Exhibit 99.2
AGREEMENT dated December 5, 2002 by and
between ORTEC INTERNATIONAL, INC., a Delaware
corporation (the "Company"), and ▇▇▇ ▇▇▇▇▇▇▇▇
(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:
2. 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.
3. 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), 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), but in such event the Company shall pay to the Executive the
lump sum amount provided in Section 2.1 of this Agreement as if the Executive
had voluntarily terminated his employment with the Company. 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) any awards previously made to the Executive as bonus
compensation and not previously paid, whether the right
to receive such payment has not vested theretofore
because a condition for making such payment has not yet
occurred or been achieved, shall also be paid by the
Company to the Executive within two (2) days after such
termination of employment;
(b) 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;
(c) 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;
(d) 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
(e) for a period of the three years 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 2.99 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.
5. 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.
6. 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
inconsistent in any material respect with the
Executive's position (which, in this definition,
includes status, office, title, and reporting
requirements), duties, or responsibilities as an officer
of the Company or any subsidiary, or any other material
diminution in the Executive's position, authority,
duties, or responsibilities from those in effect prior
to such act or action, 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 20 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 in the Executive's compensation;
(iv) the failure by the Company or any subsidiary to continue
in effect any compensation plan in which the Executive
participated that is material to the Executive's total
compensation, unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan or
arrangement) has been made with respect to that plan, or
the failure by the Company or any subsidiary to continue
the Executive's participation in any such compensation
plan (or in such substitute or alternative plan or
arrangement) on a basis not materially less favorable to
the Executive, both in terms of the amount of benefits
provided and the level of the Executive's participation
relative to other participants, than existed prior
thereto; or
(v) 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/ ▇▇▇▇▇▇ ▇▇▇▇, PH.D.
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▇▇▇▇▇▇ ▇▇▇▇, Ph.D., Chairman
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇, Executive