EXHIBIT 10.2

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of this 11th day of
May, 2004 by and among Genaera Corporation, a Delaware corporation (the
“Company”), and Roy C. Levitt (the “Executive”).

 

WHEREAS, the Company desires that Executive continue to be employed by the
Company; and

 

WHEREAS, the Executive has agreed to continue to be employed by the Company; and

 

WHEREAS, in consideration for the Executive entering into this Agreement, the
Compensation Committee of the Board, by written consent dated May 10, 2004,
awarded to the Executive 150,000 restricted shares of the Company’s Common Stock
on the terms set forth in the consent and in the award agreement; and

 

WHEREAS, the parties hereto wish to enter into the arrangements set forth herein
with respect to the terms and conditions of the Executive’s employment with the
Company.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:

 

1. Employment Agreement. On the terms and conditions set forth in this
Agreement, the Company agrees to employ the Executive and the Executive agrees
to be employed by the Company in the position and with the duties set forth in
Section 3 hereof. Terms used herein with initial capitalization and not
otherwise defined herein are defined in Section 20 below.

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2. Term. Unless earlier terminated pursuant to Section 7, the term of the
Executive’s employment hereunder shall commence as of January 1, 2004 (the
“Effective Date”) and shall conclude one year after the Effective Date (the
“Renewal Date”) (the “Employment Period”); provided, however, that the
Employment Period shall be automatically extended for an additional one-year
term on the Renewal Date and on each anniversary of the Renewal Date, unless
either party gives at least sixty (60) days’ advance written notice to the other
party (a “Notice of Non-Renewal”) that it no longer wishes such automatic
extensions to continue.

 

3. Position and Duties. The Executive shall serve as the President and Chief
Executive Officer of the Company during the Employment Period. As the President
and Chief Executive Officer of the Company, subject to the terms and conditions
of this Agreement, the Executive shall render executive, policy and other
management services to the Company as reasonably determined by the Board. The
Executive shall devote the Executive’s best efforts and substantially full
business time to the performance of the Executive’s duties hereunder and the
advancement of the business and affairs of the Company during the Employment
Period (provided that the Executive may devote time to managing his personal
investments and to charitable and community activities, and, with the consent of
the Board, take up other offices and positions during the Employment Period).
The Executive shall report directly to the Board.

 

4. Place of Performance. During the Employment Period, the Executive’s principal
place of employment and work location shall be Plymouth Meeting, Pennsylvania
except for reasonable travel on Company business.

 

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5. Compensation.

 

(a) Base Salary. During the Employment Period, the Company shall pay to the
Executive an annual base salary (the “Base Salary”) of Four Hundred Twenty-Five
Thousand Dollars ($425,000). Beginning in January, 2005, the Base Salary shall
be reviewed by the Board no less frequently than annually, and may be increased
(but not decreased) at the discretion of the Board. If the Executive’s Base
Salary is increased, the increased amount shall be the Base Salary for the
remainder of the Employment Period (until the date of any subsequent increase).
The Base Salary shall be payable bi-weekly or in such other installments as
shall be consistent with the Company’s payroll procedures in effect from time to
time.

 

(b) Bonus. In addition to the bonuses set forth in this subsection (b), during
the Employment Period, the Executive shall be eligible to earn an annual
performance bonus in an amount determined at the discretion of the Board for
each fiscal year. The Company shall pay to the Executive on March 31, 2004, a
bonus of Two Hundred Thousand Dollars ($200,000) in recognition for his
performance during 2002 to 2003. If the Company enters into an agreement for the
commercialization and development of squalamine for the treatment of age-related
macular degeneration with a third party pharmaceutical company in 2004, then
promptly following the execution of such agreement by the parties, the Company
shall pay to the Executive an additional bonus in 2004 of Fifty Thousand Dollars
($50,000). The Company shall pay to the Executive on January 15, 2005, a bonus
of One Hundred Thousand Dollars ($100,000) (the “Minimum Bonus”). The Executive
shall also be eligible to receive an additional bonus up to One Hundred Fifty
Thousand Dollars ($150,000) (the “Target Bonus”) determined at the discretion of
the Board.

 

(c) Benefits. During the Employment Period, the Executive will be entitled to
all employee benefits and perquisites (including health, welfare, life
insurance, stock option,

 

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equity and incentive plans and other arrangements) made available to similarly
situated executives of the Company. Nothing contained in this Agreement shall
prevent the Company from terminating plans, changing carriers or from effecting
modifications in employee benefits coverage for the Executive as long as such
modifications are Company-wide modifications that affect all similarly situated
employees of the Company.

 

(d) Vacation. During the Employment Period, the Executive shall be entitled to
six (6) weeks vacation during each calendar year, which shall be taken at a
reasonable time or times.

 

(e) Withholding Taxes and Other Deductions. To the extent required by law, the
Company shall withhold from any payments due to the Executive under this
Agreement any applicable federal, state or local taxes and such other deductions
as are prescribed by law.

 

6. Expenses. The Executive is expected and is authorized, subject to the
business expense policies as determined by the Board, to incur reasonable
expenses in the performance of his duties hereunder, including the costs of
entertainment, travel, and similar business expenses. The Company shall promptly
reimburse the Executive for all such expenses upon periodic presentation by the
Executive of an accounting of such expenses on terms applicable to senior
executives of the Company.

 

7. Termination of Employment. Any termination of the Executive’s employment
under this Agreement by the Company or the Executive shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a “Notice of Termination”
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon, if any, and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the

 

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Employment Period under the provision so indicated. Termination of the
Employment Period shall take effect on the Date of Termination. The Executive’s
employment under this Agreement can be terminated under the following
circumstances:

 

(a) Death. The Employment Period shall terminate upon the Executive’s death;

 

(b) Disability; Cause. The Company may terminate the Employment Period (i) if
the Executive shall have been unable to perform all of the Executive’s duties
hereunder by reason of illness, physical or mental disability or other similar
incapacity, which inability shall continue for more than three consecutive
months, or any six months in a twelve-month period (a “Disability”); or (ii)
with or without Cause upon 30 days notice under Section 10;

 

(c) Voluntary Termination by the Executive; Good Reason. The Executive may
voluntarily terminate his employment hereunder at any time with or without Good
Reason; provided, however, that the Executive must give 30 days prior notice to
terminate the Employment Period for Good Reason and 90 days prior notice to
terminate the Employment Period without Good Reason; or

 

(d) Non-Renewal. The Employment Period may terminate pursuant to the terms of
Section 2.

 

8. Compensation upon Termination.

 

(a) Death. If the Employment Period terminates as a result of the Executive’s
death, the Company shall promptly pay to the Executive’s estate, or as may be
directed by the legal representatives of such estate, after the Date of
Termination any accrued but unpaid Base Salary through the Date of Termination,
the Minimum Bonus, as pro rated for the Employment Period (the “Pro rated
Bonus”), all accrued vacation days (other than the vacation days covered

 

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by the Lump Sum Vacation Payment, as defined below), all other unpaid amounts,
if any, which the Executive has accrued as of the Date of Termination in
connection with any fringe benefits or under any bonus or incentive compensation
plan or program of the Company pursuant to Sections 5(b) and (c) hereof, and an
amount equal to 0.25 times the Executive’s then applicable Base Salary to cover
the three months vacation accrued and unpaid as of December 31, 2003 (the “Lump
Sum Vacation Payment”), and the Company shall have no further obligations to the
Executive under this Agreement or otherwise (other than pursuant to any employee
benefit plan and any life insurance, death in service or other equivalent policy
for the benefit of the Executive). In addition, the Executive’s estate or
personal representative shall have a period of one year following the
Executive’s death during which it can exercise the Executive’s vested options.

 

(b) Disability. If the Company terminates the Employment Period because of the
Executive’s Disability, the Company shall promptly pay to the Executive after
the Date of Termination any accrued but unpaid Base Salary through the Date of
Termination, the Pro Rated Bonus, the Lump Sum Vacation Payment, all accrued
vacation days and all other unpaid amounts, if any, which the Executive has
accrued as of the Date of Termination in connection with any fringe benefits or
under any bonus or incentive compensation plan or program of the Company
pursuant to Sections 5(b) and (c) hereof, and the Company shall have no further
obligations to the Executive under this Agreement or otherwise (other than
pursuant to any employee benefit plan and any disability or other medical or
life insurance policy for the benefit of the Executive (and with respect to life
insurance, to the extent the Executive is covered by a Company provided life
insurance policy at the time of his death)). In addition, the Executive or his
personal representative shall have a period of one year following the
Executive’s disability during which it can exercise the Executive’s vested
options.

 

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(c) By the Company for Cause; By the Executive without Good Reason. If the
Company terminates the Employment Period for Cause or if the Executive
voluntarily terminates the Employment Period without Good Reason (including
pursuant to the Executive’s delivery of a Notice of Non-Renewal), the Company
shall promptly pay to the Executive after the Date of Termination any accrued
but unpaid Base Salary through the Date of Termination, the Lump Sum Vacation
Payment, all accrued vacation days, and all other unpaid amounts, if any, which
the Executive has accrued and is entitled to as of the Date of Termination in
connection with any fringe benefits or under any bonus or incentive compensation
plan or program of the Company pursuant to Sections 5(b) and (c) hereof, and
other than pursuant to employee benefit plans, the Company shall have no further
obligations to the Executive under this Agreement; provided that if the
Executive terminates without Good Reason, the Company shall also assign or
otherwise transfer to the Executive, to the extent permitted under the
applicable insurance policies and at no additional cost to the Company, any
disability or other medical or life insurance policy for the benefit of the
Executive (and with respect to life insurance, to the extent the Executive is
covered by a Company provided life insurance policy at the time of his death)).

 

(d) By the Company Without Cause; By the Executive for Good Reason. If the
Company terminates the Employment Period (including pursuant to the Company’s
delivery of a Notice of Non-Renewal) other than for Cause, Disability or death
or if the Executive terminates the Employment Period for Good Reason, (i) the
Company shall promptly pay to the Executive after the Date of Termination a cash
lump sum equal to the Base Salary plus the

 

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Target Bonus in effect for the year in which the notice of Termination is given,
the Minimum Bonus, plus any earned but unpaid bonus for any prior year and the
Lump Sum Vacation Payment; (ii) the Company shall continue to provide welfare
benefits pursuant to Section 5(c) to the Executive for the Continuation Period
(or, to the extent such benefits cannot be so provided, the Company shall make a
cash payment to the Executive in an amount sufficient (on an after-tax basis) to
allow the Executive to obtain comparable benefits for such period), unless and
until the Executive receives any such or similar benefits while employed in any
capacity by any other employer during the Continuation Period; (iii) all
unvested options to purchase Company stock and shares of restricted Company
stock then held by the Executive shall become fully vested, exercisable and free
from restriction and the Executive shall be entitled to exercise all such vested
options only during the Continuation Period and the ninety-day period commencing
at the end of the Continuation Period, after which time all options to purchase
Company stock held by the Executive will immediately expire; and (iv) all
unvested shares of restricted Company stock then held by the Executive shall
become fully vested and free from restriction. Other than as set forth herein,
the Company shall have no further obligations to the Executive under this
Agreement or otherwise (except pursuant to employee benefit plans and as
otherwise set forth in this Agreement).

 

(e) Liquidated Damages. The parties acknowledge and agree that damages suffered
by the Executive as a result of termination by the Company without Cause shall
be extremely difficult or impossible to establish or prove, and agree that the
payments and benefits provided pursuant to Section 8(d) shall constitute
liquidated damages for any breach of this Agreement by the Company through the
Date of Termination. The Executive agrees that, except for such other payments
and benefits to which the Executive may be entitled as expressly

 

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provided by the terms of this Agreement or any applicable Company plan, such
liquidated damages shall be in lieu of all other claims that the Executive may
make with respect to termination of his employment, the Employment Period or any
such breach of this Agreement. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement,
and, except as specifically provided in clause (ii) of Section 8(d), such
amounts shall not be reduced whether or not the Executive obtains other
employment.

 

(f) Consulting. If the Company terminates the Employment Period (including
pursuant to the Company’s delivery of a Notice of Non-Renewal) other than for
Cause, Disability or death or if the Executive terminates the Employment Period
for Good Reason or pursuant to the Executive’s delivery of a Notice of
Non-Renewal, then during the one year period following the Date of Termination
(the “Consulting Period”), the Company shall engage the Executive to provide
consulting services (the “Consulting Services”) to the Company. The Consulting
Services shall be provided at such times and at such place as the Company and
the Executive shall reasonably agree and shall not require the Executive to
spend more than 20 days during the Consulting Period nor more than one day each
week during the Consulting Period nor more than eight hours per day during the
Consulting Period. During the Consulting Period, the Executive shall not be an
employee of the Company but shall be an independent contractor. In consideration
for the provision of the Consulting Services and for the non-competition
agreement under Section 9, the Company shall pay to the Executive an annual
consulting fee of One Hundred Twenty Thousand Dollars ($120,000) payable
bi-weekly. The Consulting Period may be extended upon agreement of the Executive
and the Company. In the event that the Executive’s employment is terminated by
reason of Disability, the Company and the Executive

 

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will mutually consider in good faith to have the Executive provide the
Consulting Services. In addition, the Executive shall have the right to (i)
during the Consulting Period, continue to vest in any outstanding unvested
options to purchase, or awards to acquire, securities of the Company, and (ii)
for a period of one year following the termination of the Consulting Period,
exercise the Executive’s vested options. Notwithstanding any provision to the
contrary contained in this Section 9(f), in the event that the Executive accepts
a position (the “Position”) with similar responsibilities that he had at the
Company prior to the termination of the Employment Period with an entity in the
life science, biotech or pharmaceutical sectors, the Consulting Period shall
immediately terminate and the Executive shall cease vesting in any outstanding
unvested options to purchase, or awards to acquire, securities of the Company as
of such date of acceptance and the Executive shall have a period of thirty days
following such date of acceptance to exercise any vested options. The Executive
shall notify the Company in writing of his date of acceptance of the Position no
later than five days following such acceptance.

 

9. Noncompetition; Nonsolicitation; Confidentiality.

 

(a) Noncompetition. The Executive acknowledges that in the course of his
employment with the Company and its Affiliates and their predecessors, he has
and will continue to become familiar with the intellectual property and trade
secrets of, and other confidential information concerning, the Company and its
Affiliates, that the Executive’s services will be of special, unique and
extraordinary value to the Company and its Affiliates and that the Company’s
ability to accomplish its purposes and to successfully pursue its business plan
and compete in the marketplace depends substantially on the skills and expertise
of the Executive. Therefore, and in further consideration of the compensation
being paid to the Executive hereunder, the Executive agrees that, during the
Employment Period and for a period of twelve months following the

 

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Executive’s termination of employment with the Company for any reason during the
Employment Period (the “Restricted Period”), he shall not directly or indirectly
own, manage, control, participate in, consult with, render services for, or in
any manner engage in any business directly competing with the businesses of the
Company or its Affiliates, in any country where the Company or its Affiliates
conducts business; provided, however, that passive investments amounting to no
more than three percent of the voting equity of a business shall not be
prohibited hereby.

 

(b) Nonsolicitation. During the Restricted Period, the Executive shall not
directly or indirectly through another entity (i) induce, attempt to induce or
hire any employee of the Company or any Affiliate to leave the employ of the
Company or such Affiliate, or in any way willfully interfere with the
relationship between the Company or any Affiliate and any employee thereof; or
(ii) induce or attempt to induce any partner, joint venturer, licensor,
customer, supplier, licensee or other business relation of the Company or any
Affiliate to cease doing business with the Company or such Affiliate, or in any
way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any Affiliate.

 

(c) Information. The Executive acknowledges that the information, observations
and data obtained by the Executive concerning the business and affairs of the
Company and its Affiliates and their predecessors during the course of the
Executive’s performance of services for, or employment with, any of the
foregoing entities (whether or not compensated for such services) are the
property of the Company and its Affiliates, including information concerning
partnership, licensing, joint venture or acquisition opportunities in or
reasonably related to the business or industry of the Company or its Affiliates
of which the

 

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Executive becomes aware during such period. Therefore, the Executive agrees that
he will not at any time (whether during or after the Employment Period) disclose
to any unauthorized person or, directly or indirectly, use for the Executive’s
own account, any of such information, observations, data or any Work Product (as
defined below) or Copyrightable Work (as defined below) without the Board’s
consent, unless and to the extent that: (a) the aforementioned matters become
generally known to and available for use by the public other than as a direct or
indirect result of the Executive’s acts or omissions to act or the acts or
omissions to act of other senior or junior management employees of the Company
and its Affiliates; (b) the Executive is required to do so by a lawful order of
a court of competent jurisdiction, any governmental authority or agency, or any
recognized subpoena power; or (c) such disclosure is necessary to prosecute the
Executive’s rights against the Company or its Affiliates or to defend himself
against any allegations. The Executive agrees to deliver to the Company at the
termination of the Executive’s employment, or at any other time the Company may
request in writing (whether during or after the Employment Period), all
memoranda, notes, plans, records, reports and other documents, regardless of the
format or media (and copies thereof), relating to the business of the Company
and its Affiliates and their predecessors (including, without limitation, all
acquisition prospects, lists and contact information) which the Executive may
then possess or have under the Executive’s control.

 

(d) Intellectual Property. The Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, trade secrets, know-how, ideas, computer programs, and all similar or
related information (whether or not patentable) that relate to the actual or
anticipated business, research and development or existing or future products or
services of the Company or its Affiliates that are conceived,

 

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developed, made or reduced to practice by the Executive while employed by the
Company or any of its predecessors (“Work Product”) belong to the Company, and
the Executive hereby assigns, and agrees to assign, all of the Executive’s
rights, title and interest in and to the Work Product to the Company. Any
copyrightable work (“Copyrightable Work”) prepared in whole or in part by the
Executive in the course of the Executive’s work for any of the foregoing
entities shall be deemed a “work made for hire” under the copyright laws, and
the Company shall own all rights therein. To the extent that it is determined,
by any authority having jurisdiction, that any such Copyrightable Work is not a
“work made for hire,” the Executive hereby assigns and agrees to assign to the
Company all the Executive’s rights, title and interest, including, without
limitation, copyright in and to such Copyrightable Work. The Executive shall
promptly disclose such Work Product and Copyrightable Work to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm the Company’s ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).

 

(e) Enforcement. The Executive acknowledges that the restrictions contained in
this Section 9 are reasonable and necessary, in view of the nature of the
Company’s business, in order to protect the legitimate interests of the Company,
and that any violation thereof would result in irreparable injury to the
Company. If, at the time of enforcement of this Section 9, a court holds that
the restrictions stated herein are unreasonable under circumstances then
existing, the parties hereto agree that the maximum duration, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum duration, scope and area
permitted by law. If the provisions of this Section 9 shall be deemed illegal by
any

 

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jurisdiction, the provisions in this Section 9 shall be deemed ineffective
within such jurisdiction. Because the Executive’s services are unique and
because the Executive has access to confidential information, the parties hereto
agree that money damages would be an inadequate remedy for any breach of any
provision of this Agreement. Therefore, in the event of a breach or threatened
breach by the Executive of any provision of this Agreement, the Company may, in
addition to other rights and remedies existing in its favor, apply to any court
of competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violations of, the provisions hereof
(without posting a bond or other security).

 

10. Notices. All notices, demands, requests or other communications required or
permitted to be given or made hereunder shall be in writing and shall be
delivered, telecopied or mailed by first class registered or certified mail,
postage prepaid, addressed as follows:

 

  (a)   If to the Company:

 

    Genaera Corporation

    5110 Campus Drive

    Plymouth Meeting, PA 19462

    Fax: (610) 941-5399

    Attention: Chief Financial Officer

 

With a copy to:

 

    Dechert LLP

    1717 Arch Street

    Philadelphia, PA 19103

    Fax: (215) 994-2222

    Attention: James A. Lebovitz

 

  (b) If to the Executive:

 

at the address on the books and records of the Company at the time of such
notice, or to such other address as may be designated by either party in a
notice to the other. Each notice, demand, request or other communication that
shall be given or made in the manner described above shall be deemed
sufficiently given or made for all purposes three days after it is deposited

 

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in the U.S. mail, postage prepaid, or at such time as it is delivered to the
addressee (with the return receipt, the delivery receipt, the answer back or the
affidavit of messenger being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.

 

11. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.

 

12. Survival. It is the express intention and agreement of the parties hereto
that the provisions of Sections 6, 7, 8, 9 and 10 hereof shall survive the
termination of employment of the Executive. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement or the Executive’s employment on the terms and conditions set forth
herein.

 

13. Assignment. The rights and obligations of the parties to this Agreement
shall not be assignable or delegable, except that (i) in the event of the
Executive’s death, the personal representative or legatees or distributees of
the Executive’s estate, as the case may be, shall have the right to receive any
amount owing and unpaid to the Executive hereunder; and (ii) the rights and
obligations of the Company hereunder shall be assignable and delegable in
connection with any subsequent merger, consolidation, sale of all or
substantially all of the assets of the Company and any similar event with
respect to any successor corporation (collectively, the “Company’s Successor”).

 

14. Binding Effect. Subject to any provisions hereof restricting assignment,
this Agreement shall be binding upon the parties hereto and shall inure to the
benefit of the parties and their respective heirs, devisees, executors,
administrators, legal representatives, successors (including the Company’s
Successor) and assigns.

 

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15. Amendment; Waiver. This Agreement shall not be amended, altered or modified
except by an instrument in writing duly executed by the parties hereto. Neither
the waiver by either of the parties hereto of a breach of or a default under any
of the provisions of this Agreement, nor the failure of either of the parties,
on one or more occasions, to enforce any of the provisions of this Agreement or
to exercise any right or privilege hereunder, shall thereafter be construed as a
waiver of any subsequent breach or default of a similar nature, or as a waiver
of any such provisions, rights or privileges hereunder.

 

16. Headings. Section and subsection headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.

 

17. Governing Law. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of Delaware.

 

18. Entire Agreement. This Agreement constitutes the entire agreement between
the parties respecting the employment of the Executive and supersedes any other
employment agreement or arrangement between the Executive and the Company.

 

19. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be an original and all of which shall be deemed to
constitute one and the same instrument.

 

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20. Definitions.

 

“Affiliates” means any entity, as may from time to time be designated by the
Board, and other entity directly or indirectly controlling or controlled by or
under common control with the Company. For purposes of this definition,
“control” means the power to direct the management and policies of such entity,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meaning correlative to the
foregoing.

 

“Board” means the board of directors of the Company.

 

“Cause” means (i) the Executive’s conviction of a felony or a crime involving
moral turpitude or the intentional commission of any other act or omission
involving fraud; (ii) habitual gross neglect of the Executive’s duties as
described in Section 3, which neglect continues uncorrected for ten days
following written notice to the Executive by the Company; or (iii) the continued
and willful failure to follow the lawful directions of the Board, which failure
continues uncorrected for ten days following written notice to the Executive by
the Company.

 

“Continuation Period” means the 12-month period commencing on the Date of
Termination.

 

“Date of Termination” means (i) if the Executive’s employment is terminated by
the Executive’s death, the date of the Executive’s death; (ii) if the
Executive’s employment is terminated because of the Executive’s Disability,
thirty days after Notice of Termination, provided that the Executive shall not
have returned to the performance of the Executive’s duties on a full-time basis
during such thirty-day period; (iii) if the Executive’s employment is terminated
by the Company for Cause, the date specified in the Notice of Termination; (iv)
if the Executive’s employment is terminated pursuant to delivery of a Notice of
Non-Renewal, the end of the then effective term of employment hereunder; or (v)
if the Employment Period is terminated for any other reason, the date on which
Notice of Termination is given.

 

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“Good Reason” means and shall be deemed to exist if, without the prior express
written consent of the Executive, (a) the Executive suffers a material change in
his reporting obligations, (b) the Executive suffers a material change in the
duties, responsibilities or effective authority associated with his titles and
positions, as set forth and described in Section 3 of this Agreement; (c) a
reduction by the Company of the Executive’s “Base Salary” (as increased from
time to time in accordance with Section 5) or in the other compensation and
benefits below a level which is substantially equivalent in the aggregate, to
those payable to the Executive hereunder, or a material adverse change in the
terms or conditions on which any such compensation or benefits are payable as in
effect on the date hereof or as the same may be increased from time to time
during the term of this Agreement; (d) the Company fails to pay the Executive’s
accrued compensation or to provide for the Executive’s accrued benefits when
due; (e) the Executive’s place of employment and work location, as provided
under Section 4 is moved to a location more than 25 miles from Plymouth Meeting,
Pennsylvania or (f) the failure or refusal of the Company’s Successor to
expressly assume this Agreement in writing.

 

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have
caused this Agreement to be duly executed on their behalf, as of the day and
year first hereinabove written.

 

GENAERA CORPORATION

By:

 

/s/ John A. Skolas

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Name:

  John A. Skolas

Title:

  Senior Vice President, Chief Financial Officer and General Counsel

 

/s/ Roy C. Levitt

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Roy C. Levitt

 

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