Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of the date of signature by and
between ENTREMED, INC., a Delaware corporation having its principal office at 9640 Medical Center
Drive, Rockville, MD 20850 (the “Company”) and Cynthia Wong (the “Executive”).
FOR AND IN CONSIDERATION of the mutual premises, agreements and covenants contained herein, the
parties hereto, intending to be legally bound, do hereby agree as follows:
1.
Employment; Position and Duties.
Subject to the terms hereof, the Company hereby agrees to employ the Executive during the Term (as
hereafter defined) to act as, and to exercise all of the powers and functions of, its Vice
President and General Counsel 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 (a) responsibility for
overall internal and external legal, contractual and SEC compliance activities, including
interactions with the SEC and exchange officials, other regulatory agencies and external legal
counsel, and (b) all duties normally reserved to a company’s principal legal officer for the
Company’s legal matters, including retention and engagement of legal counsel and interaction with
the Board. Executive shall report directly to the Chief Executive Officer (“CEO”) of the Company
and have such other powers, duties and responsibilities as the CEO, in consultation with and
approval of the Board of Directors (the “Board”), shall from time to time reasonably prescribe.
Executive will be a member of the Company’s Management Committee and Business Development Committee
and will be Secretary of the Company, subject to approval by the Board as a named officer.
Executive hereby agrees to accept such employment and shall perform and discharge faithfully,
diligently, and to the best of her 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 her duties and
responsibilities hereunder primarily from the executive offices located in Rockville, Maryland
(except for routine and customary business travel), or from such other location in the Washington
D.C. metropolitan area as designated from time to time by the CEO.
3.
Compensation
a.
Base Salary.
While the Company employs Executive during the Term, the Company
shall pay to Executive an annual base salary (“Base Salary”) of no less than $216,000, payable in
accordance with the Company’s customary payroll policy for its executives.
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 $216,000.
In making such adjustments the Board or a committee thereof may solicit and give consideration to
the views of the CEO.
c.
Incentive Compensation.
While the Company employs Executive during the Term,
Executive’s annual incentive compensation (“Incentive Compensation”) shall be targeted at 25% of
Base Salary, the exact amount of which shall be determined by the Board or a committee thereof in
its sole discretion. Executive shall be eligible for Incentive Compensation commencing at the start
of the Initial Term. Such bonus, if any, shall be paid within ninety (90) days following the last
day of each fiscal year of the Company. In making such determinations, the Board or a committee
thereof may solicit and take into consideration the views of the CEO.
d.
Certain Other Benefits.
While the Company employs Executive during the Term,
Executive shall be entitled to participate in any and all employee benefit plans and arrangements
which are available to senior executive officers of the Company, including without limitation,
group medical, disability and life insurance plans, and Company’s Directors and Officers (D&O)
insurance policy. Executive shall also be afforded no fewer than twenty-three (23) days paid time
off (PTO) pursuant to policies fixed by the Company.
e.
Expenses.
Subject to reasonable documentation and in accordance with the Company’s
business expense reimbursement policy, (i) 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, and (ii) the Company will reimburse Executive for up to $5,000 per
year for professional fees, professional development and required continuing legal education
courses during her employment.
4.
Term.
The term of this Agreement shall be the period commencing on June 1, 2006 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.
In connection with the Executive’s acceptance of employment, the Company will grant stock options
to Executive covering 100,000 shares of common stock with a per share exercise price
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equal to the closing price of EntreMed’s stock on the date of grant. Such options will vest as to
25% of the covered shares on the date of grant, and shall vest as to the remaining covered shares
in cumulative 25% share increments on each of the first, second, and third anniversary of the date
of grant, if Executive is then employed by the Company. Other periodic stock and incentive stock
option grants to Executive, if any, while the Company employs Executive during the Term shall be
determined by the Board or a committee thereof in its discretion. In the event of a termination
pursuant to paragraph 8(d) hereof or a resignation pursuant to paragraph 9 hereof, for which
purposes sections 10(a) and 10(c) of this Agreement shall control, all vested options held by
Executive on the effective date of such termination or resignation shall be 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 option agreement, all
unvested options shall vest and become exercisable immediately in accordance with the terms of the
option agreement. 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 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 her 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 she 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 she is or was
an officer or director of the Company or any of its subsidiaries, affiliates, or successors, or
because she 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 her 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
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shall continue as to Executive even if she ceases to be an officer or director or is no longer
employed by the Company, and shall inure to the benefit of Executive’s heirs, executors and
administrators.
b. As used in this Agreement, the term “Expenses” shall include, without limitation, damages,
losses, judgments, liabilities, fines, penalties, excise taxes, settlements and reasonable costs,
reasonable attorneys’ fees, reasonable accountants’ fees, and reasonable disbursements and costs of
attachment or similar bonds, investigations, and any reasonable expenses of establishing a right to
indemnification under this Agreement.
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, her
estate shall be entitled to receive payment of Base Salary through the last day of the six (6)
months following the month in which her death occurred, payable over six (6) 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 she 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 her 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 her Base Salary, payable in accordance
with the Company’s customary payroll policy for its executives, through the last day of the six (6)
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 she 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-
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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 her written
notice thirty (30) days prior to the date of termination. Until the effective date of any such
termination, the Company shall continue to pay to Executive the full compensation specified in this
Agreement, including the benefits provided at paragraph 3(d). Following the date of termination,
Executive shall make herself 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 pursuant to this subparagraph 8(d), the Company shall (i) pay Executive a
severance amount equal to six (6) months Base Salary over the following six (6) 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 six (6) months, after which Executive would be eligible for COBRA
continuation coverage, or until she 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 she 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 her 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 her
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 her the full compensation specified in this
Agreement, including the benefits provided at paragraph 3(d), provided she continues to perform her
duties during this period. Thereafter, the Company shall have no further obligations to her 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, she shall not
be required to mitigate her damages by affirmatively seeking other employment. Further,
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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 her or benefit provided to
her as the result of employment by another employer or otherwise.
g.
Non-Competition
. For a period of 1) twelve (12) months after resignation for other
than for Good Reason or 2) six (6) months after termination of employment with the Company for any
other reason, Executive shall not, as an individual, principal, agent, employee, consultant or
otherwise, directly or indirectly, or with respect to any company or entity with which the Company
has concluded partnership, licensing, joint research and development or other similar business
agreements during his employment with the Company, render any services to any firm or company or
any division or subsidiary of any firm or company, engaged in the development or commercialization
of compounds, analogs or derivatives of those compounds that (a) are of a similar type, that is,
small molecules, (for example, but not limited to, small peptidomimetic molecules), (b) have more
than one mechanism of action and cellular pathway in common with; and (c) are within the same field
(
i
.
e
. oncology or inflammation) as, those being developed and or commercialized by
the Company during the Term (“Competing Company”). In addition, for an additional period of six
(6) months after the six-month period set forth above and subject to Section 6 hereof, Executive
only may provide services to such a Competing Company if Executive does not work on, or furnish
confidential information regarding, any matter related to such compounds defined above. Moreover,
for a period of twelve (12) months after the termination of Executive’s employment with the
Company, Executive shall not take any action, without the prior written consent of the Company, to
assist Executive’s successor employer or any other entity in recruiting or hiring any other
employee who was an employee of the Company during Executive’s employment. This prohibition
includes (i) identifying to such successor employer or its agents or such other entity, the person
or persons who have special knowledge concerning the Company or its inventions, processes, methods
or confidential affairs, and (ii) commenting to Executive’s successor employer or its agents or
such other entity about the quantity or work, quality of work, special knowledge or personal
characteristics of any person who is still employed by the Company. Executive also agrees that she
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 her under this Agreement, and in such event
she shall forfeit her 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 her at law.
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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 her first receipt and acceptance of any such benefits, she 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, her resignation. If Executive resigns during the Term for Good
Reason, such resignation shall be deemed a Termination without Cause under subparagraph 8(d) hereof
and Executive shall receive the compensation and benefits provided under subparagraph 8(d) hereof
as if she 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 her duties and responsibilities hereunder, (iii) misconduct that
is materially and significantly injurious to the Company, (iv) conviction of a felony involving the
personal dishonesty of Executive or moral turpitude, (v) conviction of any crime or offense
involving the property of the Company or (vi) material breach of Executive’s obligations under this
Agreement; provided, however, with regard to a.(ii) and a.(vi.) above, the parties exclude for
this purpose an action not taken in bad faith that is remedied by Executive promptly upon receipt
of written notice thereof given to the Company.
b. “Disability” shall mean the Executive’s incapacity due to physical or mental illness which
prevents the proper performance of Executive’s duties as set forth herein or established pursuant
hereto for ninety (90) days in any twelve (12) month period of the Term. A qualified independent
physician mutually selected by the Company and the Executive shall determine any questions as to
the existence or extent of illness or incapacity of Executive, upon which the Company and Executive
cannot agree. The determination of such physician certified in writing to the Company and to the
Executive shall be final and conclusive for all purposes of this Agreement. For purposes of the
disability provisions of this Agreement, if the Executive is unable to act on her 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:
(i) 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
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thereof given by Executive; (ii) 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; (iii) the failure by the Company to continue to provide Executive with benefits
substantially similar to those enjoyed by her under any of the Company’s pension, life insurance,
medical, health and accident, disability or other welfare plans in which she 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; (iv) the failure by the Company to pay to
Executive any deferred compensation when due under any deferred compensation plan or agreement
applicable to her; (v) the failure by the Company to honor in any material respect the terms and
provisions of this Agreement; or (vi) a requirement by the Company that Executive conduct her
duties and responsibilities from a permanent location more than fifty (50) miles from the place of
employment, as defined in paragraph 2 herein.
11.
Miscellaneous.
a.
Assignments and Binding Effect.
The respective rights and obligations of the
parties under this Agreement shall be binding upon the parties hereto and their heirs, executors,
administrators, successors, and assigns, including, in the case of the Company, any other
corporation or entity with which the Company may be merged or otherwise combined and, in the case
of Executive, her 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 (or them) valid, legal, and enforceable.
e.
Withholding.
All amounts payable hereunder shall be paid net of any applicable
withholding required under federal, state or local laws and any additional withholding to which
Executive has agreed.
f.
Entire Agreement; Amendments.
This Agreement constitutes the entire Agreement and
understanding of the Company and Executive with respect to the terms of Executive’s employment with
the Company and supersedes all prior discussions, understandings and agreements with respect
thereto.
g.
Captions.
All captions and headings used herein are for convenient reference only
and do not form part of this Agreement.
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h.
Waiver.
No provision of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in writing and signed by the Executive
and the Board or its delegate. The failure of the Company or the Executive to insist upon strict
compliance with the terms of this Agreement or the failure of the Company or the Executive to
assert any right the Company or the Executive may have hereunder shall not be deemed a waiver of
such provision or right or any other provision of this Agreement.
f.
Notice.
Any notice or communication required or permitted under this Agreement
shall be made in writing and shall be delivered by hand, or mailed by registered or certified mail,
return receipt requested, first call postage prepaid, addressed as follows:
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If to Executive:
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Cynthia Wong
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c/o EntreMed, Inc.
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9640 Medical Center Drive
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Rockville, Maryland 20850
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If to the Company:
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EntreMed, Inc.
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9640 Medical Center Dive
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Rockville, Maryland 20850
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Attn.: Chief Executive Officer
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g.
Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of June 1,
2006.
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/s/ Cynthia Wong
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Cynthia Wong
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Executive
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EntreMed, Inc.
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By:
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/s/ James S. Burns
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James S. Burns
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President and Chief Executive Officer
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