AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT
10.2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) has been made and
entered into as of the 8th day of July, 2008,
between CHATTEM, INC., a Tennessee corporation (“Company”) and XXX XXXXXX
(“Executive”).
WITNESSETH
WHEREAS,
the Executive currently serves as a key employee of the Company and his services
and knowledge with respect to the Company and its business strategies and
operations are critical to maintaining the Company’s position in its industry
against its competitors;
WHEREAS,
the Board of Directors of the Company has determined that it is in the best
interests of the Company and its shareholders to secure the Executive’s
continued services, and in the event of his departure, the Executive’s agreement
to not compete with the Company for a period sufficient to allow
stability to the Company in its business strategies and
operations.
WHEREAS,
the Company and the Executive previously entered into an Employment Agreement
dated August 1, 2000;
WHEREAS,
the Company desires to amend and restate the Employment Agreement to ensure
compliance with Section 409A of the Internal Revenue Code of 1986, as amended,
and to make certain other beneficial changes; and
WHEREAS,
the Executive is willing to agree to the changes set forth herein in exchange
for the specified additional benefits provided hereunder.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained, and for
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, Company and Executive agree as
follows:
1. Stated
Term. This Employment Agreement shall be deemed to have
commenced on August 1, 2000, and unless it is terminated earlier in the manner
provided below in this Agreement, shall continue for a term of three years and
upon each anniversary date of this Agreement shall be deemed to automatically
renew for a new three year term from such anniversary date. Not later
than each anniversary date of this Agreement, either party shall have the right
to provide written notice of their intention to have the Agreement expire at the
end of the then-pending three year term period without automatic
renewal.
2. Duties. During
the term of employment set forth in this Agreement, Company shall employ
Executive, and Executive shall serve, as Chairman of the Board and
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Chief
Executive Officer, or in such other similar positions as may be assigned by the
Company’s Board of Directors. Executive shall perform faithfully the
duties assigned to Executive by the Board of Directors of Company pursuant to
this Agreement to the best of Executive’s ability and shall devote substantially
all of Executive’s business time and attention to Company’s
business.
3. Salary. Company
shall pay to Executive a salary at the rate of $_________ per annum in equal
monthly installments or on whatever basis the Company pays other
executives. The Compensation Committee of the Board of Directors of
the Company shall at least annually evaluate and establish a base salary for
Executive for the upcoming year in an amount determined to be appropriate by the
Compensation Committee.
4. Incentive
Compensation. Executive shall be entitled to participate in
the Company’s annual incentive compensation plan and any other plans
subsequently adopted by the Company and shall be eligible to receive grants of
stock options pursuant to the terms of the Company’s stock option plans
established for its executives as approved by the Compensation Committee of the
Board of Directors from time to time.
5. Withholding of
Taxes. Any payments to Executive, to the estate of Executive,
or to the designated beneficiary or beneficiaries of Executive pursuant to the
terms of this Agreement shall be reduced by such amounts as are required to be
withheld under all present and future federal, state and local tax laws and
regulations and other laws and regulations.
6. Benefits. During
the term of employment hereunder, Executive shall be entitled, to the extent
Executive is otherwise eligible, to participate fully in all benefits provided
by Company for its employees generally, including, but not limited to, any
retirement plans, life, health, and long-term disability insurance maintained
from time to time by Company. Executive shall also receive
an allowance for the use of an automobile for the duration of this Agreement and
such other perquisites as may be established by the Company from time to time
for its executives.
7. Expense
Allowance. Executive is authorized to incur, or to cause
Company to incur, reasonable expenses in connection with the performance of
Executive’s duties hereunder. Company shall reimburse Executive for
all such expenses upon the presentation by Executive from time to time of an
itemized account of such expenditures.
8. Vacation. Executive
shall be entitled to paid vacation days each year in such amounts as may be
permitted under the Company’s vacation policies generally. The timing
of Executive’s vacation shall be scheduled in a reasonable manner by
Company and the Executive.
9. Termination Before
Expiration of Stated Term. The Executive’s employment pursuant
to this Agreement shall terminate prior to the expiration of its stated term
upon the first to occur of the following:
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(a) The
voluntary resignation of Executive.
(b) Executive’s
death.
(c) Executive’s
permanent disability. The term “permanent disability” shall mean
physical or mental incapacity of a nature which has prevented or will prevent
Executive, in the sole judgment of the Board of Directors of the Company, from
performing on a full-time basis each of the material duties of Executive for a
period of 12 consecutive weeks or 24 weeks within any period of 12 consecutive
months.
(d) Executive’s
employment being terminated by Company for cause. Termination “for
cause” shall be limited solely to termination because of Executive’s indictment
or conviction for a felony or other crime involving substantial moral turpitude,
alcoholism, drug addiction or the gross, active misfeasance of the Executive
with regard to his duties with the Company. Termination for cause
shall occur immediately upon delivery to Executive of a notice of such action by
Company, which notice shall specify the ground for such
termination.
(e) Executive’s
employment being terminated by Company without cause. Termination
“without cause” shall mean termination of employment on any basis other than by
expiration of the stated term, voluntary resignation, death, permanent
disability, or termination for cause, provided that, voluntary resignation when
the Company constructively discharges the Executive shall also be deemed
termination without cause. “Constructively Discharges” shall mean changes the
location of Executive’s principal place of employment from Chattanooga,
Tennessee, or reduces the Executive’s status, duties, responsibilities or direct
or indirect compensation, (including future increases commensurate with those
given other managers of the Company), or so alters the style or philosophy of
the conduct of the Company’s business, in the opinion of the Executive, as to
cause it to be undesirable to the Executive to remain in the employ of the
Company.
10. Duties of Executive on
Termination. Upon the termination of his employment under this
Agreement, Executive shall immediately return any and all property of Company in
the possession of Executive, including, without limitation, all documents,
contracts, financial information and records.
11. Compensation Payable to
Executive on Termination. The rights of Executive to
compensation upon termination of employment are as follows:
(a) In
the case of the expiration of the stated term of the Agreement, Company shall
pay to Executive any salary and bonus accrued to the date of expiration of the
Agreement.
(b) In
the case of the death of Executive, Company shall pay to Executive’s beneficiary
or beneficiaries designated in writing to Company, or to Executive’s estate in
the absence or lapse of such designation, the salary, as in effect at the date
of
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Executive’s
death, through the last day of the month in which death occurred and any accrued
bonus as of the last day of the month in which death occurred.
(c) In
the case of the permanent disability of Executive, Company shall pay to
Executive the salary, as in effect at the date of Executive’s permanent
disability, through the last day of the month in which such permanent disability
is determined and any accrued bonus as of the last day of the month in which
such permanent disability occurred.
(d) If
Executive’s employment is terminated for cause, Company’s only obligation to
Executive shall be payment of the salary accrued on the date on which such
termination occurs.
(e) If
Executive’s employment is terminated as a result of a voluntary resignation,
Executive shall be entitled to continuing monthly payments of 75 percent of
Executive’s monthly base salary at the time of termination payable during the
period of non-competition provided in Section 13 below.
(f) If
Executive’s employment is terminated without cause, including voluntary
resignation when the Company constructively discharges the Executive, the
Executive shall be entitled to receive (i) continuing monthly payments equal to
75 percent of Executive’s monthly base salary at the time of termination payable
during the period of non-competition provided in Section 13 below, and (ii) a
lump sum payment equal to 25 percent of the Executive’s monthly base salary at
the time of termination multiplied by the number of months remaining under the
three year term of the Agreement as liquidated damages for the early termination
of this Agreement, provided, however, that such amount shall be proportionately
refunded to the Company by the Executive to the extent the Executive is
successful during the remainder of the stated term of the Agreement in securing
employment in a comparable executive position with another employer in
Chattanooga, Tennessee, with a base salary at least equal to the base salary of
Executive upon termination of employment. In addition, the Company
shall continue to provide the health, medical and life insurance benefits as set
forth in Section 12 below.
(g) Notwithstanding
the foregoing subsections (e) and (f), in the event the Executive is a “specified
employee”
within the meaning of Section 409A of the Code and the regulations thereunder as
of the date of termination of employment, the severance payments under
subsections (e) or (f), as the case may be, shall accrue during the first six
(6) months after the date of termination of employment and be paid on the first
day of the seventh (7th) month
after the date of termination of employment as required by Section 409A, or, if
earlier, the date of death of the Executive. Thereafter, subsequent
severance payments shall be made in the time and manner set forth in subsection
(e) or (f).
12. Continuation of
Benefits. If the Executive’s employment is terminated as set
forth in Section 11(f) above, the Company shall continue to provide health,
medical and life insurance in accordance with the following rules:
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A. General
Rule. If Executive’s employment is terminated as set forth in Section
11(f) above and Executive timely elects COBRA coverage under the provisions of
Section 4980B of the Code in connection with Executive’s termination of
employment, the Company shall reimburse Executive for the COBRA coverage
premiums Executive pays each month to purchase such coverage from the Company
for Executive and, if so elected, for Executive’s eligible dependents, and the
reimbursement for one month shall be made no later than the end of the
immediately following month; provided, however, such reimbursement shall be made
for no more than the greater of (1) the balance of the remaining term of
employment under this Agreement, or (2) 24 months, of COBRA coverage (the
“Coverage Period”).
B. Special
Rules.
(i). COBRA
Coverage Expires. If Executive’s COBRA coverage expires in less than
the Coverage Period and Executive elects before the expiration of such COBRA
coverage to continue to purchase from the Company coverage identical to COBRA
coverage under this Section 12.B(i) at 100% of the then COBRA coverage premium,
Executive may purchase such coverage until the total number of months of
coverage Executive has purchased under Section 12.A and this Section
12.B(i) equals the Coverage Period. The Company shall reimburse
Executive for such premiums, and the reimbursement for premiums paid for one
month shall be made no later than the end of the following month.
(ii). Additional
Coverage. If Executive elects before the expiration of Executive’s
coverage under Section 12.A or Section 12.B(i), whichever comes last, to
continue to purchase from the Company coverage identical to COBRA coverage under
this Section 12.B(ii), Executive may purchase such coverage at Executive’s
expense at 100% of the then COBRA coverage premium for a period which shall not
exceed 18 additional months, provided Executive pays such premiums at the same
time and in the same manner as the Company then requires for premium payments to
purchase COBRA coverage.
C. Life
Insurance. In addition, if Executive’s employment is terminated as
set forth in Section 11(f) above, the Company shall reimburse Executive for life
insurance premiums Executive pays each month to purchase life insurance coverage
at substantially the same level of benefits as the Executive has at the date of
termination of employment, and the reimbursement for one month shall be made no
later than the end of the immediately following month. Such payments
shall continue through the greater of (1) the balance of the remaining term of
employment under this Agreement, or (2) 24 months. Notwithstanding
the foregoing, in the event the Executive is a “specified employee” within the
meaning of Section 409A of the Code and the regulations thereunder as of the
date of termination of employment, the reimbursements under this subsection 12C
shall accrue during the first six (6) months after the date of termination of
employment and be paid on the first day of the seventh (7th) month after the
date of termination of employment as required by Section 409A, or, if earlier,
the date of death of the Executive. Thereafter, subsequent
reimbursements shall be made in the time and manner set forth in this subsection
12C.
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13. Non-Compete. Executive
covenants and agrees that Executive will not, at any time during the term of
this Agreement and, in the event of termination for cause, termination upon
voluntary resignation, or termination without cause, for a period of 18 months
following such termination of employment, accept compensation or anything of
value from, nor offer or provide any services, including consulting services, to
any person, company, partnership, joint venture or other entity in a capacity
involving, in whole or in part, over-the-counter drugs, functional toiletries or
dietary supplements which are competitive with the products of Company marketed
and sold during the term of this Agreement up through the date of termination of
employment with annual sales for the Company’s most recently completed fiscal
year in excess of $10 million. This provision applies only to entities selling
the above specified products in competition with the Company through food, drug
or mass merchandiser channels of distribution in the United States.
14. Confidentiality
Obligations. The Executive agrees to maintain all confidential
information and trade secrets obtained during the course of his employment with
the Company as confidential and to disclose the same to no one, other than in
the furtherance of the Company’s business in the normal course or to a fellow
employee with a reasonable need to know, unless the Executive can demonstrate by
documentary evidence that such information was (1) known to him prior to his
employment with the Company; (2) subsequently became part of the public domain
through no fault of his own; or (3) was subsequently disclosed to him by a third
party not in violation of any obligation of confidentiality and non-use with the
Company. The Executive agrees to maintain such confidential
information and trade secrets as confidential during the term of this Agreement
and, for confidential information for a period of 18 months thereafter and, for
trade secrets for so long as the information remains a trade
secret. It is agreed that, for purposes of this Agreement, the term
“confidential information” shall mean any and all information relative to the
Company which is unpublished or not readily available to the general public, and
the term “trade secrets” means information, without regard to form, that derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, persons other than
the Company who can obtain economic value from its disclosure or use, and is the
subject of efforts by the Company that are reasonable under the circumstances to
maintain its secrecy.
15. Injunction. Executive
expressly recognizes that any breach of the provisions of this Agreement is
likely to result in irreparable injury to Company and that monetary damages may
not adequately compensate Company for such breach. Therefore,
Executive agrees that Company shall be entitled, if it so elects, to institute
and prosecute proceedings in any court of competent jurisdiction not only to
obtain damages for any breach of this Agreement, but also to enforce the
specific performance of this Agreement by Executive and to enjoin Executive from
activities in violation of this Agreement. Further, Executive agrees
that any breach of the provisions of this Agreement shall automatically toll and
suspend the period of restraint for the amount of time that the breach
continues.
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16. Attorney Fees and Other
Costs. If any legal action or other proceeding is brought for
the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any provision of this
Agreement, Company shall be entitled to recover reasonable attorney fees as
well as court costs and all expenses not taxable as court costs. This
remedy shall include, without limitation, all such fees, costs and expenses
incident to appeals.
17. No Waiver of
Breaches. The failure of a party to require the performance of
a provision of this Agreement shall not constitute a waiver of a subsequent
breach or nullify the effect of such provision.
18. Governing
Law. This Agreement shall be construed in accordance with the
laws of Tennessee. Executive and the Company agree that any
proceeding arising out of or in connection with this Agreement may be brought in
the courts of Xxxxxxxx County, Tennessee, and Executive and the Company waive,
to the fullest extent permitted by applicable law, any objection either may have
to the appropriate venue of such court in any such proceeding.
19. Notices. Any
notice required or permitted herein shall be in writing and shall be mailed,
postage prepaid, or sent by overnight courier, properly addressed to the other
party at the address set forth below, subject to change by written notice of
either party to the other:
Company:
Chattem,
Inc.
0000 Xxxx
00xx Xxxxxx
Xxxxxxxxxxx,
XX 00000
Attention: President
Executive:
Xx. Xxx
Xxxxxx
000 Xxxxx
Xxxx Xxxx
Xxxxxxx
Xxxxxxxx XX 00000
Any
notice shall be considered given when deposited in the U.S. Mail or delivered to
an overnight courier.
20. Survival of
Obligations. All covenants, agreements, representations
and warranties made herein or otherwise made in writing by either party to this
Agreement shall survive the execution and delivery of this Agreement and the
performance of the services contemplated hereby.
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21. Severability. If
any one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to time, duration, geographical scope,
activity or subject, it shall be construed, by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear. If, moreover, any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained therein.
22. Entire
Agreement. This Agreement and the Severance Agreement dated
simultaneously herewith constitute the full and complete understanding and
agreement of the parties with respect to the employment of Executive by Company
and supersede all prior understandings and agreements regarding Executive’s
employment. This Agreement may be modified only by a written
instrument executed by both parties.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
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CHATTEM,
INC.
By:___________________________
Title:__________________________
______________________________
Xxx
Xxxxxx
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