Certain Relationships and Related Transactions

12 Months Ended

Dec. 31, 2011

Certain Relationships and Related Transactions

Certain Relationships and Related Transactions

(17) Certain Relationships and Related Transactions

The Company has employment agreements with certain of their Executive Officers and has granted such officers and directors options and warrants to purchase their common stock. Please see details of these Employment Agreements in Note 13 - Royalties, License and Employment Agreements.

The Company used at various times the property owned by Retreat House, LLC, for off-site meetings and lodging. It was determined in September 2011 that the property was owned individually by Dr. William A. Carter, Hemispherx' Chief Executive Officer, through April 28, 2010, at which time it was transferred to Retreat House, LLC, a Virginia limited liability company that is owned by three of the children of William A. Carter and a Senior Primary Revocable Trust in which William A. Carter is the Trustee. Dr. Carter also is the Manager of Retreat House, LLC. The Company paid Retreat House, LLC approximately $137,000, $123,200 and $82,400 for the use of the property, off-site meetings and lodging at various times in 2011, 2010 and 2009, respectively. Upon analysis in the Fall of 2011 by the Audit Committee's Financial Expert, the Company was unable to gain assurance that the fees charged for conference and lodging by the Retreat House, LLC were reasonable when compared to commercially available alternatives in the same geographic market. As a result and effective November 15, 2011, Dr. Carter agreed to designate the property owned by Retreat House, LLC as both his home office and as a meeting place for a variety of Company business and social activities at no additional expense to the Company and agreed not to bill, either personally or through Retreat House LLC, or any other entity, for use of the Retreat House. Additionally, Dr. Carter shall be responsible for paying for all secretarial and receptionist services related to his work conducted in Florida and provide said services at no further expense to the Company. In return as reflected in his Amended Employment Contract, Dr. Carter was granted an increase in his base salary compensation and the Company shall supply the equipment necessary for full telephone, telefax, computer and internet access. For his Board fees, Dr. Carter received approximately $170,000, $165,000 and $-0- for 2011, 2010 and 2009, respectively.

Katalin Kovari, M.D. was paid approximately $28,000, $26,000 and $13,000 in 2011, 2010 and 2009, respectively for her part-time services to the Company as Assistant Medical Director. Dr. Kovari is the spouse of William A. Carter, CEO. In December 2011, the Company hired Kyle Carter as a Data Control Clerk. Mr. Carter is the Son of Dr. William A. Carter, and was paid approximately $3,000, $-0- and $-0- in 2011, 2010 and 2009, respectively.

Thomas Equels was elected to the Board of Directors at the Annual Stockholders Meeting on November 17, 2008 and joined the Company as General Counsel effective June 1, 2010. Mr. Equels had provided external legal services for several years through May 31, 2010 and Equels Law Firm continues to support the Company. In 2011, 2010 and 2009, the Company paid Equels Law Firm approximately $159,000, $729,000 and $387,000, respectfully, for services rendered. Upon analysis in the Fall of 2011 by the Audit Committee's Financial Expert, it was deemed that the hourly rates charged by Equels Law to the Company were reasonable when compared to the fee structure of a possible arms-length transaction from comparable firms in practice in the same market and of the similar size. For his Board fees, Mr. Equels received approximately $170,000 and $165,000 in cash for 2011 and 2010, respectively, and $150,000 in cash and stock in 2009.

On a quarterly basis, the Company reimbursed Director Richard Piani for his rental of a 2,000 square foot, fully furnished and equipped office with part-time administrative assistance located at 97 Rue Jean Jaures, Levallois, Perret, France used exclusively for Hemispherx Europe N.V./S.A. In 2011, 2010 and 2009, the Company paid reimbursements to Mr. Piani for approximately $48,000, $48,000 and $46,000, respectfully, for the sublease. Upon analysis in the Fall of 2011 by the Audit Committee's Financial Expert, it was deemed that the rental fee charged to the Company was reasonable as compared to a possible arms-length transaction with comparable office facilities in the same geographic vicinity for similar commercial space of comparable quality and size in the same market. For his Board fees, Mr. Piani received approximately $170,000 and $165,000 in cash for 2011 and 2010, respectively, and approximately $150,000 in cash and stock in 2009.