RETIREMENT AGREEMENT
EXHIBIT
10.48
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 subpoena or court order issued by any agency or court of
competent jurisdiction.
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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.
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By: | By: | ||
Xx. Xxxxxx X. Xxxxx |
Xxxxxx
X. Xxxxxxxx
President
and Chief Operating Officer
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Date:
|
Date:
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