Exhibit 99.3
AGREEMENT dated December 5, 2002 by and
between ORTEC INTERNATIONAL, INC., a Delaware
corporation (the "Company"), and XXXXX
XXXXXXXX (the "Executive").
WHEREAS, the Company desires to provide for the Executive's continued
employment by the Company and for such purpose is willing to pay to the
Executive special compensation in the event of the death or disability of the
Executive or any other termination of the Executive's employment by the Company
and in consideration of the Company's promise to pay such special compensation
the Executive is willing to continue to be employed by the Company.
NOW, THEREFORE, the parties agree as follows:
1. DEATH OR DISABILITY
1.1 Executive shall be deemed disabled hereunder, if confirmed by
competent medical advice, he shall become physically or mentally unable to
perform his duties for the Company in the manner in which he has performed such
duties in the past, and such incapacity shall have continued for any period of
three (3) consecutive months or for twelve (12) weeks in any six (6) month
period. The person providing such medical advice shall be a medical doctor, or
in the case of mental disability a licensed mental health professional, who has
been treating the Executive for the condition or conditions causing the
disability and who is reasonably acceptable to the Company's Board of Directors.
1.2 In the event of the Executive's death or disability while the
Executive is employed by the Company, the Company shall pay to the Executive or
his personal representatives, as the case may be, a lump sum amount equal to the
Executive's Twelve Month Compensation (as defined in Section 3(a) hereof). Such
lump sum payment shall be paid (subject to any applicable payroll or other taxes
required to be withheld) in the case of the Executive's death within two (2)
days after the appointment by a court of competent jurisdiction of the executor
or administrator of the Executive's estate, and in the case of the Executive's
disability within two (2) days after the determination of such disability.
2. TERMINATION OF EMPLOYMENT
2.1 Voluntary Termination of Employment. In the event that the
Executive voluntarily terminates his employment by the Company, other than for
Good Reason (as that term is defined in Section 6.1 of this Agreement), and if
neither Xxxxxx Xxxx nor Xxx
Xxxxxxxx is then serving as the Company's Chief Executive Officer, the Company
shall pay to the Executive a lump sum amount equal to the Executive's Twelve
Month Compensation. Such lump sum payment shall be paid within two (2) days of
such termination of the Executive's employment by the Company.
2.2 Involuntary Termination of Employment. In the event that the
Executive's employment is terminated by the Company or by the Executive for Good
Reason, the Company shall pay to the Executive a lump sum amount equal to the
amount calculated in Section 3(b). Provided, however, that the provisions of
this Section 2.2 shall not apply if such termination of the Executive's
employment by the Company was for Cause (as that term is defined in Section 6.2
of this Agreement). The lump sum payment required to be made pursuant to this
Section 2.2 shall be paid within two (2) days of such termination of employment.
2.3 Tax Withholding. Any such lump sum payment made pursuant to Section
2.1 or Section 2.2 above shall also be subject to any applicable payroll or
other taxes required to be withheld.
2.4 Other Provisions Relating to Termination of Employment. Upon
termination of the Executive's employment for any reason (including because of
the Executive's death, disability or the voluntary or involuntary termination of
his employment):
(a) all options and/or warrants to acquire securities of the
Company then held by the Executive which have not yet
vested (because (x) a condition for the Executive's
right to exercise such option or warrant has not yet
occurred or been achieved but the time in which such
condition can occur or be achieved has not yet expired,
or (y) such option or warrant may not be exercised until
a later time but there is no other condition for the
right to exercise such option or warrant) shall
accelerate and become immediately exercisable in full,
anything in such options, warrants or plans governing
such options and/or warrants to the contrary
notwithstanding. Such options and/or warrants shall
remain exercisable by the Executive at any time during a
period ending the later of (u) the expiration date
thereof or (v) three years following the termination of
the Executive's employment. In the event that securities
identical to those that may be acquired upon the
exercise of such options and/or warrants are traded in
the public securities markets but the securities
acquired on the exercise of such options and warrants
are not freely transferable by the holder thereof in the
public securities markets by virtue of the fact that
such securities were not registered with the Securities
and Exchange Commission (the "Commission") pursuant to
the Securities Act of 1933, as amended (the "Act"), upon
the written demand of the Executive or
the person to whom the Executive transferred such
options or warrants (the "Transferee"), the Company, at
its sole cost and expense, will (i) register such
securities in a Registration Statement filed with the
Commission pursuant to the Act, such Registration
Statement to be filed by the Company within 135 days
after the Company's receipt of the Executive's or the
Transferee's written demand, or (ii) if such securities
have been registered under the Act on a Form S-8, the
Company will, if required to do so to permit the
Executive to sell such securities in the public
securities markets, file a reoffering prospectus for
such securities and (iii) in connection the Executive's
public sale of such securities Company will also, at its
sole cost and expense, qualify such securities for sale
in the public securities markets under the blue sky laws
of such states as the Executive or the Transferee shall
reasonably request;
(b) the Executive shall be entitled to the total retirement
benefits actually payable to him or his beneficiaries
under the Company's retirement plans or any successor
plans of the Company, and in the amount and manner
prescribed by such plans;
(c) the Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or
arrangements made under Sections 1 and 2 of this
Agreement, or because of the provisions of this Section
3, nor shall any payments under such Sections 1 or 2 be
reduced, or the Company relieved from performing any of
its obligations as required in this Section 3, because
of any compensation or benefits earned by the Executive
from any employment that the Executive may obtain; and
(d) for a period of the one year after the termination of
the Executive's employment by the Company for any
reason, other than the Executive's death, the Company
shall, at its sole cost and expense, provide the
Executive with the same medical and dental insurance
coverage as provided by the Company to the Executive
prior to such termination of employment.
3. DEFINITION OF "TWELVE MONTH COMPENSATION"
(a) For purposes of Sections 1.2 and 2.1 of this Agreement,
the term "Twelve Month Compensation" shall mean the sum
of the base salary received by the Executive during, and
any bonus or incentive payments received by the
Executive (whether or not pursuant to any annual bonus,
incentive compensation or similar plan maintained by the
Company) in the twelve consecutive calendar months
ending on the last day of the month
preceding the month in which the Executive's employment
by the Company was terminated. For purposes of Sections
1.2 and 2, any amount of such base salary or incentive
payment which is deferred by the Executive shall be
included in the calculation of payments received.
(b) For the purposes of Section 2.2 of this Agreement, the
term "Twelve Month Compensation" shall mean 1.99 times
the average annual compensation received by the
Executive from the Company for the five tax years prior
to the date of termination of the Executive's employment
with the Company. "Compensation" as used in this
paragraph (b) shall mean the sum of the base salary
received by the Executive and any bonus or incentive
payments received by the Executive (whether or not
pursuant to any annual bonus, incentive compensation or
similar plan maintained by the Company). For such
purposes any amount of such base salary or incentive
payment which is deferred by the Executive shall be
included in the calculation of payments received.
6. EXCISE TAX
If pursuant to any of the provisions of this Agreement, if the
aggregate amounts due the Executive under this Agreement and any other plan or
program of the Company constitutes a "Parachute Payment", as such term is
defined in Section 280 (G) of the United States Internal Revenue Code (the
"IRC"), and as a result thereof there is an excise tax imposed on the Executive
pursuant to IRC Section 4999 on all or part of such "Parachute Payment" received
by the Executive from the Company, the Company shall reimburse the Executive for
(i) such excise tax payment required to be paid by the Executive plus (ii)
income taxes and additional excise taxes required to be paid by the Executive
because of any reimbursement of excise and income taxes required to be paid by
the Executive pursuant to clause (i) and this clause (ii) of this Section 4, all
so that all excise taxes and income taxes on the amount of the reimbursement to
the Executive for such excise taxes and income taxes required to be paid by the
Executive on account of such "Parachute Payment" and such reimbursements shall
be borne by the Company and not by the Executive.
7. CODE SECTION 280(G) PAYMENTS
Anything in this Agreement to the contrary notwithstanding if the
aggregate of the amounts due the Executive under this Agreement and any other
plan or program of the Company constitutes a "Parachute Payment," then, at the
option of the Executive, the payments to be made to the Executive under this
Agreement and under such other plan or program of the Company, shall be reduced
to an amount which, when added to the aggregate of all other payments to the
Executive will make the total amount of such payments equal to three times his
Base Amount, as defined in IRC Section 280(G) (b) (3), less $1.00. The
determinations to be made with respect to this paragraph shall be made by the
public accounting firm that is retained by the Company as of the date when such
calculation is to be
made (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days of being requested to do so by the Company or the Executive. However, the
Executive may, at his option, appoint a different nationally recognized public
accounting firm to make the determinations required under this Section 5 (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
If payments to the Executive included in determining whether the Executive is
receiving an IRC 280(G) "Parachute Payment" include securities, derivative
securities and property other than cash, and the provisions of this Section 5
apply, which items of payment are to be eliminated (securities, derivative
securities, property and/or cash, or any combinations thereof) shall be made by
the Executive.
6. OTHER DEFINITIONS RELATING TO TERMINATION OF THE EXECUTIVE'S
EMPLOYMENT BY THE COMPANY
6.1 Good Reason. As used in Section 2.1 and Section 2.2 of this
Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties which are
not of a reasonable professional, executive or
administrative nature other than (in any case) an
isolated and inadvertent action not taken in bad faith
that is remedied by the Company promptly after notice
thereof to the Company by the Executive;
(ii) the Company's requiring the Executive to be based at any
office or location farther than 50 miles from the
Executive's then office or principal job location, or
his home, except for required business travel to an
extent substantially consistent with the Executive's
prior travel obligations;
(iii) a reduction by more than 20% in the Executive's
compensation, whether by a single reduction or a series
of reductions; or
(iv) the failure by the Company or any subsidiary to continue
to provide the Executive with benefits similar in all
material respects to those enjoyed by the Executive
under any plan in which the Executive was participating
at any time prior thereto, the taking of action by the
Company or any subsidiary which would directly or
indirectly materially reduce any of such benefits or
deprive the Executive of any material fringe benefit
enjoyed by the Executive at any time, or the failure by
the Company or any subsidiary to provide the Executive
with the number of paid vacation days to which the
Executive is entitled on the basis of years of service
with the Company and its subsidiary in accordance with
the Company's or a subsidiary's normal vacation policy
in effect at any time.
6.2 Cause. As used in Section 2.2 of this Agreement, "Cause" means:
(i) the Executive's willful failure to substantially perform
his employment duties to the Company, as such duties may
exist from time to time, or comply with the written
policies of the Company (other than any such failure
resulting from disability or the Executive's termination
for Good Reason) which continues for a reasonable time
after a notice to the Executive from the Company's Board
of the Directors (the "Board") that (x) identifies the
manner in which the Board believes that the Executive
has not substantially performed the Executive's duties
or complied with written policies and (y) demands
substantial performance or compliance within a specified
reasonable time; or
(ii) the Executive's willful engaging in conduct (including
any illegal conduct) that is demonstrably and materially
injurious to the Company or any of its subsidiaries,
monetarily or otherwise.
For purposes of this definition, no act, or failure to act, by the
Executive shall be deemed "willful" unless done, or omitted to be done, by the
Executive in bad faith and without reasonable belief that the Executive's act,
or failure to act, was in the best interest of the Company and its subsidiaries.
For the purpose of clause (i) of this definition, a "reasonable time" shall be a
time period determined to be sufficient under normal circumstances to correct
the deficient performance or compliance described in the notice to the
Executive.
7. WAIVER.
In the event any provision of this Agreement is found to be invalid or
unenforceable by a court of competent jurisdiction, such invalidity or
unenforceability shall attach only to such provision and not in any way affect
or render invalid or unenforceable any other provisions of this Agreement, and
this Agreement shall be carried out as if such invalid or unenforceable
provisions were not embodied therein.
8. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and there are no representations,
warranties or commitments except as set forth herein. This Agreement supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, of the parties hereto relating to the
transactions contemplated by this Agreement; provided, however, that it is the
intention of the parties that this Agreement shall be interpreted and applied in
conjunction with the terms of any option, warrant or other right now in
existence or hereinafter granted to the Executive to acquire shares of capital
stock of the Company. In the event of any conflict,
however, the terms of this Agreement shall govern and prevail. This Agreement
may be amended only in writing executed by the parties hereto affected by such
amendment.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
ORTEC INTERNATIONAL, INC.
By: /s/ XXXXXX XXXX
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XXXXXX XXXX, Ph.D., Chairman
/s/ XXXXX XXXXXXXX
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XXXXX XXXXXXXX, Executive
