Document:

exv10w2

Exhibit 10.2

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of the date of signature by
and between ENTREMED, INC., a Delaware corporation having its principal office at 9640 Medical
Center Drive, Rockville, MD 20850 (the “Company”) and Thomas H. Bliss, Jr. (the
“Executive”).

FOR AND IN CONSIDERATION of the mutual premises, agreements and covenants contained herein, the
parties hereto, intending to be legally bound, do hereby agree as follows:

1. Employment; Position and Duties.

Subject to the terms hereof, the Company hereby agrees to employ Executive during the Term (as
hereafter defined) to act as, and to exercise all of the powers and functions of its Senior Vice
President, Corporate and Business Development, and to perform such acts and duties and to generally
furnish such services to the Company and its subsidiaries (if any) as is customary for a senior
management person with a similar position in like companies, such services to include: (i) primary
responsibility for the Company’s global corporate development, business development and alliance
management activities, including management of the Company’s investment banking relationships,
corporate partnering and licensing activities, (ii) developing prospects for partnering
transactions, lead the negotiations of such partnering transactions and maintain the Company’s
relationships with its current key partners, (iii) overseeing the positioning of the Company as a
prospective partner and manage the related outreach efforts and (iv) working with the Company’s
Chief Executive Officer (the “CEO”) to identify and evaluate strategic business
opportunities, including acquisitions.

Executive shall report directly to the CEO of the Company and have such other powers, duties and
responsibilities as the CEO, in consultation with and approval of the Board of Directors (the
“Board”), shall from time to time reasonably prescribe. Executive will be a member of the
Company’s Senior Management Team and the Business Development Team. Executive hereby agrees to
accept such employment and shall perform and discharge faithfully, diligently, and to the best of
his abilities such duties and responsibilities and shall devote sufficient working time and efforts
to the business and affairs of the Company and its subsidiaries.

2. Place of Employment.

While Executive is employed by the Company during the Term, Executive shall conduct his duties and
responsibilities hereunder primarily from the executive offices located in Rockville, Maryland
(except for routine and customary business travel), or from such other location in the Washington
D.C. metropolitan area as designated from time to time by the CEO.

3. Compensation

     a. Base Salary. While the Company employs The Executive during the Term, the Company
shall pay to Executive an annual base salary (“Base Salary”) of no less than $280,000,
payable in accordance with the Company’s customary payroll policy for its executives.

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     b. Base Salary Adjustments. Executive’s Base Salary shall be reviewed at least
annually in accordance with the Company’s customary practices for its executives. The Board or a
committee thereof may make such adjustments, as it deems appropriate in its sole discretion;
provided, however, in no event shall the Company pay Executive a Base Salary of less than $280,000,
unless the change to Executive’s Base Salary was applicable to the annual base salary of all senior
executives of the Company in substantially the same manner. In making such adjustments the Board or
a committee thereof may solicit and give consideration to the views of the CEO.

     c. Incentive Compensation. While the Company employs Executive during the Term,
Executive’s annual incentive compensation (“Incentive Compensation”) shall be targeted at
30% of base compensation, the exact amount of which shall be determined by the Board or a committee
thereof in its sole discretion. Executive shall be eligible for Incentive Compensation commencing
at the start of the Initial Term. Such bonus, if any, shall be paid within ninety (90) days
following the last day of each fiscal year of the Company. In making such determinations, the Board
or a committee thereof may solicit and take into consideration the views of the CEO.

     d. Certain Other Benefits. Commencing on the first day of the month after thirty (30)
days of continuous service to the Company and throughout the Term, Executive shall be entitled to
participate in any and all employee benefit plans and arrangements which are available to senior
executive officers of the Company, including without limitation, group medical, disability and life
insurance plans, and Company’s Directors and Officers (D&O) insurance policy. Executive shall also
be afforded no fewer than twenty-three (23) days paid time off (PTO) pursuant to policies fixed by
the Company.

     e. Expenses. The Company shall pay or reimburse Executive for all reasonable business
expenses actually paid or incurred by Executive while Executive is employed by the Company during
the Term subject to reasonable documentation and in accordance with the Company’s business expense
reimbursement policy; provided, however, such business expenses do not include personal travel and
commuting expenses between Executive’s home in Oxnard, California and the Company’s offices during
Executive’s relocation period.

     f. Relocation Expenses.

     (i) The Company shall reimburse Executive for (i) reasonable expenses for up to two (2)
round trips between Oxnard, California and the Washington D.C. area for purposes of house
hunting, and (ii) reasonable short-term living or rental expenses for up to three (3) months
in the Washington, D.C. area.

     (ii) In addition to the payments set forth in Section 3(f)(i), the Company shall
reimburse Executive an aggregate of $100,000 for relocation expenses (the “Relocation
Expense Payment”), consisting of (i) $50,000, payable in a lump sum within thirty (30)
days of the date of this Agreement and (ii) $50,000 upon the submission of itemized receipts
connected with the relocation from California to Maryland, payable in a lump sum within 30
calendar days of the submission of such receipts. The Relocation Expense Payment is
intended to be used by Executive for customary relocation expenses including, but not
limited to, moving company expenses, house hunting, temporary housing, temporary storage or
vehicle transportation costs.

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     (iii) If Executive terminates his employment with the Company without Good Reason and
within twenty four (24) months of the date of this Agreement, Executive shall reimburse the
Company for all or a portion of the Relocation Expense Payment as follows:

     (a) if the Executive terminates his employment within twelve months of the
date of this Agreement, Executive shall repay 50% of the Relocation Expense Payment;
and

     (b) if the Executive terminates his employment at any time between thirteen
and eighteen months after the date of this Agreement, Executive shall repay 25% of
the Relocation Expense Payment.

Any reimbursement by Executive to the Company of the Relocation Expense Payment in accordance with
this Section 3(f) shall be made within ten (10) business days of Executive’s voluntary termination
date, payable in a lump sum.

4. Term.

The term of this Agreement shall be the period commencing on June 18, 2008 and continuing for one
year (the “Initial Term”); provided, however, that the Term of this Agreement shall be
extended automatically for successive one year periods (each one-year extension a “Successor
Term” and together with the Initial Term referred to herein as the “Term”) unless
written notice of nonextension is provided by either party to the other party at least sixty (60)
days prior to the end of the Initial Term or any Successor Term. In the event that this Agreement
is not extended at the end of the Initial Term or any Successor Term and thereby terminates, only
paragraphs 6, 7, 8(d), 8(g), 8(h), 8(i) and 11 shall survive such termination, except that
Executive shall be entitled to receive compensation and benefits to the extent expressly provided
herein or by the terms of any of the Company’s compensation and benefit plans, programs or policies
or as required by applicable law.

5. Stock Options.

          (i) Upon Executive’s commencement of employment, the Company shall grant a stock option to
Executive to purchase 200,000 shares of Company common stock with a per share exercise price equal
to the closing price of the Company’s stock on the date of grant (the “Initial Grant”).
The Initial Grant shall vest as follows, provided the Executive is then employed with the Company
on each such date:

	 	 	 
	3 Months After Date of Grant

	 	25% of the Initial Grant
	 
	1 Year After Date of Grant

	 	25% of the Initial Grant
	 
	2 Years After Date of Grant

	 	25% of the Initial Grant
	 
	3 Years After Date of Grant

	 	25% of the Initial Grant

          (ii) The Company shall also grant Executive an option to purchase 100,000 shares of Company
common stock with a per share exercise price equal to the closing price of the Company’s stock on
the date of grant, which shares shall vest in full upon the consummation of the first partnering or
strategic transaction initiated solely by the Executive (the “Transaction Grant”). The
Board of Directors shall have the sole discretion to determine whether the conditions for the
vesting of the Transaction Grant have been satisfied.

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          (iii) Other periodic stock and incentive stock option grants to Executive, if any, while the
Company employs Executive during the Term shall be determined by the Board or a committee thereof
in its discretion. In the event of a termination pursuant to paragraph 8(d) hereof or a resignation
pursuant to paragraph 9 hereof, for which purposes sections 10(a) and 10(c) of this Agreement shall
control, all vested options held by Executive on the effective date of such termination or
resignation shall be exercisable in accordance with the terms of such grants until the later of the
date set forth in such grant or twelve (12) months following Executive’s date of termination, but
in no event beyond the expiration date of the relevant option. Upon a change in control, as defined
in the Executive’s option agreement, occurring more than six (6) months after the effective date of
this Agreement, all unvested options shall vest and become exercisable immediately. All other
unvested options shall expire in accordance with the terms of such grants. Except as set forth
herein, the terms of the stock option grants under this paragraph 5 shall be otherwise in
accordance with and subject to the terms of the Company’s 2001 Long Term Incentive Plan, as
amended, or successor plan and such terms and conditions as the Board or a committee thereof may
specify.

6. Unauthorized Disclosure.

During the Term and at all times thereafter, Executive shall not, without the written consent of
the Company, or except as required by applicable law, disclose to any person, other than a person
to whom disclosure is reasonably necessary or appropriate in connection with the performance by
Executive of his duties as an executive officer of the Company, any material confidential
information obtained by Executive while in the employ of the Company with respect to the businesses
of the Company or any of its subsidiaries, including but not limited to, operations, pricing,
contractual or personnel data, products, discoveries, improvements, trade secrets, license
agreements, marketing information, suppliers, dealers, principles, customers, or methods of
distribution, or any other confidential information the disclosure of which Executive knows, or in
the exercise of reasonable care should know, will be damaging to the Company; provided, however,
that confidential information shall not include any information known generally to the public or to
persons in the industry of which the Company’s business is a part (in each case, other than as a
result of unauthorized disclosure by Executive) or any information otherwise considered by the
Company not to be confidential.

7. Indemnification. 

     a. The Company shall defend, indemnify and hold harmless Executive if he is made a party, or
threatened to be made a party, to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative (a “Proceeding”), because he is
or was an officer or director of the Company or any of its subsidiaries, affiliates, or successors,
or because he is or was serving in a fiduciary capacity with respect to employee benefit plans of
the Company, whether or not the basis of such Proceeding is alleged action in an official capacity
or otherwise, against all Expenses incurred or suffered by him in connection with such Proceeding
to the fullest extent authorized by the General Corporation Law of the State of Delaware and any
other applicable law in effect from time to time, and such indemnification shall continue as to
Executive even if he ceases to be an officer or director or is no longer employed by the Company,
and shall inure to the benefit of Executive’s heirs, executors and administrators.

     b. As used in this Agreement, the term “Expenses” shall include, without limitation, damages,
losses, judgments, liabilities, fines, penalties, excise taxes, settlements and reasonable

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costs, reasonable attorneys’ fees, reasonable accountants’ fees, and reasonable disbursements
and costs of attachment or similar bonds, investigations, and any reasonable expenses of
establishing a right to indemnification under this Agreement.

     c. Expenses incurred by Executive in connection with any Proceeding shall be paid by the
Company upon presentation of appropriate documentation and a giving by Executive of any
undertakings required by applicable law.

8. Termination.

     a. Upon Death. If Executive dies while employed by the Company during the Term, his
estate shall be entitled to receive payment of Base Salary through the last day of the nine (9)
months following the month in which his death occurred, payable over nine (9) months at the
Company’s normal pay periods. If, in respect of the fiscal year in which Executive dies the Board
or a committee thereof determines in its discretion that he would otherwise have been entitled to
receive Incentive Compensation under subparagraph 3(c) by reason of the operations of the Company
during such fiscal year, Executive’s estate shall be entitled to receive a pro rata portion of his
Incentive Compensation for such fiscal year. Such pro rata portion shall equal the product of (x)
the full amount of such Incentive Compensation, and (y) a fraction, the numerator of which is the
number of days in the fiscal year of Executive’s death prior to the date of death, and the
denominator of which is the total number of days in such fiscal year.

     b. Termination Upon Disability. The Company may terminate Executive’s employment
hereunder during the Term at the end of any calendar month in the event of his Disability by giving
to Executive written notice of termination. In the event of any such termination pursuant to this
subparagraph 8(b), Executive shall be entitled to receive his Base Salary, payable in accordance
with the Company’s customary payroll policy for it executives, through the last day of the nine (9)
months following the month in which the date of termination occurred. If in respect of the fiscal
year in which Executive’s employment terminates pursuant to this subparagraph 8(b) the Board or a
committee thereof determines in its discretion that he would otherwise have been entitled to
receive Incentive Compensation under subparagraph 3(c) by reason of the operations of the Company
during such fiscal year, Executive shall be entitled to receive a pro rata portion of his Incentive
Compensation for such year. Such pro rata portion shall equal the product of (x) the full amount
of such Incentive Compensation, and (y) a fraction, the numerator of which is the number of days in
the fiscal year of Executive’s termination on account of Disability prior to the date of
termination, and the denominator of which is the total number of days in such fiscal year.

     c. Termination for Cause. The Company may terminate Executive’s employment hereunder
at any time during the Term for Cause by giving to Executive written notice of termination that
specifies the reasons for and date of termination, subject to the terms of sub-paragraph 10(a)
hereunder. Upon any such termination for Cause under this subparagraph 8(c), the Company shall pay
to Executive Base Salary through the date of termination, including the benefits provided at
paragraph 3(d), and the Company shall have no further obligations under this Agreement.

     d. Termination Without Cause. The Company may terminate Executive’s employment with
the Company at any time during the Term, for any reason and without Cause, by giving him written
notice thirty (30) days prior to the date of termination. Until the effective date of any such
termination, the Company shall continue to pay to Executive the full compensation specified in this
Agreement, including the benefits provided at paragraph 3(d). Following the date of termination,

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Executive shall make himself reasonably available to members of the Board, the CEO, and other
senior managers and officers of the Company to assist in the transition of responsibilities and
information to others and to facilitate the orderly conduct of business operations. Upon
termination, the Company shall have no other financial obligations to Executive under any
compensation or benefit plan, program or policy and Executive’s participation in the Company’s
compensation and benefit plans, programs and policies shall cease as of the date of Executive’s
termination except as set forth herein or as expressly provided under the terms of any such plans,
programs or policies, or as required by applicable law. However, in addition to the above, if
Executive is terminated (i) pursuant to this subparagraph 8(d) or (ii) the Term is not extended in
accordance with Section 4 and for any reason other than Cause, the Company shall (i) pay Executive
a severance amount equal to nine (9) months Base Salary over the following nine (9) months at the
Company’s normal pay periods, and (ii) provide Executive coverage under the Company’s health
insurance program, under the same terms as are available to other senior executive officers of the
Company, for a period of nine (9) months, after which Executive would be eligible for COBRA
continuation coverage, or until he has obtained substantially equivalent new coverage, as
determined by the Board or a committee thereof in its discretion, through successor employment,
whichever occurs sooner. If, in respect of the fiscal year in which Executive’s employment
terminates pursuant to this subparagraph 8(d), the Board or a committee thereof determines in its
discretion that he would otherwise have been entitled to receive Incentive Compensation under
subparagraph 3(c) by reason of the operations of the Company during such fiscal year, Executive
shall be entitled to receive a pro rata portion of his Incentive Compensation for such year. Such
pro rata portion shall equal the product of (x) the full amount of such Incentive Compensation, and
(y) a fraction, the numerator of which is the number of days in the fiscal year of Executive’s
termination without Cause prior to the date of termination, and the denominator of which is the
total number of days in such fiscal year.

     e. Resignation for Other than Good Reason. Executive may voluntarily terminate his
employment with the Company during the Term for any reason upon at least thirty (30) days prior
written notice, which specifies the effective date of termination. Until the effective date of
such termination, the Company shall continue to pay him the full compensation specified in this
Agreement, including the benefits provided at paragraph 3(d), provided he continues to perform his
duties during this period. Thereafter, the Company shall have no further obligations to him under
this Agreement. This subparagraph 8(e) shall not apply to Executive’s resignation for Good Reason
pursuant to paragraph 9 hereof.

     f. No Mitigation. The parties hereto acknowledge and agree that, in the event
Executive’s employment with the Company is terminated pursuant to this paragraph 8, he shall not be
required to mitigate his damages by affirmatively seeking other employment. Further, except as
provided in subparagraph 8(d)(ii) above, the amount of any payment or benefit provided for in this
Agreement shall not be reduced by any compensation earned by him or benefit provided to him as the
result of employment by another employer or otherwise.

     g. Non-Competition. For the period of (i) twelve (12) months after resignation for
other than for Good Reason, or (ii) six (6) months after termination of employment with the Company
for any other reason, Executive shall not, as an individual, principal, agent, employee, consultant
or otherwise, directly or indirectly, or with respect to any company or entity with which the
Company has concluded partnership, licensing, joint research and development or other similar
business agreements during his employment with the Company, render any services to any firm or
company or any division or subsidiary of any firm or company, engaged in the development or
commercialization of compounds, analogs or derivatives of those compounds that (a) are of a similar

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type, that is, small molecules, (for example, but not limited to, small peptidomimetic molecules),
(b) have more than one mechanism of action and cellular pathway in common with; and (c) are within
the same field (i.e. oncology or inflammation) as, those being developed and or
commercialized by the Company during the Term (“Competing Company”). In addition, for an
additional period of six (6) months after the six-month period set forth above and subject to
Section 6 hereof, Executive only may provide services to such a Competing Company if Executive does
not work on, or furnish confidential information regarding, any matter related to such compounds
defined above. Moreover, for a period of twelve (12) months after the termination of Executive’s
employment with the Company, Executive shall not take any action, without the prior written consent
of the Company, to assist Executive’s successor employer or any other entity in recruiting or
hiring any other employee who was an employee of the Company during Executive’s employment. This
prohibition includes (i) identifying to such successor employer or its agents or such other entity,
the person or persons who have special knowledge concerning the Company or its inventions,
processes, methods or confidential affairs, and (ii) commenting to Executive’s successor employer
or its agents or such other entity about the quantity or work, quality of work, special knowledge
or personal characteristics of any person who is still employed by the Company. Executive also
agrees that he will not provide such information to a prospective employer or to an executive
search firm during interviews preceding possible employment.

     h. Non-Disparagement. During the Term and thereafter, Executive shall not communicate
negatively about or otherwise disparage the Company or its products or each and any of the released
parties described in subparagraph 8(i) in any way whatsoever except as may be required for truthful
sworn testimony or in connection with a legal or administrative proceeding, report, claim or
dispute. The Company, acting in its official capacity, shall not make any public false, disparaging
or derogatory statements in connection with or concerning Executive’s service to the Company except
as may be required for truthful sworn testimony or in connection with a legal or administrative
proceeding, report, claim or dispute. After termination, in the event Executive materially breaches
any of the conditions set forth herein or in any other paragraph of this Agreement, the Company may
discontinue the provision of any payment or benefits to him under this Agreement, and in such event
he shall forfeit his entitlement to any further termination payments or benefits under this
Agreement. After termination, in the event the Company materially breaches any of the conditions
set forth herein or in any other paragraph of this Agreement, the Executive may pursue any remedies
available to him at law.

     i. Release. In consideration of Executive’s receipt of severance benefits subject to
and in accordance with subparagraphs 8(b) and (d) and paragraph 9 of this Agreement, Executive
agrees that, upon his first receipt and acceptance of any such benefits, he shall have released and
forever discharged the Company, its subsidiaries and affiliates, successors and assigns,
predecessors and all of their respective officers, directors, employees and agents and employee
benefits plans from all claims, demands, liabilities and causes of action arising out of facts or
occurrences arising or occurring at any time up to and including the time of Executive’s
termination or resignation, whether known or unknown, and the parties hereto contemplate that this
release shall be broadly construed.

9. Resignation for Good Reason.

If Executive has Good Reason during the Term, Executive may resign at any time during the Term by
providing at least thirty (30) days prior written notice to the Company that specifies the reason
for, and the effective date of, his resignation. If Executive resigns during the Term for Good
Reason, such resignation shall be deemed a Termination without Cause under subparagraph 8(d) hereof
and

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Executive shall receive the compensation and benefits provided under subparagraph 8(d) hereof as if
he had been terminated without Cause.

10. Definitions.

     a. “Cause” shall mean Executive’s (i) habitual drunkenness or drug addiction, (ii) material
failure to perform and discharge his duties and responsibilities hereunder, (iii) misconduct that
is materially and significantly injurious to the Company, (iv) conviction of a felony involving the
personal dishonesty of Executive or moral turpitude, (v) conviction of any crime or offense
involving the property of the Company or (vi) material breach of Executive’s obligations under this
Agreement, provided, however, with regard to Section 10(a)(ii) and 10(a)(vi) above, the parties
exclude for this purpose an action not taken in bad faith that is remedied by Executive promptly
upon receipt of written notice thereof given to the Company.

     b. “Disability” shall mean the Executive’s incapacity due to physical or mental illness which
prevents the proper performance of Executive’s duties as set forth herein or established pursuant
hereto for ninety (90) days in any twelve (12) month period of the Term. A qualified independent
physician mutually selected by the Company and the Executive shall determine any questions as to
the existence or extent of illness or incapacity of Executive, upon which the Company and Executive
cannot agree. The determination of such physician certified in writing to the Company and to the
Executive shall be final and conclusive for all purposes of this Agreement. For purposes of the
disability provisions of this Agreement, if the Executive is unable to act on his own behalf due to
incapacity, any person legally authorized to do so may act on the Executive’s behalf.

     c. “Good Reason” shall mean the occurrence of any of the following events during the Term:
(A) the assignment to Executive of any duties inconsistent in any material respect with Executive’s
position, authority, duties or responsibilities as of the commencement of the Term or any other
action by the Company which results in a diminution in any material respect in such position,
duties or responsibilities, excluding for this purpose an isolated and inadvertent action not taken
in bad faith that is remedied by the Company promptly after receipt of written notice thereof given
by Executive; (B) a reduction by the Company in Executive’s annual Base Salary as in effect on the
date hereof or subsequently in effect hereunder, except as agreed to by Executive, unless such
change was applicable to all senior executives of the Company; (C) the failure by the Company to
continue to provide Executive with benefits substantially similar to those enjoyed by him under any
of the Company’s pension, life insurance, medical, health and accident, disability or other welfare
plans in which he was participating as of the commencement of the Term or subsequently in effect
hereunder, unless such change was applicable to all senior executives of the Company; (D) the
failure by the Company to pay to Executive any deferred compensation when due under any deferred
compensation plan or agreement applicable to him; (E) the failure by the Company to honor in any
material respect the terms and provisions of this Agreement; or (G) a requirement by the Company
that Executive conduct his duties and responsibilities from a permanent location more than fifty
(50) miles from the place of employment, as defined in paragraph 2 herein.

11. Miscellaneous.

     a. Assignments and Binding Effect. The respective rights and obligations of the
parties under this Agreement shall be binding upon the parties hereto and their heirs, executors,
administrators, successors, and assigns, including, in the case of the Company, any other
corporation

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or entity with which the Company may be merged or otherwise combined and, in the case of
Executive, his estate or other legal representatives.

     b. No Assignment of Benefits. Except as otherwise provided herein or by applicable
law, no right or interest of the Executive under this Agreement shall be assignable or
transferable, in whole or in part, either directly or by the operation of law or otherwise,
including without limitation execution, levy, garnishment, attachment, pledge or in any manner; no
attempted transfer thereof shall be effective.

     c. Governing Law. This Agreement shall be governed as to its validity, interpretation
and effect by the laws of the State of Maryland, without reference to its conflict of laws
provisions.

     d. Severability. In the event that any provision or portion of this Agreement shall
be determined to be invalid, illegal, or unenforceable for any reason, the remaining provisions and
portions of this Agreement shall remain in full force and effect to the fullest extent permitted by
law. Such invalid, illegal or unenforceable provision(s) shall be deemed modified to the extent
necessary to make it (them) valid, legal, and enforceable.

     e. Withholding. All amounts payable hereunder shall be paid net of any applicable
withholding required under federal, state or local laws and any additional withholding to which
Executive has agreed.

     f. Entire Agreement; Amendments. This Agreement constitutes the entire Agreement and
understanding of the Company and Executive with respect to the terms of Executive’s employment with
the Company and supersedes all prior discussions, understandings and agreements with respect
thereto.

     g. Captions. All captions and headings used herein are for convenient reference only
and do not form part of this Agreement.

     h. Waiver. No provision of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in writing and signed by the Executive
and the Board or its delegate. The failure of the Company or the Executive to insist upon strict
compliance with the terms of this Agreement or the failure of the Company or the Executive to
assert any right the Company or the Executive may have hereunder shall not be deemed a waiver of
such provision or right or any other provision of this Agreement.

     f. Notice. Any notice or communication required or permitted under this Agreement
shall be made in writing and shall be delivered by hand, or mailed by registered or certified mail,
return receipt requested, first call postage prepaid, addressed as follows:

If to Executive:

Thomas H. Bliss, Jr.

c/o EntreMed, Inc.

9640 Medical Center Drive

Rockville, Maryland 20850

If to the Company:

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EntreMed, Inc.

9640 Medical Center Dive

Rockville, Maryland 20850

Attn.: Chief Executive Officer

     g. Counterparts. This Agreement may be executed in counterparts, each of which shall
constitute one and the same agreement.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of June 18,
2008.

	 	 	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Thomas H. Bliss, Jr.	 	 
	 
	 	 	 	 	 	 
	 	 	ENTREMED, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

James S. Burns
	 	 
	 

	 	 	 	President and Chief Executive Officer	 	 

11exv10w1

Exhibit 10.1

AMENDMENT NO. 1 TO

EMPLOYMENT AGREEMENT

          THIS AMENDMENT NO. 1 to the Employment Agreement between Bruce Thornton (the “Executive”) and
Oculus Innovative Sciences, Inc., a Delaware corporation (the “Corporation”), effective as of June
1, 2005, is entered into by and between the Executive and the Corporation effective as of August 5,
2008.

          WHEREAS, the parties wish to make certain modifications to the Agreement to comply with final
regulations published under Section 409A of the Internal Revenue Code of 1986, as amended;

          NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and promises of
the parties, the parties hereto agree as follows:

          1. The Agreement and all exhibits attached thereto are hereby incorporated by reference
herein and made a part hereof, subject to the specified modifications set forth herein.

          2. Section 5 of the Agreement is hereby amended to read in its entirety as follows:

“5.1 Termination by the Corporation. The Executive’s employment by
the Corporation, and the Period of Employment, may be terminated at any
time by the Corporation: (i) with Cause (as defined in Section 5.5, or
(ii) without Cause, or (iii) in the event of the Executive’s death, or
(iv) in the event that the Board determines in good faith that the
Executive has a Disability (as defined in Section 5.5).

5.2 Termination by the Executive. The Executive’s employment by
the Corporation, and the Period of Employment, may be terminated at any
time by the Executive, on no less than thirty (30) days prior written
notice to the Corporation.

5.3 Benefits Upon Termination. If the Executive’s employment by
the Corporation is terminated during the Period of Employment for any
reason by the Corporation or by the Executive, the Corporation shall have
no further obligation to make or provide to the Executive, and the
Executive shall have no further right to receive or obtain from the
Corporation, any payments or benefits except:

          (a) the Corporation shall pay the Executive (or, in the event of his
death, the Executive’s estate) any Accrued Obligations (as defined in
Section 5.5); and

          (b) if, during the Period of Employment, the Executive’s employment
is terminated by the Corporation without Cause or by the

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Executive for
Good Reason (as defined in Section 5.5) (and, in each case, other than due
to either the Executive’s death, or a good faith determination by the
Board that the Executive has a Disability):

     (i) the Corporation shall, subject to the conditions set forth in
Section 5.3(c), also pay the Executive a lump sum severance benefit equal
to twelve (12) times the average monthly Base Salary paid to the Executive
over the twelve (12) whole months preceding the month in which the
termination of the Executive’s employment occurs. Subject to the
conditions set forth in Section 5.3(c), such lump sum amount shall be paid
to the Executive (without interest) no later than seven (7) days following
the date on which the Executive’s employment by the Corporation
terminates;

     (ii) the Corporation shall, subject to the conditions set for the in
Section 5.3(c), pay as a severance benefit one hundred percent (100%) of
the Executive’s premiums under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”) for the same or reasonably equivalent medical
coverage as in effect on the date the Executive’s employment terminated
for a period not to exceed the lesser of one year following the date of
such termination or until the Executive becomes eligible for medical
insurance coverage provided by another employer; and

     (iii) as of the date the Executive’s employment terminates, any and
all stock options, stock appreciation rights, restricted stock awards, and
similar equity and equity-based awards granted by the Corporation to the
Executive outstanding immediately prior to such termination of employment
shall thereupon be deemed fully vested and shall be exercisable for a
period of no less than twelve (12) months thereafter or until the stated
expiration date for such option or award at the end of its maximum term,
whichever is earlier; provided, however, that this Section 5.3(b)(iii)
shall not affect any right of the Corporation to terminate such option or
award in connection with a change in control of the Corporation or similar
event to the extent such right exists under the provisions of any
agreement evidencing such option or award.

          (c) Any obligation of the Corporation pursuant to Section 5.3(b) to
pay a severance benefit in the circumstances described therein is further
subject to the following two “conditions precedent: (i) such severance
obligation shall be paid only if the Executive has remained in compliance
with all of the provisions of Section 5.6 and Sections 7 through 12, and
such obligation shall
terminate immediately if the Executive is for any reason not in compliance
with one or more of the provisions of Section 5.6, and Sections 7 through
12; and (ii) the Executive’s satisfaction of the release obligations set
forth in Section 5.4. For purposes of the preceding sentence, if the
Executive is not in compliance with one or more provisions of Section 5.6,
and Sections 7 though 12, and a cure is

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reasonably possible in the
circumstances, the Executive will not be deemed to have breached such
provision(s) unless the Executive is given notice and a reasonable
opportunity (in no case shall more than a 10-day cure period be required)
to cure such breach and such breach is not cured within such time period.
The parties agree that a cure will not be reasonably possible in all
circumstances including, without limitation, a material breach of
confidentiality or similar occurrence.

          (d) Except as expressly provided herein, the foregoing provisions of
this Section 5.3 shall not affect (i) the Executive’s receipt of benefits
otherwise due terminated employees under group insurance coverage
consistent with the terms of the applicable Corporation welfare benefit
plan; (ii) the Executive’s rights under COBRA to continue participation in
medical, dental, hospitalization and life insurance coverage; (iii) the
Executive’s receipt of benefits otherwise due in accordance with the terms
of the Corporation’s 401(k) plan (if any); or (iv) any rights that the
Executive may have under and with respect to a stock option, stock
appreciation right, restricted stock award, or similar equity or
equity-based award, to the extent that such award was granted before the
date that the Executive’s employment by the Corporation terminates and to
the extent expressly provided in the written agreement evidencing such
award.

          5.4 Release; Exclusive Remedy.

          (a) This Section 5.4 shall apply notwithstanding anything else
contained in this Agreement to the contrary. As a condition precedent to
any Corporation obligation to the Executive pursuant to Section 5.3(b),
the Executive shall, upon or promptly following his last day of employment
with the Corporation, provide the Corporation with a valid, executed,
written Release (as defined in Section 5.5) (in a form provided by the
Corporation) and such release shall have not been revoked by the Executive
pursuant to any revocation rights afforded by applicable law. The
Corporation shall have no obligation to make any payment to the Executive
pursuant to Section 5.3(b) unless and until the Release contemplated by
this Section 5.4 becomes irrevocable by the Executive in accordance with
all applicable laws, rules and regulations.

          (b) The Executive agrees that the payments contemplated by Section
5.3 shall constitute the exclusive and sole remedy for any termination of
his employment and the Executive covenants not to assert or pursue any
other remedies, at law or in equity, with respect to any termination of
employment. The Corporation and Executive acknowledge and agree that there
is no duty of the Executive to mitigate damages under this Agreement. All
amounts paid to the Executive pursuant to Section 5.3 shall be paid
without regard to whether the Executive has taken or takes actions to
mitigate damages.

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          5.5 Certain Defined Terms.

          (a) As used herein, “Accrued Obligations” means:

               (i) any Base Salary that had accrued but had not been paid (including
accrued and unpaid vacation time) prior to the date of termination; and

               (ii) any reimbursement due to the Executive pursuant to Section 4.2
for expenses incurred by the Executive prior to the date the Period of
Employment terminates.

          (b) As used herein, “Cause” shall mean the reasonable and good faith
determination by a majority of the Board based on its reasonable belief at
the time that, during the Period of Employment, any of the following
events or contingencies exists or has occurred:

               (i) the Executive is convicted of, or has pled guilty to, a felony
(under the laws of the United States or any state thereof); or

               (ii) the Executive has engaged in acts of fraud, material dishonesty
or other acts of willful misconduct in the course of his duties hereunder,
unless the Executive believed in good faith that such acts were in the
interests of the Corporation; or

               (iii) the Executive willfully and repeatedly fails to perform or
uphold his duties under this Agreement; or

               (iv) the Executive willfully fails to comply with reasonable
directives of the CEO which are communicated to him in writing.

          (c) As used herein, “Disability” shall mean a physical or mental
impairment which substantially limits a major life activity of the
Executive and which renders the Executive unable to
perform the essential functions of the Executive’s position, even with
reasonable accommodation which does not impose an undue hardship on the
Corporation , for ninety (90) days in any consecutive twelve (12) month
period. The Board reserves the right, in good faith, to make the
determination of whether or not a Disability exists for purposes of this
Agreement based upon information supplied by the Executive and/or his
medical personnel, as well as information from medical personnel (or
others) selected by the Corporation or its insurers.

          (d) As used herein, “Good Reason” shall mean the occurrence of one or
more of the following without the Executive’s written consent:

               (i) the assignment of the Executive to duties materially inconsistent
with the Executive’s authorities, duties, responsibilities and

4

 

status
(including tides and reporting requirements) as General Counsel of the
Corporation, or a material reduction or alteration in the nature or status
of the Executive’s authorities, duties or responsibilities, other than an
insubstantial and inadvertent act that is remedied by the Corporation
promptly after receipt of notice thereof given by the Executive; or

               (ii) a reduction by the Corporation in the Executive’s Base Salary as
in effect on the Effective Date or as the same shall be increased from
time to time, or the Corporation otherwise fails to satisfy its
compensation obligations to the Executive under this Agreement, after
notice by the Executive and a reasonable opportunity to cure; or

               (iii) only after the Sale of the company, the Corporation’s requiring
Executive to be based at any office or location more than fifty (50) miles
from the Corporation’s headquarters in Petaluma, California; or

               (iv) the failure of the Corporation to obtain a satisfactory
agreement from any successor to the Corporation to assume and agree to
perform this Agreement ; provided, however, that none of the events
specified in clause (i),(ii),or (iii) above shall constitute Good Reason
unless the Executive shall have notified the Corporation in writing
describing the events which constitute Good Reason and the Corporation
shall have failed to cure such event within a reasonable period, not to
exceed ten (10) days, after the Corporation’s actual receipt of such
written notice.

          (e) As used herein, “Release” shall mean a written release, discharge
and covenant not to sue entered into by the Executive on
behalf of himself, his descendants, dependents, heirs, executors,
administrators, assigns, and successors, and each of them, of and in favor
of the Corporation, its parent (if any), the Corporation’s subsidiaries
and affiliates, past and present, and each of them, as well as its and
their trustees, directors, officers, agents, attorneys, insurers,
employees, shareholders, members, representatives, assigns, and
successors, past and present, and each of them (the “releasees”), with
respect to and from any and all claims, wages, demands, rights, liens,
agreements, contracts, covenants, actions, suits, causes of action,
obligations, debts, costs, expenses, attorneys’ fees, damages, judgments,
orders and liabilities of whatever kind or nature in law, equity or
otherwise, whether now known or unknown, suspected or unsuspected, and
whether or not concealed or hidden, which he may then own or hold or he at
any be theretofore owned or held or may in the future hold as against any
or all of said releasees, arising out of or in any way connected with the
Executive’s employment relationship with each and every member of the
Company Group(as defined in Section 7) with which the Executive has had
such a relationship, or the termination of his employment or any other
transactions, occurrences, acts or omissions or any loss, damage or injury

5

 

whatever, known or unknown, suspected or unsuspected, resulting from any
act or omission by or on the part of said releasees, or any of them,
committed or omitted prior to the date of such release including, without
limiting the generality of the foregoing, any claim under Section 1981 of
the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act, the Americans with Disabilities
Act, the Family and Medical Leave Act of 1993, the California Fair
Employment and Housing Act, the California Family Rights Act, any other
claim under any other federal, state or local law or regulation, and any
other claim for severance pay, bonus or incentive pay, sick leave, holiday
pay, vacation pay, life insurance, health or medical insurance or any
other fringe benefit, medical expenses, or disability (except that such
release shall not constitute a release of any Corporation obligation to
the Executive that may be due to the Executive pursuant to Section 5.3(b)
upon the Corporation’s receipt of such release). The Release shall also
contain the Executive’s warrant that he has not theretofore assigned or
transferred to any person or entity, other than the Corporation, any
released matter or any part or portion thereof and that he will defend,
indemnify and hold harmless the Corporation and the aforementioned
releasees from and against any claim (including the payment of attorneys’
fees and costs actually incurred whether or not litigation is commenced)
that is directly or indirectly based on or in connection with or
arising out of any such assignment or transfer made, purported or claimed.

5.6 Resignation From Boards. Upon or promptly following any
termination of Executive’s employment with the Corporation, the Executive
agrees to resign from (i) each and every board of directors (or similar
body, as the case may be) of the Corporation and each of its affiliates on
which the Executive may then serve (if any), and (ii) each and every
office of the Corporation and each of its affiliates that the Executive
may then hold, and all positions that he may have previously held with the
Corporation and any of its affiliates.”

5.7 Excise Tax Gross-Up. During and after the period of
Executive’s employment with the Corporation, Executive shall be entitled
to the excise tax protections set forth in Exhibit B hereto. The
preceding sentence takes precedence over any contrary provision (such as,
without limitation, an excise tax cut-back provision) of any other
applicable incentive plan or award agreement.

5.8 Section 409A.

          (a) Notwithstanding any provision to the contrary in this Agreement,
the Corporation shall delay the commencement of payments or benefits
coverage to which the Executive would otherwise become entitled under the
Agreement in connection with the Executive’s termination of employment
until the earlier of (i) the expiration of the six-

6

 

month period measured
from the date of the Executive’s “separation from service” with the
Corporation (as such term is defined in Treasury Regulations issued under
Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”)) or (ii) the date of the Executive’s death, if the Corporation in
good faith determines that the Executive is a “specified employee” within
the meaning of that term under Code Section 409A at the time of such
separation from service and that such delayed commencement is otherwise
required in order to avoid a prohibited distribution under Section
409A(a)(2) of the Code. Upon the expiration of the applicable Code
Section 409A(a)(2) deferral period, all payments and benefits deferred
pursuant to this section (whether they would have otherwise been payable
in a single sum or in installments in the absence of such deferral) shall
be paid or reimbursed to the Executive in a lump sum, and any remaining
payments and benefits due under the Agreement shall be paid or provided in
accordance with the normal payment dates specified for them herein. If a
benefit subject to the delayed payment rules of this section is to be
provided other than
by the payment of money to the Executive, then continuation of such
benefit during the deferral period is conditioned on pre-payment by the
Executive to the Corporation of the full taxable value of the benefit and
following the end of the deferral period, the Corporation shall repay the
Executive for the payments made by the Executive pursuant to the terms of
this sentence which would otherwise not have been required of the
Executive.

          (b) To the extent the Corporation is required pursuant to this
Agreement to reimburse expenses incurred by the Executive, and such
reimbursement obligation is subject to Section 409A of the Code, the
Corporation shall reimburse any such eligible expenses by the end of the
calendar year next following the calendar year in which the expense was
incurred, subject to any earlier required deadline for payment otherwise
applicable under this Agreement; provided, however, that the following
sentence shall apply to any tax gross-up payment and related expense
reimbursement obligation to the extent subject to Section 409A. Any such
tax gross-up payment will be made by the end of the calendar year next
following the calendar year in which the Executive remits the related
taxes, and any required reimbursement of expenses incurred due to a tax
audit or litigation addressing the existence or amount of a tax liability
will be made by the end of the calendar year next following the calendar
year in which the taxes that are the subject of the audit or litigation
are remitted to the taxing authority, or where as a result of such audit
or litigation no taxes are remitted, the end of the calendar year next
following the calendar year in which such audit is completed or there is a
final and nonappealable settlement or other resolution of the litigation,
in each case subject to any earlier required deadline for payment
otherwise applicable under this Agreement.

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          (c) The provisions of this Agreement which require commencement of
payments or benefits coverage subject to Section 409A upon a termination
of employment shall be interpreted to require that the Executive have a
“separation from service” with the Corporation (as such term is defined in
Treasury Regulations issued under Code Section 409A).

          (d) Each payment made (including any benefit provided) pursuant to
this Agreement as part of a series of payments shall for all purposes of
Section 409A be treated as a separate payment and not as a single payment.

          (e) In each case where this Agreement provides for the payment of an
amount that constitutes nonqualified deferred compensation under Code
Section 409A to be made to the
Executive within a designated period (e.g., within a specified number of
days after the date of termination) and such period begins and ends in
different calendar years, the exact payment date within such range shall
be determined by the Corporation, in its sole discretion, and the
Executive shall have no right to designate the year in which the payment
shall be made.

          (f) To the fullest extent applicable, amounts and other benefits
payable under this Agreement are intended to be exempt from the definition
of “nonqualified deferred compensation” under Code Section 409A, in
accordance with one or more of the exemptions available under the Treasury
Regulations promulgated under Section 409A. To the extent that any
amounts or benefits payable under this Agreement are or become subject to
Code Section 409A due to a failure to qualify for an exemption from the
definition of nonqualified deferred compensation, this Agreement is
intended to comply with the applicable requirements of Code Section 409A
with respect to such amounts or benefits. This Agreement shall be
interpreted and administered to the extent possible in a manner consistent
with the foregoing statement of intent.”

          3. Section 26 of the Agreement is hereby amended to insert the section reference “5.8,” after
“5.7”.

          4. Except as expressly modified by this Amendment, the terms and provisions of the Agreement
shall remain unchanged and in full force and effect.

          5. Any modification to this Amendment shall be effective only if it is in writing and signed
by the parties to be bound thereby.

          6. This Amendment (including the Agreement and exhibits to the Agreement incorporated herein
by reference) constitutes the entire agreement between the parties hereto with respect to the
changes to the Agreement provided for in this Amendment and supersedes all prior or contemporaneous
written or oral agreements and understandings among the parties in connection with the subject
matter thereof.

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          IN WITNESS WHEREOF, the parties have executed this Amendment by their duly authorized officers
or agents.

	 	 	 	 	 	 	 
	OCULUS INNOVATIVE SCIENCES, INC.	 	 	 	EXECUTIVE
	 
	 	 	 	 	 	 
	By:

	 	/s/ Hojabr Alimi
	 	 	 	/s/ Bruce Thornton
	 

	 
	 	 	 	 
	Title:

	 	President & CEO
	 	 	 	Bruce Thornton
	Date:

	 	August 5, 2008
	 	 	 	Date: August 5, 2008

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