registrable
                     Securities requested to be registered by all Holders (that
                     are not Investors) which shall be included in such
                     registration shall be allocated on a pro rata basis, based
                     on the number of Registrable Securities owned by each
                     Holder (that is not an Investor) requesting registration
                     pursuant to Section 2.2 in relation to the number of
                     Registrable Securities then owned by all Holders (that are
                     not Investors) requesting registration pursuant to Section
                     2.2; and

              (iv)   to the extent the number of Corporation Securities and
                     Registrable Securities requested to be registered by all
                     Holders pursuant to Section 2.2 is less than the Section
                     2.2 Sale Number, all (or such lesser number sufficient to
                     aggregate the Section 2.2 Sale Number when added to the
                     Corporation Securities and the number of Registrable
                     Securities of all Holders (including the Investors)
                     requested to be registered pursuant to Section 2.2) of the
                     Registrable Securities requested to be registered by Holdco
                     pursuant to Section 2.2; and

              (v)    to the extent that the number of Corporation Securities and
                     Registrable Securities requested to be registered by all
                     Holders and Holdco pursuant to Section 2.2 is less than the
                     Section 2.2 Sale Number, all (or such lesser number
                     sufficient to aggregate the Section 2.2 Sale Number when
                     added to the Corporation Securities and the number of
                     Registrable Securities of all Holders (including the
                     Investors) and Holdco requested to be registered pursuant
                     to Section 2.2) of the Common Shares requested to be
                     registered by holders of Additional Piggyback Rights.

<PAGE>   15
                                     - 15 -

SECTION 2.4   REGISTRATION PROCEDURES

       If and whenever the Corporation is required by the provisions of this
Agreement to use its reasonable best efforts to effect or cause the registration
of any Registrable Securities under the applicable Securities Laws determined in
the manner contemplated by this Agreement, the Corporation shall, as soon as
reasonably possible:

       (a)    prepare and file with the Commission or Canadian securities
              regulatory authorities a registration statement on an appropriate
              registration form of the Commission or Canadian securities
              regulatory authorities for the disposition of such Registrable
              Securities in accordance with the intended method of disposition
              thereof, which form shall, in the case of a shelf registration, be
              available for the sale of the Registrable Securities by the
              Holders or Holdco and such registration statement shall comply in
              all material respects with the requirements of the applicable form
              and include all financial statements required by the Commission or
              Canadian securities regulatory authorities to be filed therewith,
              and the Corporation shall use its reasonable best efforts to cause
              such registration statement to become and, subject to 2.4(b),
              remain effective (provided, however, that before filing a
              registration statement or any amendments or supplements thereto,
              or comparable statements under securities or "blue sky" laws of
              any United States jurisdiction, the Corporation will furnish to
              counsel (in the case of a registration pursuant to Section 2.1,
              selected by the Initiating Holders and, in the case of a
              registration pursuant to Section 2.2, selected by the Person
              (being a Holder or Holdco), that, together with its Affiliates,
              includes the largest number of Registrable Securities in such
              registration (the "MAJOR HOLDER")) and the underwriters, if any,
              copies of all such documents proposed to be filed (including all
              exhibits thereto), which documents will be subject to the
              reasonable review and reasonable comment of such counsel and the
              underwriter, if any, and the Corporation shall not file any
              registration statement or amendment thereto or any supplement
              thereto to which the Initiating Holders, in the case of a Demand
              Registration Request, the Major Holder in the case of a
              registration pursuant to Section 2.2, or the underwriters, if any,
              shall reasonably object in writing);

       (b)    prepare and file with the Commission or Canadian securities
              regulatory authorities such amendments and supplements to such
              registration statement (including the prospectus contained
              therein) as may be necessary to keep such registration statement
              effective for such period (which shall not be required to exceed
              120 days in the case of a registration pursuant to Section 2.1 or
              90 days in the case of a registration pursuant to Section 2.2) as
              any seller of Registrable Securities pursuant to such registration
              statement may reasonably request and to comply with the provisions
              of the Securities Laws with respect to the sale or other

<PAGE>   16
                                     - 16 -

              disposition of all Registrable Securities covered by such
              registration statement in accordance with the intended methods of
              disposition by the seller or sellers thereof set forth in such
              registration statement;

       (c)    furnish, without charge, to each seller of such Registrable
              Securities and each underwriter, if any, of the securities covered
              by such registration statement such number of copies of such
              registration statement, each amendment and supplement thereto (in
              each case including all exhibits and including any preliminary
              prospectus) included in or constituting such registration
              statement in conformity with the requirements of the applicable
              Securities Laws, and other documents, as such seller and the lead
              managing underwriter may reasonably request in order to facilitate
              the public sale or other disposition of the Registrable Securities
              owned by such seller (the Corporation hereby consenting to the use
              in accordance with all applicable laws of each such registration
              statement (or amendment or post-effective amendment thereto) by
              each such seller of Registrable Securities and the underwriters,
              if any, in connection with the offering and sale of the
              Registrable Securities covered by such registration statement);

       (d)    use its reasonable best efforts to register or qualify the
              Registrable Securities covered by such registration statement
              under such other securities or "blue sky" laws of such
              jurisdictions as any sellers of Registrable Securities or any lead
              managing underwriter, if any, shall reasonably request, and do any
              and all other acts and things which may be reasonably necessary or
              advisable to enable such sellers or the underwriters, if any, to
              consummate the disposition of the Registrable Securities in such
              jurisdictions, except that in no event shall the Corporation be
              required to qualify to do business as a foreign corporation in any
              jurisdiction where it would not, but for the requirements of this
              paragraph (d), be required to be so qualified, to subject itself
              to taxation in any such jurisdiction, to consent to general
              service of process in any such jurisdiction or to qualify the
              Registrable Securities under U.S. Securities Law unless the Common
              Shares are listed and trading on a stock exchange in the United
              States;

       (e)    promptly notify each seller of Registrable Securities covered by
              such registration statement and each lead managing underwriter, if
              any:

              (i)    when the registration statement, any pre-effective
                     amendment, the prospectus or any prospectus supplement
                     included therein or post-effective amendment to the
                     registration statement has been filed and, with respect to
                     the registration statement or any post-effective amendment,
                     when the same has become effective;

<PAGE>   17
                                     - 17 -

              (ii)   of any request by the Commission, any United States state
                     securities authority or any Canadian securities regulatory
                     authority for amendments or supplements to the registration
                     statement or the prospectus included therein or for
                     additional information;

              (iii)  of the issuance by the Commission or any Canadian
                     securities regulatory authority of any stop order
                     suspending the effectiveness of the registration statement
                     or the initiation of any proceedings for that purpose;

              (iv)   of the receipt by the Corporation of any notification with
                     respect to the suspension of the qualification of any
                     Registrable Securities for sale under the securities or
                     "blue sky" laws of any jurisdiction or the initiation of
                     any proceeding for such purpose;

              (v)    of the existence of any fact of which the Corporation
                     becomes aware which results in the registration statement,
                     the prospectus included therein, if any, or any document
                     incorporated therein by reference containing an untrue
                     statement of a material fact or omitting to state a
                     material fact required to be stated therein, or necessary
                     to make any statement therein not misleading or not
                     misleading in light of the circumstances in which it is
                     made; and

              (vi)   if at any time the representations and warranties
                     contemplated by any underwriting agreement, securities
                     sales agreement, or other similar agreement relating to the
                     offering shall cease to be true and correct in all material
                     respects;

       (f)    if the notification relates to an event described in clause (v),
              the Corporation shall promptly prepare and furnish to any seller
              of Registrable Securities and each underwriter, if any, a
              reasonable number of copies of a registration statement
              supplemented or amended so that, as thereafter delivered to the
              purchasers of such Registrable Securities, such registration
              statement shall not include an 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 not misleading or not
              misleading in light of the circumstances in which they are made;

       (g)    use its reasonable best efforts (including the payment of any
              listing fees) to obtain the listing of all Registrable Securities
              covered by such registration statement on each securities exchange
              on which securities of the same class are then listed, if the
              listing of such Registrable Securities is then permitted or is
              required under the rules of such exchange;

<PAGE>   18
                                     - 18 -

       (h)    provide and cause to be maintained a transfer agent and registrar
              for all such Registrable Securities covered by such registration
              statement not later than the effective date of such registration
              statement;

       (i)    enter into such customary agreements (including, if applicable, an
              underwriting agreement) and take such other actions as the Major
              Holder (or the Initiating Holders in the case of a Section 2.1
              Demand Registration) shall reasonably request in order to expedite
              or facilitate the disposition of such Registrable Securities;

       (j)    obtain an opinion from the Corporation's counsel and a "cold
              comfort" letter from the Corporation's independent public
              accountants in customary form and covering such matters as are
              customarily covered by such opinions and "cold comfort" letters
              delivered to underwriters in underwritten public offerings, which
              opinion and letter shall be reasonably satisfactory to the
              underwriters, if any, and to the Major Holder (or the Initiating
              Holders in the case of a Section 2.1 Demand Registration)
              participating in such offering and furnish to each Holder and/or
              Holdco (if participating in the offering) and to each underwriter,
              if any, a copy of such opinion and letter addressed to each such
              Holder and/or Holdco and underwriter, if any;

       (k)    use its reasonable best efforts to obtain the withdrawal of any
              order suspending the effectiveness of the registration statement;

       (l)    provide a CUSIP number for all Registrable Securities, not later
              than the effective date of the registration statement, if
              requested;

       (m)    make reasonably available its employees and personnel and
              otherwise provide reasonable assistance to the underwriters in the
              marketing of Registrable Securities in any underwritten offering;
              provided however, that, the Corporation shall not be required to
              have employees attend or conduct any road shows (which for greater
              certainty will not include conference calls or video conferencing)
              with respect to any Demand Registration pursuant to Section 2.1
              hereof more than one time in any 12 month period, unless the
              Corporation is otherwise selling Common Shares under such
              registration statement and is otherwise conducting road shows;
              provided however, that the Corporation shall require such
              employees and personnel to attend and conduct a road show (which
              for greater certainty, shall be in addition to the road show
              described above and conducted pursuant to Section 2.1 once during
              any 12 month period), including conference calls or video
              conferencing, in respect of an underwritten public offering
              pursuant to Section 3.12 hereof, at any time prior to July 31,
              2001;

<PAGE>   19
                                     - 19 -

       (n)    cooperate with the sellers of Registrable Securities and the
              managing lead underwriter, if any, to facilitate the timely
              preparation and delivery of certificates not bearing any
              restrictive legends representing the Registrable Securities to be
              sold, and cause such Registrable Securities to be issued in such
              denominations and registered in such names in accordance with the
              underwriting agreement prior to any sale of Registrable Securities
              to the underwriters or, if not an underwritten offering, in
              accordance with the instructions of the sellers of Registrable
              Securities at least three business days prior to any sale of
              Registrable Securities;

       (o)    if a Canadian Prospectus is filed in the Province of Quebec,
              obtain opinions of Quebec counsel and of the auditors representing
              the Corporation for the purposes of such registration relating to
              translation into the French language of the applicable
              registration statement, in form and substance as is customarily
              given to underwriters in an underwritten public offering and
              reasonably satisfactory to the underwriter, if any, and to the
              Major Holder (or the Initiating Holders, in the case of a Section
              2.1 Demand Registration) participating in such offering and
              furnish to each Holder and/or Holdco (if participating in the
              offering) and to such underwriters, if any, a copy of such
              opinion, addressed to the underwriter, if any, and to each such
              Holder and/or Holdco; and

       (p)    take all such other commercially reasonable actions as are
              necessary or advisable in order to expedite or facilitate the
              distribution of such Registrable Securities.

       The Corporation may require as a condition precedent to the Corporation's
       obligations under this Section 2.4 that each seller of Registrable
       Securities as to which any registration is being effected furnish the
       Corporation such information regarding such seller and the distribution
       of such securities as the Corporation may from time to time reasonably
       request, provided that such information shall be used only in connection
       with such registration. If any Holder or Holdco, as applicable, fails to
       provide the Corporation with such information within 15 days of the
       Corporation's request, the Corporation's obligations under Section 2.1
       and Section 2.2 hereof with respect to such Holder or Holdco, as
       applicable, or the Registrable Securities owned by such Holder or Holdco,
       as applicable, as to which the registration is being effected, shall be
       suspended until such Holder or Holdco, provides such information.

       Each Holder and Holdco agrees that upon receipt of any notice from the
       Corporation of the happening of any event of the kind described in
       Section 2.4(e)(v), each such Holder and Holdco, as applicable, will
       discontinue such Holder's or Holdco's, as applicable, disposition of
       Registrable Securities pursuant to the registration statement covering
       such Registrable Securities until such Holder's or Holdco's, as
       applicable, receipt of the copies of the registration

<PAGE>   20
                                     - 20 -

       statement contemplated by Section 2.4(f) and, if so directed by the
       Corporation, will deliver to the Corporation all copies, other than
       permanent file copies, then in such Holder's or Holdco's, as applicable,
       possession of the registration statement covering such Registrable
       Securities that was in effect at the time of receipt of such notice. In
       the event the Corporation shall give any such notice, the applicable
       period mentioned in Section 2.4(b) shall be extended by the number of
       days during such period from and including the date of the giving of such
       notice to and including the date when each seller of any Registrable
       Securities covered by such registration statement shall have received the
       copies of the registration statement contemplated by Section 2.4(f).

       If any such registration statement or comparable statement under "blue
       sky" laws refers to any Holder or Holdco by name or otherwise as the
       holder of any Registrable Securities of the Corporation, then such Holder
       or Holdco, as applicable, shall have the right to require:

              (i)    the insertion therein of language, in form and substance
                     satisfactory to such Holder or Holdco, as applicable,
                     acting reasonably, to the effect that the holding by such
                     Holder or Holdco, as applicable, of such securities is not
                     to be construed as a recommendation by such Holder or
                     Holdco, as applicable, of the investment quality of the
                     Corporation's securities covered thereby and that such
                     holding does not imply that such Holder or Holdco, as
                     applicable, will assist in meeting any future financial
                     requirements of the Corporation; or

              (ii)   in the event that such reference to such Holder or Holdco,
                     as applicable, by name or otherwise is not in the judgement
                     of the Corporation, as advised by counsel, required by
                     applicable Securities Laws or any similar federal statute
                     or any state "blue sky" or United States or Canadian
                     securities law then in force, the deletion of the reference
                     to such Holder or Holdco, as applicable.

SECTION 2.5   REGISTRATION EXPENSES

       (a)    "EXPENSES" shall mean any and all fees and expenses incident to
              the Corporation's performance of or compliance with this Article
              2, including, without limitation:

              (i)    Commission, Canadian securities regulatory authorities,
                     United States or Canadian stock exchange registration
                     listing and filing fees;

              (ii)   fees and expenses of compliance with Securities Laws or
                     United States "blue sky" laws and in connection with the
                     preparation of a

<PAGE>   21
                                     - 21 -

                     "blue sky" survey, including, without limitation,
                     reasonable fees and expenses of blue sky counsel;

              (iii)  printing and copying expenses;

              (iv)   messenger and delivery expenses;

              (v)    expenses incurred by the Corporation and any underwriter(s)
                     in connection with any road show;

              (vi)   fees and disbursements of counsel for the Corporation;

              (vii)  fees and disbursements of all independent public
                     accountants (including the expenses of any audit and/or
                     "cold comfort" letter) and fees and expenses of other
                     Persons, including special experts, retained by the
                     Corporation; and

              (viii) subject to clause (d)(ii) below, any other fees and
                     disbursements of underwriters, if any, customarily paid by
                     issuers or sellers of securities.

       (b)    Subject to Section 2.5(c), the Corporation shall pay all Expenses
              with respect to any Demand Registration pursuant to Section 2.1
              (which for greater certainty shall include the Expenses associated
              with a withdrawal of a Demand Registration by an Investor or
              Holdco, as the case may be, pursuant to Section 2.1(d) which
              results in the Corporation abandoning the registration pursuant to
              Section 2.1(e)(i) hereof) whether or not such Demand Registration
              becomes effective or does not remain effective for the period
              contemplated by Section 2.4(b). Subject to Section 2.5(c), the
              Corporation shall pay all Expenses of each Investor and Holdco
              with respect to any registration effected under Section 2.2. Each
              Holder (other than the Investors) shall pay the expenses
              attributable to that Holder with respect to any registration
              effected pursuant to Section 2.2 (such expenses shall be allocated
              amongst the Holders (other than the Investors) on a pro rata basis
              based on the number of Registrable Securities included in such
              offering by each Holder (that is not an Investor) relative to the
              number of Common Shares included in such offering, except to the
              extent Expenses are specifically attributable to a Holder (other
              than an Investor) or to Registrable Securities included in an
              offering by a Holder (other than an Investor)).

       (c)    Each Holder and Holdco participating in a registration pursuant to
              Section 2.1 and each Investor and Holdco participating in a
              registration pursuant Section 2.2, shall pay the fees and expenses
              payable by the Corporation pursuant to Sections 2.5(a)(i) and (ii)
              above that are

<PAGE>   22
                                     - 22 -

              calculated on a "per security" basis, which fees and expenses
              shall be allocated between each Holder and Holdco in a
              registration pursuant to Section 2.1 and between each Investor and
              Holdco in a registartion pursuant to Section 2.2 on a pro rata
              basis based on the number of Registrable Securities included in
              such offering by each party relative to the number of Common
              Shares included in such offering; provided that, if the
              Corporation or any other Person sells any Shares pursuant to a
              registration under Section 2.1 or Section 2.2, then the Holders
              and Holdco participating in a registration under Section 2.1, and
              the Investors and Holdco participating in a registration under
              Section 2.2 shall not be responsible for that portion of the fees
              and expenses payable under Sections 2.5(a)(i) and (ii) that are
              attributable to the Corporation or such Person or Persons as a
              result of participating in such offering or offerings.

       (d)    Notwithstanding the foregoing:

              (i)    the provisions of this Section 2.5 shall be deemed amended
                     to the extent necessary to cause these expense provisions
                     to comply with United States "blue sky" laws of each state
                     or the securities laws of any other jurisdiction in which
                     the offering is made as contemplated herein;

              (ii)   in connection with any registration hereunder, each Holder
                     and Holdco shall pay all underwriting discounts and
                     commissions and any transfer taxes, if any, attributable to
                     such Holder's or Holdco's, Registrable Securities sold in
                     the offering;

              (iii)  the Corporation shall be responsible for all of its
                     internal expenses (including, without limitation, all
                     salaries and expenses of its officers and employees
                     performing legal or accounting duties);

              (iv)   each Holder and Holdco shall pay the fees and expenses of
                     its own counsel pursuant to a registration under Section
                     2.2. In the case of a registration pursuant to Section 2.1,
                     the Corporation shall pay the reasonable fees and expenses
                     of one special counsel for the Holders and/or Holdco in
                     each applicable country or province, which special counsel
                     shall be designated by the Initiating Holders, and subject
                     to the approval of the Corporation, in an amount not to
                     exceed US$35,000 per registration pursuant to Section 2.1
                     and an aggregate of US$l50,000 for all registrations under
                     Section 2.1.

SECTION 2.6   CERTAIN LIMITATIONS ON REGISTRATION RIGHTS

       In the case of any registration under Section 2.1 pursuant to an
underwritten offering, or in the case of a registration under Section 2.2 if the
Corporation has determined to enter into an underwriting agreement in connection
therewith, all

<PAGE>   23
                                     - 23 -

securities to be included in such registration shall be subject to an
underwriting agreement and no Person may participate in such registration unless
such Person agrees to sell such Person's securities on the basis provided
therein and completes and/or executes all questionnaires and other documents
which must be executed in connection therewith, and provides such other
information to the Corporation or the underwriter as may be necessary to
register such Person's securities; provided that the Corporation and, in the
case of a Demand Registration pursuant to Section 2.1, the Initiating Holders,
first advises with such Holder and/or Holdco, if applicable requesting
Registrable Securities to be included in such registration as to the terms and
conditions of such underwriting agreement. The Corporation shall be entitled to
select the underwriters for all such offerings; provided that in the case of a
Demand Registration, the Initiating Holders shall be entitled to select the
underwriters with the approval of the Corporation, not to be unreasonably
withheld.

SECTION 2.7   LIMITATIONS ON SALE OR DISTRIBUTION OF OTHER SECURITIES.

       If requested in writing by the Corporation or the lead managing
underwriter, if any, of any registration effected pursuant to Section 2.1 or
Section 2.2, each Holder and Holdco agrees not to effect any public sale or
distribution, including any sale pursuant to Canadian Securities Laws or Rule
144 under the U.S. Securities Act, of any Registrable Securities, or of any
other security convertible into or exchangeable or exercisable for any
Registrable Securities (other than as part of such underwritten public offering)
during the time period reasonably requested by the Corporation or the lead
managing underwriter, if any, not to exceed 180 days (and the Corporation hereby
also agrees to cause each holder of 10% or more of the Common Shares or of any
security convertible into or exchangeable or exercisable for 10% or more of the
Common Shares in respect of which the Corporation then has the power to request
or impose such a restriction to agree to an identical restriction on sale or
distribution of any of their Common Shares or securities convertible or
exchangeable or exercisable for Common Shares).

SECTION 2.8   NO REQUIRED SALE

       Nothing in this Agreement shall be deemed to create an independent
obligation on the part of any Holder or Holdco to sell any Registrable
Securities pursuant to any effective registration statement.

SECTION 2.9   INDEMNIFICATION

       (a)    In connection with any registration statement, the Corporation
              shall indemnify and hold harmless each Holder and Holdco which has
              elected to exercise its registration rights under Section 2.1 or
              Section 2.2 hereof ("EXERCISING Person") and each of its
              respective directors and officers and each person controlling such
              Exercising Person within the meaning of Section 15 of the U. S.
              Securities Act from and against any loss, liability, claim, damage
              and expense whatsoever, including any amounts paid in settlement
              of any investigation, litigation, proceeding or claim, joint or

<PAGE>   24
                                     - 24 -

              several, as incurred, arising out of any untrue statement or
              alleged untrue statement of a material fact contained in any
              registration statement (or any amendment or supplement thereto)
              covering Registrable Securities, including all documents
              incorporated therein by reference, or the omission or alleged
              omission therefrom of a material fact required to be stated
              therein or necessary to make the statements therein not misleading
              or not misleading in the light of the circumstances under which
              they were made; provided, that, the Corporation shall not be
              liable under this clause (a) for any settlement of any action
              effected without its written consent, which consent shall not be
              unreasonably withheld or delayed; provided, further, that the
              indemnity provided for in this Section 2.9(a) shall not apply to
              any loss, liability, claim, damage or expense to the extent
              arising out of an untrue statement or omission or alleged untrue
              statement or omission (i) made in reliance upon and in conformity
              with written information furnished to the Corporation by such
              Exercising Person in writing expressly stating that such
              information is being provided by such Exercising Person for use in
              the registration statement (or any amendment thereto) or any
              prospectus (or any amendment or supplement thereto) included
              therein or (ii) contained in any registration statement if such
              Exercising Person failed to send or deliver a copy of the
              registration statement (or any amendment or supplement thereto) to
              the Person asserting such losses, claims, damages or liabilities
              on or prior to the delivery of written confirmation of any sale of
              securities covered thereby to such Person in any case where such
              registration statement (or any amendment or supplement thereto)
              corrected such untrue statement or omission. Any amounts advanced
              by the Corporation to an indemnified party pursuant to this
              Section 2.9 as a result of such losses shall be returned to the
              Corporation if it shall be finally determined by such a court in a
              judgement not subject to appeal or final review that such
              indemnified party was not entitled to indemnification by the
              Corporation.

       (b)    Each Exercising Person, severally and not jointly, shall indemnify
              and hold harmless the Corporation and the other Exercising Persons
              and each of their respective directors and officers (including
              each officer and director (if applicable) of the Corporation who
              signed the registration statement) and each Person, if any, who
              controls the Corporation or any other Exercising Person within the
              meaning of Section 15 of the U. S. Securities Act, from and
              against any loss, liability, claim, damage and expense whatsoever
              described in the indemnity contained in Section 2.9(a) hereof, as
              incurred, but only with respect to untrue statements or omissions,
              or alleged untrue statements or omissions, made in the
              registration statement (or any amendment thereto) or any
              prospectus (or any amendment or supplement thereto) included
              therein in reliance upon and in conformity with written
              information furnished to the Corporation

<PAGE>   25
                                     - 25 -

              by such Exercising Person in writing expressly stating that such
              information is being provided by such Holder for use in the
              registration statement (or any amendment thereto) or any
              prospectus (or any amendment or supplement thereto) included
              therein provided, that the Exercising Person shall not be liable
              under this clause for any settlement of any action effected
              without its written consent, which consent shall not be
              unreasonably withheld.

       (c)    Each party entitled to indemnification under this Section 2.9 (the
              "INDEMNIFIED PARTY") shall give notice to the party required to
              provide indemnification (the "INDEMNIFYING PARTY") promptly after
              such Indemnified Party has actual knowledge of any claim as to
              which indemnity may be sought, but the omission to so notify the
              Indemnifying Party shall not relieve it from any liability which
              it may have to the Indemnified Party pursuant to the provisions of
              this Section 2.9 except to the extent of the actual damages
              suffered by such delay in notification. The Indemnifying Party
              shall assume the defence of such action, including the employment
              of counsel to be chosen by the Indemnifying Party to be reasonably
              satisfactory to the Indemnified Party, and payment of expenses.
              The Indemnified Party shall have the right to employ its own
              counsel in any such case, but the legal fees and expenses of such
              counsel shall be at the expense of the Indemnified Party, unless
              the employment of such counsel shall have been authorized in
              writing by the Indemnifying Party in connection with the defence
              of such action, or the Indemnifying Party shall not have employed
              counsel to take charge of the defence of such action within a
              reasonable time after notice thereof or the Indemnified Party
              shall have reasonably concluded that there may be defences
              available to it or them which are different from or additional to
              those available to the Indemnifying Party (in which case the
              Indemnifying Party shall not have the right to direct the defence
              of such action on behalf of the Indemnified Party), in any of
              which events such fees and expenses shall be borne by the
              Indemnifying Party. No Indemnifying Party, in the defence of any
              such claim or litigation, shall, except with the consent of each
              Indemnified Party, consent to entry of any judgement or enter into
              any settlement which does not include as an unconditional term
              thereof the giving by the claimant or plaintiff to such
              Indemnified Party of a release from all liability in respect to
              such claim or litigation.

       (d)    If the indemnification provided for in this Section 2.9 is
              unavailable to a party that would have been an Indemnified Party
              under this Section 2.9 in respect of any expenses, claims, losses,
              damages and liabilities referred to herein, then each party that
              would have been an Indemnifying Party hereunder shall, in lieu of
              indemnifying such Indemnified Party, contribute to the amount paid
              or payable by such Indemnified Party as a

<PAGE>   26
                                     - 26 -

              result of such expenses, claims, losses, damages and liabilities
              in such proportion as is appropriate to reflect the relative fault
              of the Indemnifying Party on the one hand and such Indemnified
              Party on the other in connection with the statement or omission
              which resulted in such expenses, claims, losses, damages and
              liabilities, as well as any other relevant equitable
              considerations. The relative fault shall be determined by
              reference to, among other things, whether the untrue or alleged
              untrue statement of a material fact or the omission or alleged
              omission to state a material fact relates to information supplied
              by the Indemnifying Party or such Indemnified Party and the
              parties' relative intent, knowledge, access to information and
              opportunity to correct or prevent such statement or omission. The
              Corporation and each Exercising Person agrees that it would not be
              just and equitable if contribution pursuant to this Section were
              determined by pro rata allocation or by any other method of
              allocation which does not take account of the equitable
              considerations referred to above in this Section 2.9(d).

       (e)    No Person guilty of fraudulent misrepresentation (within the
              meaning of Section 11(f) of the U.S. Securities Act) shall be
              entitled to contribution from any Person who was not guilty of
              such fraudulent misrepresentation.

       (f)    Notwithstanding any provision of this Agreement or any other
              agreement, in no event will any Exercising Person be liable for
              indemnification hereunder for an amount greater than the amount of
              proceeds that such Exercising Person received in any particular
              offering of Common Shares in which its Registrable Securities were
              sold.

                                    ARTICLE 3
                                     GENERAL

SECTION 3.1   RULE 144

       If the Corporation shall have filed a registration statement pursuant to
the requirements of Section 12 of the U.S. Exchange Act or a registration
statement pursuant to the requirements of the U.S. Securities Act in respect of
the Common Shares or securities of the Corporation convertible into or
exchangeable or exercisable for Common Shares, the Corporation covenants that:

       (a)    so long as it remains subject to the reporting provisions of the
              U.S. Exchange Act, it will timely file the reports required to be
              filed by it under the U.S. Securities Act or the U.S. Exchange Act
              (including, without limitation, the reports under Sections 13 and
              15(d) of the U.S. Exchange Act referred to in subparagraph (c)(l)
              of Rule 144 under the U.S. Securities Act); and

<PAGE>   27
                                     - 27 -

       (b)    to the extent required from time to time to enable such Holder to
              sell Registrable Securities without registration under the U.S.
              Securities Act within the limitation of the exemptions provided by
              (a) Rule 144 under the U.S. Securities Act, as such Rule may be
              amended from time to time, or (b) any similar rule or regulation
              hereafter adopted by the Commission. Upon the request of any
              Holder or Holdco, the Corporation will deliver to such Holder or
              Holdco, as applicable, a written statement as to whether it has
              complied with such requirements.

SECTION 3.2   NOMINEES FOR BENEFICIAL OWNERS

       If Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its option, be treated as the
holder of such Registrable Securities for purposes of any request or other
action by any holder or holders of Registrable Securities pursuant to this
Agreement (or any determination of any number or percentage of Common Shares
constituting Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement); provided, however, that the
Corporation shall have received written assurances reasonably satisfactory to it
of such beneficial ownership.

SECTION 3.3   AMENDMENTS

       The terms and provisions of this Agreement may be modified or amended, or
any of the provisions hereof waived, temporarily or permanently, pursuant to the
prior written consent of the Corporation and the party adversely affected by
such modification or waiver.

SECTION 3.4   NOTICES

       All notices, requests, consents and other communications hereunder to any
party shall be deemed to be sufficient if contained in a written instrument
delivered in person or sent by telecopy, nationally recognized overnight courier
or first class registered or certified mail, return receipt requested, postage
prepaid, addressed to such party at the address set forth below or such other
address as may hereafter be designated in writing by such party to the other
parties:

       (a)    if to the CAI Entities, to:

              c/o CAI Managers & Co., L. P.
              767 Fifth Avenue
              New York, NY 10153

              Attention: Manfred Yu

              Telephone: (212) 319-3023
              Facsimile: (212) 319-0232

<PAGE>   28
                                     - 28 -

              with a copy to (which shall not constitute notice for the purposes
              of this Agreement):

              Stikeman Elliott
              Commerce Court West
              Suite 5300, 199 Bay Street
              Toronto, ON M5L lB9

              Attention: Simon Romano

              Telephone: (416) 869-5596
              Facsimile: (416) 947-0860

       (b)    if to B.C., to:

              Randall Mullan
              c/o McCullough O'Connor Irwin
              1100-888 Dunsmuir Street
              Vancouver, BC V6C 3K4

              Attention: Jonathon McCullough

              Telephone: (604) 687-7077
              Facsimile: (604) 687-7079

       (c)    if to the Institutional Investor, to:

              5650 Yonge Street
              Toronto, Ontario, Canada M2M 4H5

              Attention: Roy Graydon

              Telephone: (416) 730-6167
              Facsimile: (416) 730-5143

              with a copy to (which shall not constitute notice for the purposes
              of this Agreement):

              Goodmans
              Suite 2400
              250 Yonge Street
              Toronto, Ontario M5B 2M6

              Attention: Jonathan Lampe

              Telephone: (416) 979-2211
              Facsimile: (416) 979-1234

<PAGE>   29
                                     - 29 -

       (d)    if to Holdco, to:

              c/o 21700 Atlantic Boulevard
              Dulles, Virginia
              20166

              Attention:    Legal Department

              Telephone:    (703) 406-5000
              Facsimile:    (703) 406-5572

              with a copy to (which shall not constitute notice for the purposes
              of this Agreement):

              Hogan & Hartson, L.L.P.
              555 13th Street, N.W.
              Washington, D.C.
              20004 - 1109

              Attention:    Eve N. Howard

              Telephone:    (202) 537-5627
              Facsimile:    (202) 537-5910

              (e)    if to the Corporation, to:

              13800 Commerce Parkway
              Richmond, BC V6V 253

              Attention: Chief Executive Officer

              Telephone: (604) 278-3411
              Facsimile: (604) 278-l837

              with a copy to (which shall not constitute notice for the purposes
              of this Agreement):

              Farris Vaughan Wills & Murphy
              P. O. Box 10026
              Pacific Centre South
              Toronto Dominion Bank Tower
              700 West Georgia Street
              Vancouver, B.C. V7Y lB3

              Attention: Elizabeth Harrison, Esq.

<PAGE>   30
                                     - 30 -

              Telephone: (604) 661-9367
              Facsimile: (604) 661-9349

Each party, by written notice given to the Corporation in accordance with this
Section 3.4, may change the address to which such notice or other communications
are to be sent to such party. All such notices, requests, consents and other
communications shall be deemed to have been given when received.

SECTION 3.5   REGISTRATION RIGHTS OF ORBITAL

       Subject to Section 3.8:

       (a)    For good and valuable consideration, the receipt and sufficiency
              of which is hereby acknowledged by each of Orbital, the
              Corporation, the CAI Entities and B.C., Orbital, the Corporation,
              the CAI Entities and B.C. covenant and agree that the registration
              rights granted to Orbital pursuant to the Registration Rights
              Agreement in respect of its Registrable Securities as defined in
              the Registration Rights Agreement are cancelled and terminated as
              and from the date of this Agreement and all the provisions of the
              Registration Rights Agreement as they relate to Orbital are hereby
              declared to be null and void and of no further force and effect.

       (b)    Orbital and the Corporation hereby release each other, their
              successors and assigns and the CAI Entities and B.C. from any
              claims or demands arising under or pursuant to the Registration
              Rights Agreement as it relates to the rights granted to Orbital.

       (c)    Orbital acknowledges that the registration rights previously
              granted to it under the Registration Rights Agreement have been in
              effect granted to Holdco pursuant to this Agreement.

SECTION 3.6   SUBORDINATION OF REGISTRATION RIGHTS OF HOLDCO

       Holdco's registration rights in respect of the Corporation set forth in
this Agreement shall in all respects be subordinate to the rights of the Holders
herein.

SECTION 3.7   CERTAIN COVENANTS OF ORBITAL AND HOLDCO IN FAVOUR OF THE CAI
ENTITIES AND B.C.

       The CAI Entities, B.C., Orbital and Holdco covenant and agree as follows:

       (a)    For so long as (i) the CAI Entities and B.C. collectively own the
              lesser of (a) at least 10% of the outstanding Common Shares, and
              (b) Common Shares representing at least U.S.$25 million based on
              their Issue Price, and (ii) Orbital Controls Holdco, Holdco shall
              not at any time incur or guarantee any indebtedness for borrowed
              money (including borrowings represented by a note, bond, debenture
              or other evidence of indebtedness) or other obligations, or
              pledge, grant security over or otherwise encumber

<PAGE>   31
                                     - 31 -

              any of its assets, or dispose of any of its assets except for
              transfers of Common Shares in accordance with the Amended and
              Restated Option Agreement, without the consent of the CAI Entities
              and B.C.

       (b)    For so long as (i) the CAI Entities and B.C. collectively own the
              lesser of (a) at least 10% of the outstanding Common Shares, and
              (b) Common Shares representing at least U.S.$25 million based on
              their Issue Price, and (ii) Orbital Controls Holdco, Holdco shall
              not, without the consent of the CAI Entities and B.C., amend its
              articles (except immaterial amendments) or be the subject of any
              reorganization, continuance, amalgamation, arrangement, merger,
              winding-up, liquidation or dissolution.

       (c)    Orbital will at all times, for so long as Orbital Controls Holdco,
              ensure that any security existing with respect to any shares of
              Holdco held by Orbital shall comply with the following: Orbital
              shall be entitled to pledge any or all of its shares of Holdco to
              a bona fide arm's length lender or lenders (the "LENDER") of
              Orbital from time to time as security for indebtedness of Orbital
              owed to such Lender provided that such Lender acknowledges in
              writing to the CAI Entities, B.C. and Holdco that (i) until a
              default under the pledge, the pledged shares shall continue to be
              registered in the name of Orbital and Orbital shall be entitled to
              exercise all rights in respect thereof (including voting rights
              and director nomination rights), and (ii) if the Lender commences
              enforcement proceedings or otherwise realizes on the pledged
              shares following default, the Lender shall immediately notify the
              CAI Entities, B.C. and Holdco and its interest in the pledged
              shares shall be subject to the provisions of this Section
              applicable thereto, as and to the same extent as though the Lender
              were Orbital.

       (d)    Orbital will at all times, for so long as Orbital Controls Holdco,
              ensure that Holdco, if applicable, and the Corporation and its
              subsidiaries shall operate consistent with the following: Orbital
              shall ensure that Holdco complies with the Amended and Restated
              Option Agreement and, for so long as the CAI Entities and B.C.
              hold at least 10% of the outstanding Common Shares or Common
              Shares representing at least U.S.$25 million based on their Issue
              Price, Orbital shall ensure that Holdco complies with its charter
              documents (which shall continue to have limitations satisfactory
              to the CAI Entities and B.C., acting reasonably, on its activities
              to ensure its separateness and independence).

       (e)    The provisions of this Section 3.7 shall terminate two years from
              the date hereof.

SECTION 3.8   EFFECTIVENESS OF CERTAIN AGREEMENTS

       The Registration Rights Agreement is terminated, amended, restated,
replaced and superseded by this Agreement effective immediately.

<PAGE>   32
                                     - 32 -

SECTION 3.9   PERMITTED TRANSFEREES OF THE CAI ENTITIES

       Each Person or Persons holding Registrable Securities as a result of a
transfer or assignment by the CAI Entities contemplated by Section 2.3 of the
Resale Restrictions Agreement, shall be deemed collectively for the purposes of
this Agreement a CAI Entity and such investors shall agree to act for the
purposes of this Agreement through one of the CAI Entities or their general
partners for the earlier of the term of this Agreement and 12 months following
the Closing Date, and shall not, for greater certainty, exercise a Demand
Registration pursuant to Section 2.1 without the prior consent of one of the CAI
Entities or their general partners.

SECTION 3.10  CAI

       The parties to this Agreement (including any other Person or Persons that
become bound by the terms of this Agreement) agree that the CAI Entities shall
be treated collectively for purposes of the computations found in Sections
3.7(a), (b) and (d) and shall be deemed to be Affiliates for the purposes
hereof.

SECTION 3.11  HOLDERS

       This Agreement shall cease to apply to a Holder (that is a transferee
pursuant to Section 2.2(2) or Sections 3.13(1) or (2) of the Resale Restrictions
Agreement as in effect on the date hereof) following June 30, 2002.

SECTION 3.12  REMAINING SHARES

(1)    Notwithstanding anything to the contrary contained in this Agreement,

       (a)    if the CAI Entities or B.C., as the case may be (each an
              "EXERCISING OPTIONHOLDER"), exercises its right under Section 5(b)
              of the Amended and Restated Option Agreement to require Holdco to
              sell the Remaining Shares pursuant to an underwritten public
              offering at any time prior to the Termination Date (as defined in
              the Amended and Restated Option Agreement), then Holdco shall
              promptly thereafter exercise a Demand Registration pursuant to
              Section 2.1 of the Amended and Restated Registration Rights
              Agreement to sell, by way of an underwritten public offering, any
              or all of the Remaining Shares and the Exercising Optionholder
              shall be entitled to (i) select the underwriter(s) for such public
              offering; and (ii) exercise the decision-making powers of Holdco
              in respect of such Demand Registration as if it was Holdco
              (notwithstanding that the Demand Registration is being exercised
              by Holdco), and the Exercising Optionholder shall be treated in
              all other respects as the Initiating Holder for the purposes of
              such offering; and

       (b)    none of the Holders (other than the Exercising Optionholder),
              Holdco, the Corporation or the holders of Additional Piggyback
              Rights shall be entitled to participate in the Demand Registration
              and/or underwritten

<PAGE>   33
                                     - 33 -

              public offering without the prior written consent of the
              Exercising Optionholder, in its sole discretion; and

       (c)    for greater certainty, Section 2.3(a) and Section 2.1(b) shall not
              apply in such circumstances.

(2)    The Corporation, Holdco and Orbital agree to cooperate in full with the
       Exercising Optionholder, in connection with the sale of the Remaining
       Shares pursuant to an underwritten public offering, including without
       limitation, participating in the prospectus process, assisting with
       access for due diligence purposes, and signing any requested underwriting
       or indemnification agreements on terms not materially more adverse to
       them than those applicable in the Corporation's initial public offering.

(3)    The exercise by Holdco of a Demand Registration in accordance with
       Section 2.1(1) shall count as one of Holdco's Demand Registrations
       pursuant to Section 2.1(e)(iv) of this Agreement.

SECTION 3.13  BOARD APPROVAL

       The terms and conditions of this Agreement shall not take effect until
ratified, confirmed and approved by the board of directors of the Corporation
(it being understood that all members of the board of directors of the
Corporation shall be entitled, notwithstanding their interest, to vote thereon
given the immateriality of this Agreement).

SECTION 3.14  MISCELLANEOUS

       (a)    This Agreement shall be binding upon and enure to the benefit of
              and be enforceable by the parties hereto and the respective
              successors, personal representatives and permitted assigns of the
              parties hereto, whether so expressed or not, provided that, for
              greater certainty, no Person other than a Holder or Holdco shall
              be entitled to any benefits under this Agreement, except as
              otherwise expressly provided herein. This Agreement and the rights
              of the parties hereunder may be assigned in whole by any of the
              parties hereto to any transferee (other than a Holder) of
              Registrable Securities with the consent of the Corporation, which
              consent shall not be unreasonably withheld, provided that upon the
              consummation of, and as a condition to, any such assignment the
              transferee assumes the obligations of the assignor under, and
              agrees to be bound by the terms of this Agreement.

       (b)    This Agreement and the other writings referred to herein or
              delivered pursuant hereto which form a part hereof contain the
              entire agreement among the parties with respect to the subject
              matter hereof and supersede all prior and contemplated
              arrangements and understandings with respect thereto, including
              but not limited to, Schedule "F" of the

<PAGE>   34
                                     - 34 -

              Subscription Agreement dated as of June 29, 2000, as amended among
              CAI Capital Partners and Company II, L.P., CAI Partners and
              Company II, L.P., CAI Capital Partners and Company II-C, L.P.,
              597858 B.C. LTD., Orbital Sciences Corporation, MacDonald,
              Dettwiler Holdings Inc. and MacDonald, Dettwiler and Associates
              Ltd.

       (c)    This Agreement shall be governed by and construed in accordance
              with the laws of the Province of British Columbia without giving
              effect to the principles of conflicts of law thereof.

       (d)    The headings of the sections of this Agreement have been inserted
              for convenience of reference only and shall not be deemed to be a
              part of this Agreement.

       (e)    This Agreement may be executed in any number of counterparts, and
              each such counterpart hereof shall be deemed an original
              instrument, but all such counterparts together shall constitute
              but one instrument.

       (f)    Whenever possible, each provision of this Agreement shall be
              interpreted in such manner as to be effective and valid, but if
              any provision of this Agreement is held to be invalid or
              unenforceable in any respect, such invalidity or unenforceability
              shall not render invalid or unenforceable any other provision of
              this Agreement.

       (g)    It is hereby agreed and acknowledged that it will be impossible to
              measure in money the damages that would be suffered if the parties
              fail to comply with any of the obligations herein imposed on them
              and that in the event of any such failure, an aggrieved Person
              will be irreparably damaged and will not have an adequate remedy
              at law. Any such Person, therefore, shall be entitled to
              injunctive relief, including specific performance, to enforce such
              obligations, without the posting of any bond, and, if any action
              should be brought in equity to enforce any of the provisions of
              this Agreement, none of the parties hereto shall raise the defence
              that there is an adequate remedy at law.

       (h)    Each party hereto 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 any other party hereto reasonably may request in
              order to carry out the intent and accomplish the purposes of this
              Agreement and the consummation of the transactions contemplated
              hereby.

<PAGE>   35
                                     - 35 -

       IN WITNESS WHEREOF the parties have executed this Agreement.

                                   CAI CAPITAL PARTNERS AND COMPANY II, L.P. BY
                                   ITS GENERAL PARTNER, CAI CAPITAL PARTNERS GP
                                   & CO., L.P., BY ONE OF ITS GENERAL PARTNERS
                                   36 PIERREPONT ST. II. CO.

                                   By:
                                         ---------------------------------------
                                         Name:     Peter Restler
                                         Title:    President

                                   CAI PARTNERS AND COMPANY II,  L.P. BY ITS
                                   GENERAL PARTNER, CAI PARTNERS GP & CO., L.P.,
                                   BY ONE OF ITS GENERAL PARTNERS, 36 PIERREPONT
                                   ST. II. CO.

                                   By:
                                         ---------------------------------------
                                         Name:     Peter Restler
                                         Title:    President

                                   CAI CAPITAL PARTNERS AND COMPANY II-C, L.P.,
                                   BY ITS GENERAL PARTNER, CAI CAPITAL PARTNERS
                                   GP II-C INC.

                                   By:
                                         ---------------------------------------
                                         Name:     Manfred Yu
                                         Title:    Assistant Secretary

                                   CAI MANAGERS & CO., L.P.

                                   By:
                                         ---------------------------------------
                                         Name:     Manfred Yu
                                         Title:    Vice-President and Secretary

<PAGE>   36
                                     - 36 -

                                   597858 B.C. LTD., AS AGENT

                                   By:
                                         ---------------------------------------
                                         Name:     Randall Mullan
                                         Title:    Director

                                   ONTARIO TEACHERS' PENSION PLAN BOARD

                                   By:
                                         ---------------------------------------
                                         Name:     Roy Graydon
                                         Title:    Vice-President, Relationship
                                                   Investing

                                   MACDONALD, DETTWILER AND ASSOCIATES LTD.

                                   By:
                                         ---------------------------------------
                                         Name:     Anil Wirasekara
                                         Title:    Chief Financial Officer

                                   MDA HOLDINGS CORPORATION

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

                                   ORBITAL SCIENCES CORPORATION
                                   ONLY FOR THE PURPOSES OF SECTIONS 3.5 , 3.7
                                   AND 3.8

                                   By:
                                         ---------------------------------------
                                         Name:
                                         Title:<PAGE>   1

                                                              EXECUTION VERSION

                              PURCHASE AGREEMENT

                                   BETWEEN

                          BIOVENTURE INVESTMENTS KFT

                                     and

                                ENTREMED, INC.

                          Dated as of June 14, 2001

                             THALIDOMIDE ROYALTY

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

<PAGE>   2

                              TABLE OF CONTENTS

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

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

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

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

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

                                     -i-

<PAGE>   3

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

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

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

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

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

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

Exhibits
--------

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

                                     -ii-

<PAGE>   4

                              PURCHASE AGREEMENT

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

                             W I T N E S S E T H:

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

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

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

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

                                  ARTICLE I

                                 DEFINITIONS

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

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

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

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

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

<PAGE>   5

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

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

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

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

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

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

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

                                     -2-

<PAGE>   6

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                     -3-

<PAGE>   7

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

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

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

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

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

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

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

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

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

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

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

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

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

                                     -4-

<PAGE>   8

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

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

                                  ARTICLE II

                              PURCHASE AND SALE

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

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

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

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

                                     -5-

<PAGE>   9

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

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

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

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

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

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

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

                                     -6-

<PAGE>   10

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

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

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

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

                                     -7-

<PAGE>   11

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

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

                                 ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF SELLER

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

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

                                     -8-

<PAGE>   12

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

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

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

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

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

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

                                     -9-

<PAGE>   13

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

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

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

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

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

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

                                     -10-

<PAGE>   14

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

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

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

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

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

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

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

                                     -11-

<PAGE>   15

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

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

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

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

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

                                  ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer hereby represents and warrants to Seller that:

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

                                     -12-

<PAGE>   16

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

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

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

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

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

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

                                     -13-

<PAGE>   17

                                  ARTICLE V

                                  COVENANTS

         Buyer and Seller agree that:

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

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

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

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

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

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

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

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

         5.04.    [RESERVED.]

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

                                     -14-

<PAGE>   18

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

         5.06.    SELLER'S CONTINUING COVENANTS.

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

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

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

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

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

                                     -15-

<PAGE>   19

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

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

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

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

                                  ARTICLE VI

                            CONDITIONS TO CLOSING

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

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

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

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

                                     -16-

<PAGE>   20

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

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

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

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

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

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

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

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

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

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

                                     -17-

<PAGE>   21

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

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

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

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

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

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

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

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

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

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

                                     -18-

<PAGE>   22

                                 ARTICLE VII

                          SURVIVAL; INDEMNIFICATION

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

         7.02.    INDEMNIFICATION.

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

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

                                     -19-

<PAGE>   23

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

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

                                 ARTICLE VIII

                                 TERMINATION

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

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

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

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

                                     -20-

<PAGE>   24

                                  ARTICLE IX

                                MISCELLANEOUS

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

         (a)      if to Buyer, to:

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

                  with copies to:

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

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

         (b)      if to Seller, to:

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

                                     -21-

<PAGE>   25

                  Telecopy:         (301) 217-9594

                  with copies to:

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

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

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

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

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

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

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

                                     -22-

<PAGE>   26

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

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

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

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

                                     -23-

<PAGE>   27

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

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

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

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

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

                [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

                                     -24-

<PAGE>   28

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

                                     ENTREMED, INC.

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

                                     BIOVENTURE INVESTMENTS KFT

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

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

                                     -25-

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