AMENDED AND RESTATED ENGAGEMENT AGREEMENT

 

                                                               Exhibit 10.39

 

                              AMENDED AND RESTATED

                              ENGAGEMENT AGREEMENT

 

     THIS AMENDED AND RESTATED  ENGAGEMENT  AGREEMENT (the  "Agreement") is made

and  entered  into as of March 11, 2005  between  Hemispherx  Biopharma,  Inc. a

Delaware  Corporation (the "Company") and William A. Carter, M.D., of Tavernier,

Florida ("Carter").

 

         WHEREAS,  Carter and the Company  entered into an Engagement  Agreement

effective as of dated January 1, 2004, (the "Existing Agreement");

 

     WHEREAS,  Carter and the  Company  wish to amend and  restate the terms and

conditions of the Existing Agreement;

 

         NOW,  THEREFORE,  the Company and the Employee hereby amend and restate

the Existing Agreement in its entirety and agree as follows:

 

         1.  Engagement.  The Company  engages Carter and Carter agrees to serve

the Company as a consultant relating to patent development. Additionally, Carter

shall serve, so long as he is elected by the  shareholders of the Company,  as a

Director of the Company,  and shall serve, so long as he is elected by the Board

of Directors of the Company, as chairman of the Executive Committee of the Board

of Directors of the Company.  It is expressly  understood and agreed that all of

Carter's services hereunder are being provided as an independent  contractor and

not as an employee for federal tax purposes.

 

         2. Term. This Agreement shall commence, retroactively, as of January 1,

2005 and shall terminate on December 31, 2010 (the "Initial  Termination  Date")

unless sooner  terminated in accordance  with Section 5 hereof or unless renewed

as  hereinafter  provided  (such period of service  together  with any extension

thereto hereinafter being called the "Service Period").  This Agreement shall be

automatically  renewed for  successive  one (1) year periods  after the original

Termination Date unless written notice of refusal to renew is given by one party

to the other at least ninety days prior to the initial  Termination  Date or the

expiration of any renewal period.

 

         3.       Fees.

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                  (a) For his  services to the  Company  the  Company  shall pay

                  Carter a fee (the  "Base  Fee") of  $207,776.88  per year (the

                  "Original Base Fee"), which shall be subject to adjustments as

                  provided in succeeding subsections (b) and (c).

 

                  (b) On January 1, 2006,  and on January 1, of each  succeeding

                  calendar year during the Service Period, the Base Fee shall be

                  increased  or  decreased by the amount of increase or decrease

                  in the annual dollar value of Directors fees being provided to

                  the  individual  Directors of the Company from the December of

                  the  preceding  year to the  December of the second  preceding

                  year.

 

                  (c) On January 1,  2006,  and on January 1 of each  succeeding

                  calendar  year  during  the  Service   Period  and  after  the

                  adjustment  provided for in subsection (b) above, the Base Fee

                  shall be increased  or decreased by a percentage  equal to the

                  percentage average increase or decrease in the Bureau of Labor

                  Statistics  "Consumer  Price Index - U.S.  City  Average - All

                  Items" from December of the second preceding year.

 

                  (d) For each calendar year (or part thereof) during which this

                  Agreement is in effect,  Carter shall be eligible to be paid a

                  performance bonus in an amount up to twenty-five percent (25%)

                  of his Base Fee then in effect,  in the sole discretion of the

                  Compensation  Committee  of the  Board of  Directors  based on

                  Carter's performance for such year.

 

         4.       Expenses. During the Service Period,Carter, upon presentation

                  ---------

                  of payment vouchers or receipts, will be reimbursed for the

                  reasonable and necessary expenses incurred by him in providing

                  services pursuant to this Agreement.

 

         5.       Termination.

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                  (a)     The Company may discharge Carter for cause at any time

                  as provided herein.  For purposes  hereof,  "cause" shall mean

                  the  willful  engaging  by Carter in illegal  conduct or gross

                  misconduct which is demonstrably  and materially  injurious to

                  the  Compan