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, 0000 XXX Xxxxxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter referred to as the "CORPORATION"),
and Xxxxxx X. Xxxxxxxx, an individual residing at 0000 Xxxx 00xx Xxxxxx, Xxxxx,
Xxxxxxxx 00000 (hereinafter referred to as "XXXXXXXX").
WHEREAS, Xxxxxxxx is engaged by the Company pursuant to an Engagement
Agreement dated as of June 23, 2004, (the "Existing Agreement");
WHEREAS, Xxxxxxxx and the Company wish to amend and restate the terms and
conditions of the Existing Agreement;
NOW, THEREFORE, the Company and Xxxxxxxx hereby amend and restate the
Existing Agreement in its entirety and agree as follows:
1. ENGAGEMENT. The CORPORATION agrees to engage XXXXXXXX, and XXXXXXXX
agrees to serve the CORPORATION as a Chief Financial Officer for the CORPORATION
upon the terms and conditions hereafter set forth. The duties of XXXXXXXX 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 XXXXXXXX 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 XXXXXXXX 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 XXXXXXXX an additional bonus compensation in the sum of One
Hundred Thousand Dollars ($100,000.00).
(c) The CORPORATION shall xxxxx Xxxxxxxx a bonus in each year that the
Chief Executive Officer is granted a bonus. Each bonus granted shall be a
percentage of Xxxxxxxx'x 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 XXXXXXXX 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, XXXXXXXX will not participate in the
CORPORATION'S Group Medical program or 401K pension program.
4. SERVICES. XXXXXXXX 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 XXXXXXXX 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, XXXXXXXX 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 XXXXXXXX.
6. Termination.
(a) The Company may discharge Xxxxxxxx for cause at any time as provided
herein. For purposes hereof, "cause" shall mean the willful engaging by Xxxxxxxx
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 Xxxxxxxx'x part shall be deemed "willful" unless done, or omitted to be
done, by Xxxxxxxx not in good faith and without reasonable belief that
Xxxxxxxx'x action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Xxxxxxxx shall not be deemed to have been
terminated for Cause unless and until the Company delivers to Xxxxxxxx a copy of
a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to Xxxxxxxx and an
opportunity for Xxxxxxxx, together with counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, Xxxxxxxx was guilty of
conduct set forth above and specifying the particulars thereof in detail.
(b) This Agreement shall terminate upon the death or disability of
Xxxxxxxx. For purposes of this subsection (b), "disability" shall mean the
inability of Xxxxxxxx effectively to substantially provide the services
hereunder by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months.
(c) Xxxxxxxx shall have the right to terminate this Agreement upon not less
than thirty (30) days prior written notice of termination.
7. Effect of Termination.
(a) In the event that this Agreement is terminated for "cause" pursuant to
subsection 6(a), the Company shall pay Xxxxxxxx, at the time of such
termination, only the fees due and payable to him through the date of the
termination of this Agreement.
(b) In the event that this Agreement is terminated by the Company at any
time without "cause", as defined in subsection 5(a), the Company shall pay to
Xxxxxxxx, at the time of such termination, the fees otherwise due and payable to
him through the last day of the then current term of this Agreement.
(c) In the event this Agreement is terminated at his election pursuant to
subsection 6(c) or due to Xxxxxxxx'x death or disability pursuant to 6(b), the
Company shall pay to Xxxxxxxx, at the time of such termination, the fees
otherwise due and payable to him through the last day of the month in which such
termination occurs and for an additional twelve month period.
8. DISABILITY.
(a) During a period of disability, the disabled XXXXXXXX shall continue to
receive full compensation from the CORPORATION each month for the term of such
disability but not to exceed six (6) months; after the expiration of said six
(6) months period, XXXXXXXX shall receive compensation at the rate of fifty
percent (50%) of his full compensation each Month for the remaining term of such
disability but not to exceed an additional six (6) months; after the expiration
of said one (1) year period, XXXXXXXX shall not be entitled to any additional
compensation until the resumption of the normal duties of his employment;
provided, however, that if XXXXXXXX is disabled as defined herein, and
thereafter resumes full time employment hereunder, and thereafter becomes
disabled again, any such resumed period of disability shall, for the purpose of
determining the percentage of full compensation and duration of payment thereof
to which XXXXXXXX is then entitled, be deemed a continuation of the prior period
of disability unless a period of at least six (6) continuous months of active
full time employment elapsed since the conclusion of the prior period of
disability. Any amounts paid hereunder to the disabled XXXXXXXX shall be reduced
by any disability income insurance proceeds under any policies owned by or paid
for by the CORPORATION.
(b) Anything herein contained to the contrary notwithstanding, XXXXXXXX
shall be conclusively deemed to be disabled within the meaning of this Agreement
during any period in which he received disability insurance proceeds from an
insurance carrier, the policies of which were owned or paid for by the
CORPORATION.
9. TRADE SECRETS AND NON-DISCLOSURE. XXXXXXXX hereby acknowledges that
certain trade secrets of the CORPORATION are valuable, special and unique assets
of the CORPORATION'S business. Such trade secrets include but are not limited to
its customer lists and the sources of its materials and products. XXXXXXXX
hereby covenants that he will not, during or after the term of his employment,
disclose any of the foregoing secrets or any part thereof to any firm, person or
corporation or any entity for any reason or purpose whatsoever. In the event of
a breach or threatened breach by XXXXXXXX of the provisions of this Paragraph,
the CORPORATION shall be entitled to proceed in any court for an injunction
restraining XXXXXXXX from disclosing, in whole or in part, any of the aforesaid
trade secrets, or from rendering such service to any person, firm, corporation,
association or any entity to whom such trade secrets, in whole or in part, have
been disclosed, or are threatened to be disclosed. Nothing herein contained
shall be construed as prohibiting the CORPORATION from pursuing any other
remedies for such breach or threatened breach, including the recovery of damages
from XXXXXXXX and/or from proceeding pursuant to the arbitration provisions of
this Agreement.
10. NOTICES. Any notice or other communication pursuant to this Agreement
shall be in writing and shall be sent by telecopy or by certified or registered
mail addressed to the respective parties as follows:
(i) If to the Company, to:
HEMISPHERX BIOPHARMA, INC.
Xxx Xxxx Xxxxxx
0000 XXX Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 1910
Telecopier No.: (000) 000-0000
Attention: President
(ii) If to Xxxxxxxx, to:
Xxxxxx X. Xxxxxxxx
0000 X. 00xx Xxxxxx
Xxxxx, XX 00000
Telecopier No.: (000) 000-0000
or to such other address as the parties shall have designated by notice to the
other parties given in accordance with this section. Any notice or other
communication shall be deemed to have been duly given if personally delivered or
mailed via registered or certified mail, postage prepaid, return receipt
requested, or, if sent by telecopy, when confirmed.
11. Modification. No modification or waiver of this Agreement or any
provision hereof shall be binding upon the party against whom enforcement of
such modification or waiver is sought unless it is made in writing and signed by
or on behalf of both parties hereto.
12. Miscellaneous.
(a) This Agreement shall be subject to and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
(b) The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate and be construed as a waiver or a
continuing waiver by that party of the same or any subsequent breach of any
provision of this Agreement by the other party.
(c) If any provisions of this Agreement or the application thereof to any
person or circumstance shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder hereof,
or the application of such provision to persons or circumstances other than
those as to which it is so determined to be invalid or unenforceable, shall not
- be affected thereby, and each provision hereof shall be valid and shall be
enforced to the fullest extent permitted by law.
(d) This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective heirs, executors and administrators,
successors and assigns.
(e) This Agreement shall not be assignable in whole or in part by either
party, except that the Company may assign this Agreement to and it shall be
binding upon any subsidiary or affiliate of the Company or any person, firm or
corporation with which the Company may be merged or consolidated or which may
acquire all or substantially all of the assets of the Company.
IN WITNESS WHEREOF, this Agreement has been signed by the parties hereto as
of the date first above written.
HEMISPHERX BIOPHARMA, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chairman of the Board
and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
