AMENDED AND RESTATED ENGAGEMENT AGREEMENT

 

 

 

                                                                  Exhibit 10.40

 

                              AMENDED AND RESTATED

                              ENGAGEMENT AGREEMENT

 

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

of the 11th day of March, 2005 between  Hemispherx  Biopharma,  Inc., a Delaware

Corporation   having  an  office  at  One  Penn  Center,   1617  JFK  Boulevard,

Philadelphia, Pennsylvania 19103 (hereinafter referred to as the "CORPORATION"),

and Robert E. Peterson,  an individual residing at 3232 West 72nd Street, Tulsa,

Oklahoma 74132 (hereinafter referred to as "PETERSON").

 

     WHEREAS,  Peterson  is engaged by the  Company  pursuant  to an  Engagement

Agreement dated as of June 23, 2004, (the "Existing Agreement");

 

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

conditions of the Existing Agreement;

 

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

Existing Agreement in its entirety and agree as follows:

 

     1.  ENGAGEMENT.  The CORPORATION  agrees to engage  PETERSON,  and PETERSON

agrees to serve the CORPORATION as a Chief Financial Officer for the CORPORATION

upon the terms and conditions  hereafter set forth. The duties of PETERSON shall

be  consistent  with his  position as an  executive,  and shall be those  duties

customarily  performed  by an  executive  of  his  experience.  The  CORPORATION

originally engaged PETERSON in this capacity on April 15, 1993.

 

     2. TERM. This Agreement  becomes  effective,  retroactively,  on January 1,

2005 and shall expire on December 31, 2010  subject to  provisions  of Article 6

herein provided.

 

     3. COMPENSATION AND OTHER BENEFITS.

 

     (a) For his services to the  CORPORATION  during the TERM, the  CORPORATION

shall pay  PETERSON a fee  ("Fee") at the annual  base rate of Two  Hundred  Two

Thousand Six Hundred Eighty  ($202,680)  Dollars.  This annual base rate will be

increased  each year to reflect the increase in the cost of inflation  index for

the preceding year.

 

     (b) Upon the CORPORATION receiving FDA approval for commercial  application

of  "Ampligen"  (the  CORPORATION'S   primary  product  being  developed),   the

CORPORATION will pay PETERSON an additional bonus compensation in the sum of One

Hundred Thousand Dollars ($100,000.00).

 

     (c) The  CORPORATION  shall  grant  Peterson  a bonus in each year that the

Chief  Executive  Officer is  granted a bonus.  Each  bonus  granted  shall be a

percentage of Peterson's  annual base  compensation,  with the percentage  being

equal  to  that  percentage  of  the  Chief  Executive   Officer's  annual  base

compensation granted to the Chief Executive Officer as a bonus.

 

     (d)  During  the  term of  this  Agreement,  the  CORPORATION  shall  grant

additional  stock options to PETERSON at the same time and on the same terms and

conditions as those granted to other employees and/or executives.

 

     (e) As an  independent  contractor,  PETERSON will not  participate  in the

CORPORATION'S Group Medical program or 401K pension program.

 

     4. SERVICES. PETERSON agrees to serve the CORPORATION faithfully and to the

best of his ability,  and shall devote eighty-five percent (85%) of his business

time,  attention  and  energies to the  business of the  CORPORATION  during the

regular  business  hours and at any other  time  during  the week as  reasonably

requested by the CORPORATION and/or required by the demands of his position. All

services  required to be rendered by PETERSON may be rendered for the benefit of

any of the  CORPORATION'S  affiliates or  subsidiaries,  but no liability  shall

attach to such  affiliate  or  subsidiary  for the  payment of any  compensation

hereunder.

 

     5.  EXPENSES.  During  the  period  of his  engagement,  PETERSON  will  be

reimbursed for his reasonable and necessary expenses incurred by him pursuant to

his engagement hereunder,  such expenses to include necessary travel and related

costs  incurred  in  commuting  to and from  Tulsa,  Oklahoma as well as lodging

expenses  while in  Philadelphia,  Pennsylvania  upon  submission of appropriate

receipts or vouchers  therefore..  All personal  expenses of whatsoever  kind or

nature with respect to commuting and staying in Philadelphia  are to be defrayed

and borne by PETERSON.

 

     6. Termination.

 

     (a) The Company may  discharge  Peterson  for cause at any time as provided

herein. For purposes hereof, "cause" shall mean the willful engaging by Peterson

in illegal  conduct or gross  misconduct  which is  demonstrably  and materially

injurious to the Company. For purposes of this Agreement,  no act, or failure to

act, on Peterson's part shall be deemed  "willful" unless done, or omitted to be

done,