AMENDED AND RESTATED EMPLOYMENT AGREEMENT

3.   Compensation.

(a)    As compensation for the services to be performed hereunder, the Company shall pay to the Employee a salary (the "Salary"), as hereinafter provided, payable at such times as salaries of other senior executives of the company are paid but no less frequently than monthly.  The Salary shall be at a rate of two hundred Twenty Five Thousand dollars ($225,000) per year (the "Base Salary"), which shall be subject to cost-of-living adjustments, as provided in the succeeding subsection (b).

(b)    The Salary shall consist of the Base Salary, increased as provided in this subsection.   On January 1, 2012, and on January 1 of each succeeding calendar year during the Employment Period, the Base Rate shall be increased by a percentage equal to the greater of the percentage average increase in the Bureau of Labor Statistics "Consumer Price Index -- U.S. City Average -- All Items" from the December 31st of the preceding year to January 1st of the preceding year or a universal, non-discriminatory Cost Of Living salary adjustment as approved by the Compensation Committee.

(c)    For each calendar year (or part thereof) during which the Agreement is in effect, the Employee shall be eligible to be paid the following bonuses:

 

(i)         a performance bonus in an amount up to twenty-five percent (25%) of his current Base Salary as then in effect, in the sole discretion of the Compensation Committee of the Board of Directors based on the Employee's performance and/or the Company's operating results for such year; and

The performance bonus shall be eligible to be paid in cash within 90 days of the close of the calendar year.

(d)    The Employee is hereby granted non-qualified stock options as additional compensation for the services to be performed hereunder as follows: the Company shall issue to the Employee, non-qualified annual options valid for a ten year period to purchase 100,000 shares of the Company common stock with an exercise price equal to 110% of the closing price of the Company stock on the NYSE/ Amex on the trading date immediately preceding the date this Agreement was agreed to by the Company and the Employee. All options issued pursuant to this subsection shall vest on the first anniversary of the date of award. All options issued pursuant to this subsection not vested at the time of termination of employment with the Company shall immediately become void.

(e)    Notwithstanding any provision of this Agreement to the contrary, if the Employee is considered a “specified employee” as defined in the Internal Revenue Code section 409A regulations upon his “separation from service” (as defined in the section 409A regulations), the provisions of this section shall govern all distributions of deferred compensation hereunder that are subject to Internal Revenue Code section 409A.  Benefit distributions that are made due to a “separation from service” occurring while the Employee is a “specified employee” shall not be made during the first six (6) months following “separation from service”.  Rather, any distribution which would otherwise be paid to the Employee during such period shall be accumulated and paid to the Employee in a lump sum on the first day of the seventh month following the “separation from service”.  All subsequent distributions shall be paid in the manner specified. 

(f)    All compensation paid to the Employee pursuant to this Agreement, including, without limitation, base salary, bonuses, stock options, and fringe benefits, shall be subject to recoupment from the Employee by the Company pursuant to the Company’s Executive Compensation Recoupment Policies adopted December 1, 2011 (the “Recoupment Policies”), as may be amended by the Company’s Board of Directors from time to time. The Employee acknowledges receipt of a copy of the Recoupment Policies and agrees that he is bound by the terms of such Policies, as they may be amended by the Board of Directors from time to time.

4.   Fringe Benefits.

(b)           The Employee acknowledges that the Company may become subject to the health care non-discrimination rules of Internal Revenue Code Section 105(h) as made applicable by Section 10101(d) of the Patient Protection and Affordable Care Act. If the Company determines that it is or will be subject to such non-discrimination rules and that the health care insurance benefit provided by this section would cause a violation of such rules, the parties shall execute an amendment to this Agreement modifying the health care insurance benefit in such a manner that the benefit does not cause a violation of such non-discrimination rules.

 

5.   Termination.

(a)    The Company may discharge the Employee for cause at any time as provided herein, for purposes hereof, “cause” shall mean the willful engaging by Employee in illegal conduct or gross misconduct or gross violation of the Company’s Code of Ethics And Business Conduct for Officers which is demonstrably and materially injurious to the Company. For purposes of this Agreement, no act, or failure to act, on Employee's part shall be deemed "willful" unless done intentionally by Employee  and not in good faith and without reasonable belief that Employee's action or omission was in the best interest of the Company.  Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for Cause unless and until the Company delivers to Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the directors of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to Employee and an opportunity for Employee, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, Employee was guilty of conduct set forth above and specifying the particulars thereof in detail.

 

8.   Confidentiality, Invention and Non-Compete Agreement.  The Employee confirms his obligation to be bound by the terms of the Confidentiality, Invention and Non-Compete Agreement attached hereto as Exhibit B, executed as of 3rd day of December 2010.

9.   Offices.     Mr. Bernhardt may conduct the business of the Company from a variety of locations, including but not limited to those offices of at the Company Headquarters in Philadelphia or his home office in Malvern, PA.  The Company shall supply that equipment necessary for full telephone, telefax and internet access at all these locations and supply a portable computer capable of remote access while employee travels domestically and internationally on Company business.

10.   Expenses.  The Company shall be responsible for all travel and business related expenses of Mr. Bernhardt. Employee shall provide substantiation, in accordance with IRS regulations, as to all such expenses.  Employee agrees to reimburse the Company for all unrelated or personal expenses within one month. The expenditures shall be as prescribed or limited by the Company’s Travel & Expense policies and procedures; however, for air travel Employee shall be entitled to fly in business or first class at Employee’s discretion.

11.   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:

HEMISPHERX BIOPHARMA, INC.

One Penn Center

1617 JFK Boulevard, Suite 660

Philadelphia, Pennsylvania 19103

Telecopier No.: (215) 988-1739

Attention: William A. Carter

Chairman and Chief Executive Officer

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.

12.       Survival.  Notwithstanding anything in section 2 hereof to the contrary, the Confidentiality, Invention and Non-Compete Agreement shall survive any termination of this Agreement or any termination of the Employee's services.