RETIREMENT AGREEMENT
EXHIBIT
10.52
THIS
RETIREMENT AGREEMENT
(hereinafter “Agreement”) is made and entered into by and between Xxxxxx X.
Xxxxx (“Xx. Xxxxx”) and Chattem, Inc. (“Chattem”) in order to reach an amicable
termination of their employment relationship and to promote harmonious relations
in the future.
1. Resignation
as
Officer. Xx. Xxxxx agrees that his employment as Vice
President of Research and Development and Chief Scientific Officer for Chattem
will terminate by his resignation from these positions effective January 31,
2007 (“the Resignation Date”). Following the Resignation Date, Xx.
Xxxxx will continue to be employed by Chattem without any officer designation
or
other title during the time period from February 1, 2007 through May 31, 2007,
during which time period (a) Xx. Xxxxx shall vacate his office at Chattem;
(b)
Xx. Xxxxx shall perform such services, up to 16 hours per month, as are
requested by Chattem; and (c) for these services set forth in 1(b) herein,
Xx.
Xxxxx’x rate of compensation shall be reduced to the gross amount of Three
Thousand Eight Hundred Forty-Six and 16/100 ($3,846.16) Dollars per bi-weekly
pay period, less appropriate withholding for FICA, Medicare, and federal and
state (if applicable) taxes.
2. Retirement. Xx.
Xxxxx agrees that his employment with Chattem will terminate by his retirement
effective May 31, 2007 (“the Retirement Date”). Thereafter, except as
expressly provided herein, no future compensation, allowances, or benefits
will
accrue in his favor.
3. Retirement
Pay. Provided that Xx. Xxxxx signs this Agreement and does not
revoke it, Chattem will voluntarily pay Xx. Xxxxx, as Retirement Pay, the gross
amount of Three Thousand Eight Hundred Forty-Six and 16/100 ($3,846.16) Dollars
per bi-weekly pay period, less appropriate withholding for FICA, Medicare,
and
federal and state (if applicable) taxes, for a period of twenty (20) consecutive
months from June 1, 2007 through January 31, 2009. All payments of
Retirement Pay hereunder will be made by direct deposit to Xx. Xxxxx’x bank
account according to Chattem’s normal payroll procedures and
cycle. Xx. Xxxxx specifically acknowledges that the Retirement Pay
and other consideration specified in this Agreement, supplant any bonus,
commissions, or other pay to which he might otherwise be entitled, except as
provided in paragraph 4 hereof.
4. Bonus
Participation. To the extent that bonuses are paid to active
employees of Chattem under the fiscal 2006 Chattem Short Term Incentive
Compensation Plan (“Chattem Corporate Bonus Plan”), the parties acknowledge that
Xx. Xxxxx was eligible to participate in the Chattem Corporate Bonus Plan
through November 30, 2006. In the event that such bonuses are paid,
Xx. Xxxxx will be given full credit for the portions of the bonus based upon
Chattem’s corporate performance and his individual performance. Any
bonus payable to Xx. Xxxxx under this provision will be paid to him according
to
Chattem’s regular time-table for making such bonus payments to active
employees. Xx. Xxxxx acknowledges that he will not be eligible for
any other bonus from Chattem under any other program, plan or policy, including,
without limitation, any pro
rata participation in the fiscal 2007, 2008 or 2009 Chattem Corporate
Bonus Plan.
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5. Resignation/Retirement
Benefits.
a. Termination
of Employee
Benefits. Xx. Xxxxx agrees that all of his employee benefits
will cease as of the Resignation Date (i.e., January 31, 2007), except as
expressly provided herein.
b. Health
Insurance Premium
Continuation. During the time period from February 1, 2007
through January 31, 2009, Chattem shall pay to Xx. Xxxxx the gross amount of
Five Hundred and 00/100 ($500.00) Dollars per month, which amount represents
health insurance premiums for Xx. Xxxxx and his spouse.
c. Life
Insurance. As
of the date of this Agreement, Xx. Xxxxx may be participating in the Chattem,
Inc. Non-Equity/Economic Benefit Split Dollar Life Insurance Benefit Plan
Agreement (“Split Dollar Plan”), including a death benefit with respect to Xx.
Xxxxx under New York Life Assurance and Annuity Corporation (“New York Life”)
Policy No. 00-000-000 in the amount of Two Hundred Seventy-Four Thousand Six
Hundred Seventy-Seven and No/100 ($274,677.00) Dollars, and Policy No.
00-000-000 in the amount of Twenty-Five Thousand and No/100 ($25,000.00) Dollars
(together, the “New York Life Policy”). Following the execution of
this Agreement, Chattem shall use commercially reasonable efforts to obtain
an
increase in the death benefit with respect to Xx. Xxxxx under the New York
Life
Policy to One Million and No/100 ($1,000,000.00) Dollars or obtain supplemental
coverage under a separate policy that, together with the New York Life Policy,
would provide a total death benefit of One Million and No/100 ($1,000,000.00)
Dollars. In the event Chattem is unable through commercially
reasonable efforts to obtain the described coverage, Chattem shall not be in
default in the performance of this section, nor shall Chattem be under any
further obligation or duty to pursue or obtain coverage for Xx. Xxxxx, his
spouse, his dependents, or his beneficiaries. Following the
Resignation Date, Chattem shall maintain the New York Life Policy under the
terms of the Split Dollar Plan, and any supplemental policy that may have been
obtained in accordance with this paragraph 5(c), until January 31,
2009. On February 1, 2009, or as soon thereafter as practicable,
Chattem shall assign and transfer ownership of the New York Life Policy and
any
supplemental policy to Xx. Xxxxx, to the extent such policies are assignable,
with Chattem retaining any cash surrender value in said
policies. Other than as described herein, nothing in this Agreement
shall obligate Chattem to provide any life insurance or death benefit to Xx.
Xxxxx, his spouse, his dependents, or his beneficiaries after January 31, 2007
under the Split Dollar Plan or otherwise, and Chattem shall not be or become
an
insurer of Xx. Xxxxx, his spouse, his dependents, or his
beneficiaries. Further, nothing in this Agreement shall constitute a
waiver or relinquishment of Chattem’s right to terminate, alter or amend the
Split Dollar Plan.
6. Retirement
Plans. As of the date of this Agreement, Xx. Xxxxx may be
participating in various Chattem Retirement Plans, including a 401(k) account
(“Retirement Plans”). Notwithstanding that Xx. Xxxxx’x employment
with Chattem shall continue until the Retirement Date, for purposes of the
Retirement Plans, January 31, 2007 shall be Xx. Xxxxx’x Xxxxxxxxx from
Employment Date.
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7. Positive
Job Reference and
Non-Disparagement. In the event that an authorized
representative of Chattem (for purposes of this paragraph "authorized
representative" means an officer of Chattem or any member of Chattem’s Human
Resources Department) is contacted by any person or entity concerning Xx.
Xxxxx’x employment by Chattem, such representative of Chattem will refer such
inquiry to Chattem’s Director of Human Resources or President/Chief Operating
Officer who will provide a positive reference. Xx. Xxxxx agrees that
he will not make any disparaging, negative, or unfavorable verbal or written
statements of any nature whatsoever about Chattem, its management, operations,
products, services, directors, officers, employees or agents.
8. Stock
Options. Attached as Exhibit A is
a
schedule that sets forth, among other things, the number of options granted
to
Xx. Xxxxx, the number of options previously exercised, the options outstanding
after exercise, and the number of vested and exercisable options as of May
31,
2007 (i.e., the Retirement Date). In accordance with the terms of
Chattem’s Non-Statutory Stock Option Plans, the options vested and exercisable
as of the Retirement Date may be exercised at any time on or before three (3)
years after the Retirement Date. After May 31, 2010, all such vested
and unexercised options shall expire. The stock options granted to
Xx. Xxxxx that are not vested as of the Retirement Date shall expire and
terminate on such Retirement Date. The 25,000 options to acquire
common stock of Chattem granted to Xx. Xxxxx on April 20, 2005 (“2005 Options”)
are subject to a First Amendment to Grant Agreement dated November 30, 2005
(the
“First Amendment”), which, among other things, accelerated the vesting of all
25,000 of the 2005 Options but prohibits Xx. Xxxxx as the optionee from
transferring any shares acquired pursuant to such accelerated options prior
to
the date such options would have become vested as set forth in the vesting
schedule attached to the Grant Agreement dated April 20, 2005. As of
the Retirement Date, 12,500 of the shares to be acquired under the 2005 Options
are transferable, and 12,500 of the shares to be acquired under the 2005 Options
are not transferable until April 20, 2008 as to 6,250 shares and April 20,
2009
as to 6,250 shares.
9. Restricted
Stock. On January 26, 2005, Xx. Xxxxx was granted 3,000 shares
of restricted stock (the “Restricted Stock”). As of the Retirement
Date, 1,500 shares of the Restricted Stock will have vested and forfeiture
restrictions will have terminated. The parties agree that the
remaining 1,500 shares of restricted stock shall be forfeited as of the
Retirement Date.
10. Xx.
Xxxxx’x Consulting
Services. Xx. Xxxxx agrees that, from the Retirement Date
through January 31, 2009, upon request by Chattem, he will provide a minimum
of
16 hours of consulting services (“Consulting Hours”) per month to Chattem for no
additional compensation beyond the Retirement Pay and Benefits specified
herein. Chattem will pay Xx. Xxxxx the gross amount of Two Hundred
Twenty-Five and No/100 ($225.00) Dollars for each Consulting Hour provided
by
Xx. Xxxxx to Chattem in excess of 16 Consulting Hours per month. Any
consulting hours not requested or used by Chattem in a given month will not
carry forward as a credit in future months. Xx. Xxxxx acknowledges
that he must obtain express approval from Chattem’s Chief Executive Officer,
President & Chief Operating Officer, or such other person as either of them
may designate, before he provides to Chattem more than 16 Consulting Hours
in
any given month and/or before he incurs expenses on behalf of
Chattem. Any expenses incurred
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by
Xx.
Xxxxx on behalf of Chattem, approved by Chattem prior to incurrence, and
submitted to Chattem in a timely manner, will be reimbursed. In the
absence of specific instruction from Chattem, the consulting services performed
by Xx. Xxxxx may be performed at Chattem, at Xx. Xxxxx’x offices, or at other
venues that the parties mutually deem appropriate to the efficient and timely
completion of the assignment.
11. General
Release. In
consideration for the Retirement Pay and Benefits conferred upon Xx. Xxxxx
as
outlined in this Agreement, Xx. Xxxxx agrees to release Chattem and each of
its
officers, directors, employees, agents, attorneys, subsidiaries and affiliates
from any and all charges, complaints, claims, liabilities, obligations, actions,
causes of action, suits, demands, costs, losses, damages and expenses, of any
nature whatsoever, known or unknown, including, but in no way limited to, any
claims under Title VII of the Civil Rights Act of 1964 (Title VII); The Age
Discrimination in Employment Act (ADEA); the Americans with Disabilities Act
(ADA); the Employee Retirement Income Security Act of 1974, as amended (ERISA);
42 U.S.C. §1981; the Occupational Safety and Health Act, 29 U.S.C. §651 et seq. (OSHA); the Family
and Medical Leave Act, 29 U.S.C. §2601 et seq. (FMLA); the federal
False Claims Act; the Tennessee Human Rights Act; the Tennessee Public
Protection Act; any claim based on express or implied contract; any claims
of
promissory estoppel; any action arising in tort, including, but in no way
limited to, libel, slander, defamation, intentional infliction of emotional
distress, or negligence; any claim for wrongful discharge, any constitutional
claims, or any claim under all laws relating to the violation of public policy,
retaliation or compensation; any claims arising under employment or disability
discrimination or whistleblower laws; or any claims under other applicable
federal, state or local law, regulation, ordinance or order, at common law
or
otherwise arising out of their employment relationship or the termination of
their employment relationship, which Xx. Xxxxx now has, owns or holds, or claims
to have, own or hold, or which he at any time heretofore had, owned or held,
or
claimed to have, own or hold against them. It is agreed that this is
a general release and it is to be broadly construed as a release of all claims;
provided that, this paragraph expressly does not include a release of any claims
that cannot be released hereunder by law. Xx. Xxxxx hereby
acknowledges that he has received from Chattem all wages and compensation which
he is owed by Chattem or to which he is entitled by law as of his last pay
period. Xx. Xxxxx hereby acknowledges that Chattem has in no way
interfered with his right
to take any leave
to which he may have been entitled by law or under Chattem’s
policies. Xx. Xxxxx further acknowledges that Chattem has allowed him
to take any such leave for which he was eligible and which he
requested. Xx. Xxxxx further acknowledges that he has reported any
and all workplace injuries that he has incurred or suffered to
date.
12. Confidentiality
of
Agreement. In further consideration for the above Retirement
Pay and Benefits, Xx. Xxxxx agrees that he will keep the terms and amount of
this Agreement completely confidential, and that he will not hereafter disclose
any information concerning this Agreement to any person or entity other than
his
attorneys, his tax and financial advisors and his spouse, except as required
by
law; provided, that those individuals will be deemed to be his agents and,
therefore, also bound by this Agreement. Xx. Xxxxx further recognizes
and acknowledges that strict confidentiality is of the essence of this
Agreement, and that Chattem would suffer immediate and irreparable harm in
the
event of any breach of that confidentiality. Nothing in this
Agreement shall prevent Xx. Xxxxx from responding to a
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subpoena
or court order issued by any agency or court of competent
jurisdiction.
13. Non-disclosure
of Confidential
Information. As further consideration for the benefits
conferred upon Xx. Xxxxx by this Agreement, Xx. Xxxxx agrees that he will not
divulge, furnish or make accessible to anyone or use in any way any confidential
or secret knowledge or information of Chattem that Xx. Xxxxx has acquired or
become acquainted with during his employment by Chattem, whether developed
by
himself or by others concerning any products, financial information, techniques,
data, ideas, trade secrets, confidential or secret designs, processes, formulae,
plans, devices or material (whether or not patented or patentable) directly
or
indirectly useful in any aspect of the business of Chattem; any customer
information, marketing information, business plans, merchandising information,
pricing information, strategies, or supplier lists of Chattem; any confidential
or secret development or research work of Chattem; any other confidential
information or secret aspects of the business of Chattem; or any information
relating to personal matters, stock ownership, contracts, investments, legal
matters or business affairs of Chattem which are of a proprietary or
confidential nature, or maintained as information not generally disclosed to
the
public, whether communicated orally or in writing (collectively, the
“Confidential Information”). Xx. Xxxxx acknowledges that Confidential
Information constitutes a unique and valuable asset of Chattem and represents
a
substantial investment of time and expense by Chattem, and that any disclosure
or other use of such Confidential Information other than for the sole benefit
of
Chattem would be wrongful and would cause irreparable harm to
Chattem. Xx. Xxxxx will refrain from any acts or omissions that would
reduce the value of such Confidential Information to Chattem. Xx.
Xxxxx further acknowledges that this provision is of the essence of this
Agreement, and that Chattem would suffer irreparable harm in the event of any
breach of this provision.
14. Surrender
of Materials Upon
Retirement. Xx. Xxxxx hereby agrees that, upon the Retirement
Date, he will immediately surrender to Chattem all personal notes, drawings,
manuals, documents, photographs, computer programs, disks or the like, including
all copies thereof, relating to any Confidential Information. In
addition, Xx. Xxxxx agrees to return to Chattem, immediately upon the Retirement
Date, all Chattem property, including, but not limited to, credit cards,
computer hardware, computer software, cell phones, pagers, office and plant
keys
or cards, and office supplies.
15. Agreement
Not to Interfere, Solicit
or Compete. Xx. Xxxxx agrees that, for a period of twenty-four
(24) months following the Resignation Date (the “Non-Competition Period”), he
will not, directly or indirectly, either for the benefit of himself or for
the
benefit of any other person, firm, corporation, or other entity, without the
prior written consent of Chattem, which consent may be withheld by Chattem
in
its sole discretion, take any action to interfere with the relationships between
Chattem and its suppliers, customers, clients and/or business
partners. He further agrees that he will not induce or attempt to
induce any supplier, customer, client and/or business partner of Chattem to
withdraw, curtail or cease doing business with Chattem. Xx. Xxxxx
also agrees that, during the Non-Competition Period, he will not, directly or
indirectly, induce or attempt to induce any employee of Chattem to leave the
employ of Chattem. Further, Xx. Xxxxx agrees that, during the
Non-Competition Period, he will not, directly or indirectly, assist or encourage
any other person in carrying out any activity that would be prohibited by the
foregoing provisions of this Paragraph 15, if such activity were carried out
by
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Xx.
Xxxxx
either directly or indirectly. During the Non-Competition Period, Xx.
Xxxxx covenants and agrees that he will not directly or indirectly offer or
provide any information or services, including, without limitation, employment
or consulting services, to any person or entity, relating to the development,
manufacture, production, distribution, marketing or sale of products or product
categories which are competitive with, or are substantially similar to, products
or product categories which were developed, manufactured, produced, distributed,
marketed or sold by Chattem as of the Resignation Date and/or during the period
of time that Xx. Xxxxx is providing consulting services to
Chattem. Notwithstanding the foregoing, the parties agree that Xx.
Xxxxx may (i) provide information or services to such person or entity if such
services are limited exclusively to products that are not competitive with,
or
substantially similar to, products or product categories which were developed,
manufactured, produced, distributed, marketed or sold by Chattem in territories
and trade channels in which Chattem’s products are sold as of the Resignation
Date and/or during the period of time from February 1, 2007 through January
31,
2009; or (ii) provide information or services to such person or entity if such
services are limited exclusively to products that are not marketed or sold
in
territories or trade channels in which Chattem’s products are marketed or sold;
or (iii) continue to provide services to such person or entity in a product
category that Chattem enters into after Xx. Xxxxx is initially engaged to
provide such services by such person or entity. Attached as Exhibit B is a list
of Chattem’s product categories as of the Resignation Date.
16. Litigation. Xx.
Xxxxx agrees that it is an essential term and condition of this Agreement that
he cooperate with Chattem and its counsel in any claims and/or lawsuits
involving Chattem of which he may have particular knowledge or in which he
may
be a witness through January 31, 2009. Such cooperation includes
meeting with Chattem representatives and counsel to disclose such facts as
Xx.
Xxxxx may know; preparing with Chattem counsel for any deposition, trial,
hearing or other proceeding; attending any deposition, trial, hearing or other
proceeding to provide truthful testimony; and providing other assistance to
Chattem and to Chattem’s counsel in the defense or prosecution of litigation as
may, in the judgment of Chattem’s counsel, be necessary. Chattem
agrees to reimburse Xx. Xxxxx for reasonable and necessary expenses incurred
by
Xx. Xxxxx in the course of complying with this obligation of
cooperation. The parties agree that, to the extent Xx. Xxxxx is
required to provide information and assistance in connection with this
paragraph, each hour of time spent fulfilling such requirement shall be
considered a Consulting Hour, and, as set forth in paragraph 10 herein, Chattem
will pay Xx. Xxxxx the gross amount of Two Hundred Twenty-Five and No/100
($225.00) Dollars for each Consulting Hour provided by Xx. Xxxxx to Chattem
in
excess of 16 Consulting Hours per month.
17. Remedies. Xx.
Xxxxx
agrees that the covenants specifically set forth in paragraphs 7, 8, 9, 10,
11,
12, 13, 14, 15 and 16 of this Agreement are of the essence of this Agreement;
that each of such covenants is reasonable and necessary to protect and preserve
the interests and properties of Chattem; and that irreparable loss and damage
will be suffered by Chattem should Xx. Xxxxx breach any of such
covenants. In the event of a breach of any of these provisions, this
Agreement shall not be void; however, Chattem will thereafter have no further
obligations to pay any compensation, including, without limitation, Retirement
Pay, to Xx. Xxxxx pursuant to this Agreement. Xx. Xxxxx agrees and
consents that, in addition to all other remedies provided at law or in equity,
Chattem shall be entitled file an action in a court of appropriate
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jurisdiction
to seek a temporary restraining order and temporary and permanent injunctions
to
prevent a breach or contemplated breach of any of the aforementioned
covenants. Thereafter, any action by Chattem to recover appropriate
damages, attorney fees and costs shall be submitted to arbitration pursuant
to
paragraph 24 herein. Similarly, Chattem agrees and consents that, in
addition to all other remedies provided at law or in equity, Xx. Xxxxx shall
be
entitled file an action in a court of appropriate jurisdiction to seek a
temporary restraining order and temporary and permanent injunctions to prevent
a
breach or contemplated breach of any of the covenants contained in this
Agreement which impose obligations upon Chattem in favor of Xx.
Xxxxx. Thereafter, any action by Xx. Xxxxx to recover appropriate
damages, attorney fees and costs shall be submitted to arbitration pursuant
to
paragraph 24 herein.
18. Opportunity
to
Review. Xx. Xxxxx represents and acknowledges that he has
carefully read and understands all of the provisions of this Agreement, and
that
he is voluntarily entering into this Agreement. Xx. Xxxxx represents
and
acknowledges that he has been advised in writing to, and has been afforded
the
right and opportunity to consult with an attorney prior to executing this
Agreement; that he has twenty-one (21) days within which to consider this
Agreement; that he has seven (7) days following its execution within which
to
revoke this Agreement; and that this Agreement, and any consideration due
hereunder, will not become effective until after the revocation period has
expired. Xx. Xxxxx further acknowledges and confirms that the
only consideration for him signing this Agreement are the terms and conditions
stated in writing in this Agreement, and that no other promise or agreement
of
any kind, other than those set out in writing in this Agreement, has been made
to him by any person to cause him to sign this Agreement.
19. Indemnification.
In further
consideration for the above, Xx. Xxxxx agrees to indemnify and hold Chattem
harmless from and against any and all loss, cost, damage or expense, including,
without limitation, attorney fees, incurred by Chattem arising out of any breach
of this Agreement by Xx. Xxxxx. Chattem agrees to indemnify and hold
Xx. Xxxxx harmless from and against any and all loss, cost, damage or expense,
including, without limitation, attorney fees, incurred by Xx. Xxxxx arising
out
of any breach of this Agreement by Chattem.
20. Non-admission. This
Agreement will not in any way be construed as an admission by Chattem of any
acts of discrimination or misconduct whatsoever against Xx. Xxxxx or any other
person, and Chattem specifically disclaims any liability to or discrimination
against Xx. Xxxxx or any other person, on the part of itself, its employees
or
its agents.
21. Governing
Law. This
Agreement is made and entered into in the State of Tennessee, and will in all
respects be interpreted, enforced and governed under the laws of that
State.
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22. Binding
Effect. All
covenants, representations, and agreements made by or on behalf of Xx. Xxxxx
and
Chattem contained in the Agreement will be binding upon the parties and their
respective spouses, successors, representatives, assigns, heirs and
estates.
23. Entire
Agreement. This Agreement sets forth the entire agreement
between the parties, and fully supersedes any and all prior agreements or
understandings between them pertaining to the subject matter
hereof. It is agreed that this Agreement may be modified only by a
subsequent, written agreement, executed by both parties.
24. Arbitration. Xx.
Xxxxx expressly waives any right to a jury trial or to go to court concerning
any and all disputes arising regarding the interpretation, enforcement, or
performance of this Agreement. Any and all disputes arising regarding
the interpretation, enforcement, or performance of this Agreement, except as
specifically set forth in paragraph 17 herein, shall be resolved by binding,
confidential arbitration in Chattanooga, Tennessee, which arbitration shall
be
governed by the Arbitration Rules established by the American Arbitration
Association. The arbitrator shall have full authority to enforce the
Agreement, including injunctive or other equitable relief.
This
Agreement includes a waiver and
general release of all known and unknown claims. Xx. Xxxxx
acknowledges that he has carefully read and understands this
Agreement. Xx. Xxxxx is advised to consult an attorney before
executing this waiver and general release of all claims.
The
undersigned have executed this
Agreement on the dates reflected by their signatures.
CHATTEM,
INC.
| By: | /s/ Xxxxxx X. Xxxxx | By: | /s/ Xxxxxx X. Xxxxxxxx | |
| Xx. Xxxxxx X. Xxxxx | Xxxxxx X. Xxxxxxxx | |||
|
President
and Chief Operating Officer
|
||||
| Date: | Date: | |||
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