EXHIBIT 10.1
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SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (hereinafter "Agreement") is made and entered
into by and between A. Xxxxxxxxx Xxxxxx, XX ("Xx. Xxxxxx") and Chattem, Inc.
("Chattem") in order to reach an amicable termination of their employment
relationship, promote harmonious relations in the future and facilitate the
transition of management responsibilities.
1. TERMINATION. Xx. Xxxxxx agrees that the Employment Agreement dated as of
August 1, 2000 between Xx. Xxxxxx and Chattem ("Employment Agreement"), his
employment with Chattem, his position as an officer of Chattem and all
subsidiaries and his membership on the Board of Directors of Chattem and all
subsidiaries will terminate by his resignation effective September 1, 2005 (the
"Termination Date"). Thereafter, except as otherwise provided herein, no future
compensation, allowances, or benefits will accrue in his favor.
2. SEPARATION PAY. In full satisfaction of its obligations under Section 11
of the Employment Agreement, Chattem will pay Xx. Xxxxxx, as separation pay
("Separation Pay"), the gross amount of Three Hundred Thirty-Five Thousand Four
Hundred Sixteen ($335,416) Dollars on March 1, 2006, the gross amount of One
Hundred Seventy-Two Thousand Five Hundred ($172,500) Dollars on March 1, 2006
and the gross amount of Three Hundred Forty-Five Thousand ($345,000) Dollars,
payable in monthly installments of Twenty-Eight Thousand Seven Hundred Fifty
($28,750) Dollars beginning on April 1, 2006 and continuing on the same date of
the immediately succeeding eleven (11) months, less an appropriate withholding
for income, payroll and employment taxes. The Separation Pay outlined above will
be in addition to Xx. Xxxxxx'x regular salary, fringe benefits and unpaid earned
and accrued vacation pay through August 31, 2005. Xx. Xxxxxx specifically
acknowledges that the Separation Pay and other consideration specified in this
Agreement, supplant any bonus, commissions, or other pay to which he might
otherwise be entitled.
3. BONUS PARTICIPATION. In further consideration for this Agreement, Xx.
Xxxxxx shall participate in the Chattem Corporate Bonus Plan through November
30, 2005 at the applicable bonus level based on the same personal and corporate
performance levels. Any bonus payable to Xx. Xxxxxx under this provision will be
paid to him on March 1, 2006. Xx. Xxxxxx acknowledges that he will not be
eligible for any other bonus from Chattem under any other program, plan or
policy.
4. STOCK OPTIONS. Under the 2003 and 2005 Chattem, Inc. Stock Incentive
Plans, Xx. Xxxxxx has been awarded and there are currently outstanding options
to acquire 250,000 shares of common stock of Chattem. The currently outstanding
options, together with the exercise price and vesting schedule, are described in
Appendix 1 attached hereto. Chattem agrees that the vested stock options granted
to Xx. Xxxxxx will be exercisable in accordance with their terms at any time on
or prior to October 20, 2005. After October 20, 2005, all such vested and
unexercised options shall expire and terminate. The remaining outstanding
172,500 stock options granted to Xx. Xxxxxx that are not vested as of the date
of this Agreement shall expire and terminate on the date of this Agreement.
5. RESTRICTED STOCK. Xx. Xxxxxx has been awarded 63,250 shares of
restricted stock as to which shares the restrictions have not lapsed. The
currently outstanding shares of restricted stock as to which restrictions have
not lapsed are described on Appendix 2 attached hereto. 19,500 shares of
restricted stock as to which restrictions have not lapsed as of the date of the
Agreement shall immediately be forfeited and cancelled (the Forfeited Shares")
and Xx. Xxxxxx shall tender to Chattem for cancellation certificates
representing such Forfeited Shares. In further consideration for this Agreement,
the Company hereby agrees that Xx. Xxxxxx shall retain and continue to hold
without restrictions 43,750 shares of restricted stock (the "Retained Shares").
Xx. Xxxxxx shall tender to Chattem certificates representing the Retained Shares
in order for Chattem to cause the restrictive legends on such certificates to be
removed and then redelivered to Xx. Xxxxxx.
6. SEPARATION BENEFITS. Except as otherwise provided in this paragraph 6,
Xx. Xxxxxx agrees that all of his employee benefits, including, without
limitation, his Chattem group medical and dental insurance coverages, will cease
as of the Termination Date. Xx. Xxxxxx and his dependents will be entitled to
continue certain benefits under the Consolidated Omnibus Budget Reconciliation
Act ("COBRA") following the expiration of his group medical and dental insurance
coverage on the Termination Date. For an 18 month period beginning on the
Termination Date, Chattem will pay the premiums for such coverage under COBRA
from September 1, 2005 through February 28, 2007, or until Xx. Xxxxxx is
employed by some other employer which provides substantially similar benefits,
whichever event occurs sooner. Chattem will furnish the appropriate COBRA forms
to Xx. Xxxxxx to elect this coverage. If this obligation has not earlier
terminated as provided above, beginning on March 1, 2007 and continuing monthly
thereafter through August 2008, or until Xx. Xxxxxx is employed by some other
employer which provides substantially similar benefits, Chattem will also pay to
Xx. Xxxxxx the cost of his medical and dental insurance coverage (not to exceed
$12,000 per year). Chattem will continue to provide Xx. Xxxxxx with life
insurance benefits at substantially the same level currently provided to Xx.
Xxxxxx until August 31, 2008.
7. RETIREMENT PLANS. As of the date of this Agreement, Xx. Xxxxxx may be
participating in various Chattem Retirement Plans, including a 401(k) account
("Retirement Plans"). For purposes of the Retirement Plans, the Termination Date
shall be Xx. Xxxxxx'x xxxxxxxxx from employment date.
8. MUTUAL 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. Xxxxxx'x employment by Chattem,
such representative of Chattem will refer such inquiry to Chattem's Chairman or
Director of Human Resources who will provide a positive reference, divulging
only information such as Xx. Xxxxxx'x dates of employment, positions held, his
rate of pay and the reason for his resignation and such other information that
is not inconsistent with a positive reference. Such representative will not make
any disparaging, negative or unfavorable verbal or written statements of any
nature whatsoever about Xx. Xxxxxx. Chattem will take all reasonable steps to
refer all inquiries from outside parties requesting an employment reference
concerning Xx. Xxxxxx'x employment with Chattem to the Director of Human
Resources or the Chairman. Similarly, Xx. Xxxxxx agrees that he will not make
any disparaging, negative, or unfavorable verbal or written statements of any
nature
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whatsoever about Chattem, its management, operations, future prospects,
products, services, directors, officers, employees or agents. Chattem and Xx.
Xxxxxx mutually agree that the reason given for the termination of Xx. Xxxxxx'x
employment is that he resigned in order to pursue other opportunities.
9. XXXXXX'X SERVICES. Xx. Xxxxxx agrees that for a period of eighteen (18)
months from his Termination Date (the "Effective Period"), he will respond
fully, promptly and truthfully to all requests for information from Chattem, its
attorneys or accountants concerning any matters in which he was involved during
his employment with Chattem, including, without limitation, relationships with
shareholders, analysts, bondholders, banks, investment banks, suppliers,
customers and contacts; the location of files, products, customers, contact
information, supplier and supplier information; and the status of pending
matters. In addition, during the Effective Period Xx. Xxxxxx agrees that he will
not take any action to interfere with the relationships between Chattem or any
subsidiary or affiliate of Chattem, and their respective shareholders, analysts,
bondholders, banks, investment banks, suppliers, customers, distributors,
clients and business partners. During the Effective Period, he further agrees
that he will not induce or attempt to induce any shareholder, analyst,
bondholder, bank, investment bank, customer, supplier, distributor, client,
business partner, or other business relation of Chattem or any subsidiary or
affiliate of Chattem to withdraw, curtail or cease doing business with Chattem
or any subsidiary or affiliate of Chattem, as applicable. Further, during the
Effective Period Xx. Xxxxxx agrees that upon request from Chattem he will
cooperate fully with Chattem in transitioning existing relationships with
shareholders, analysts, bondholders, banks, investment banks, suppliers, as well
as potential relationships with any of the foregoing, to his successor at
Chattem. Xx. Xxxxxx acknowledges and agrees that these services will be provided
by him to Chattem for the Separation Pay and other consideration provided in
this Agreement, and that no additional compensation will be paid to him for
these services. Xx. Xxxxxx 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.
10. GENERAL RELEASE. In exchange for the valuable consideration set forth
herein, Xx. Xxxxxx 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 Americans with
Disabilities Act (ADA); the Employee Retirement Income Security Act of 1974, as
amended (ERISA); 42 U.S.C. ss.1981; the Occupational Safety and Health Act, 29
U.S.C. ss.651 ET SEQ. (OSHA); the Family and Medical Leave Act, 29 U.S.C.
ss.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
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employment relationship, which Xx. Xxxxxx 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. Except as specifically provided in this
Agreement, Xx. Xxxxxx 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. Xxxxxx 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. Xxxxxx further acknowledges
that Chattem has allowed him to take any such leave for which he was eligible
and which he requested. Xx. Xxxxxx further acknowledges that he has reported any
and all workplace injuries that he has incurred or suffered to date.
11. NON-COMPETE. During the Effective Period, Xx. Xxxxxx covenants and
agrees that he will not directly or indirectly, 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, health and beauty aid products sold
over-the-counter which are competitive with the products of Chattem existing or
announced to the trade on the date hereof with annual sales for Chattem's most
recently completed fiscal year in excess of $10 million, which the parties agree
and stipulate are topical analgesics, medicated skin care products, weight loss
products, medicated dandruff shampoos and conditioners and sunscreen products.
This provision applies only to persons or entities selling the above specified
products in competition with Chattem in the United States or in any country in
which Chattem has sold or distributed products during the past two years.
Moreover, during the Effective Period, Xx. Xxxxxx covenants and agrees that he
will not directly or indirectly hire, attempt to solicit with respect to hiring
for or on behalf of any person or entity other than Chattem any present (or then
current) employee of Chattem.
12. STANDSTILL. During the Effective Period, Xx. Xxxxxx shall not, directly
or indirectly, and Xx. Xxxxxx shall cause any affiliate of his not to: (i)
except pursuant to currently held stock options described on Appendix 1,
acquire, or offer or agree to acquire, directly or indirectly, by purchase or
otherwise, any securities of Chattem (or direct or indirect rights or options to
acquire any securities of Chattem), except by way of stock dividends or other
distributions made on a pro rata basis with respect to securities of Chattem
acquired by Xx. Xxxxxx prior to the date of this Agreement; (ii) solicit proxies
or consents or become a "participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the Securities Exchange Act of 1934, as amended)
of proxies or consents with respect to securities of Chattem with regard to any
matter; (iii) seek to control or influence the management, Board of Directors or
policies of Chattem, or seek to advise, encourage or influence any person with
respect to the voting of any securities of Chattem, or induce, attempt to induce
or in any manner assist any other person in initiating any shareholder proposal
or a tender or exchange offer for securities of Chattem or any change of control
of Chattem, or for the purpose of convening a shareholders' meeting of Chattem;
(iv) make any public announcement or make any written or oral proposal or
invitation to discuss any possibility, intention, plan or arrangement, relating
to a tender or exchange offer for securities of Chattem or a business
combination (or other similar transaction which would result in a change of
control), sale of assets, liquidation or other extraordinary
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corporate transaction between Xx. Xxxxxx or any of his affiliates and Chattem or
take any action which might require Chattem to make a public announcement
regarding any of the foregoing; or (v) form, join or in any way participate in a
partnership, limited partnership, syndicate or other group (or otherwise act in
concert with any other person) for the purpose of acquiring, holding, voting or
disposing of securities of Chattem or taking any other actions restricted or
prohibited under clauses (i) through (iv) of this paragraph 12, or announce an
intention to do, or enter into any arrangement or understanding with others to
do, any of the actions restricted or prohibited under clauses (i) through (iv)
of this paragraph 12. Notwithstanding the foregoing, the parties agree that Xx.
Xxxxxx'x ownership of less than a two percent (2%) interest in a mutual fund
registered under the Investment Company Act of 1940, as amended, shall not be a
violation of clauses (i) through (iv) of this paragraph 12. In accordance with
Chattem's xxxxxxx xxxxxxx policy, Xx. Xxxxxx will abstain from any transactions
in the stock of Chattem until after its September 2005 earnings release for its
third quarter of fiscal 2005.
13. CONFIDENTIALITY OF AGREEMENT. In further consideration for the
foregoing, Xx. Xxxxxx agrees that he will keep the facts and circumstances
relating to his termination of employment 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 advisors and his spouse,
except as required by law. It is acknowledged that Chattem will be obligated to
disclose the contents of this Agreement under applicable securities laws, NASDAQ
rules and certain contractual relationships or as otherwise required by law;
issue a press release and deal with the media in connection with the
announcement of this Agreement; and respond to inquiries from shareholders,
analysts and other appropriate parties. However, Chattem will not make any
statements relating to Xx. Xxxxxx'x termination of employment that violate the
mutual non-disparagement provisions of paragraph 8 of this Agreement.
14. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. As further consideration
for the benefits conferred upon Xx. Xxxxxx by this Agreement, Xx. Xxxxxx 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. Xxxxxx
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"). The parties agree that
Confidential Information shall not include information that is or becomes
generally available to the public other than as a result of disclosure in breach
of this Agreement by Xx. Xxxxxx. Xx. Xxxxxx 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
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wrongful and would cause irreparable harm to Chattem. Xx. Xxxxxx will refrain
from any acts or omissions that would reduce the value of such Confidential
Information to Chattem. Xx. Xxxxxx 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.
15. SURRENDER OF MATERIALS UPON TERMINATION. Xx. Xxxxxx hereby agrees that,
within fifteen (15) days after the Termination Date, he will 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, as well as all Chattem property, including, without
limitation, credit cards, computer hardware, computer software, cell phones,
pagers, office and plant keys or cards, and office supplies. Chattem will assist
Xx. Xxxxxx in converting his cell phone number to his personal use and will
provide assistance in establishing Blackberry service for his personal use.
16. LITIGATION. For a period of three (3) years from the date of this
Agreement, Xx. Xxxxxx 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. Such cooperation includes meeting with Chattem
representatives and counsel to disclose such facts as Xx. Xxxxxx 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.
Xxxxxx for reasonable and necessary expenses incurred by Xx. Xxxxxx in the
course of complying with this obligation of cooperation.
17. OPPORTUNITY TO REVIEW. Xx. Xxxxxx 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. Xxxxxx further
acknowledges and confirms that the only consideration for his 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.
18. REMEDIES. Xx. Xxxxxx agrees that the covenants set forth in paragraphs
8 through 16 of this Agreement are of the essence of this Agreement; each of
such covenants is reasonable and necessary to protect and preserve the interests
and properties of Chattem; and irreparable loss and damage will be suffered by
Chattem should Xx. Xxxxxx breach any of such covenants. Further, Xx. Xxxxxx
expressly recognizes that any breach of the provisions of this Agreement is
likely to result in irreparable injury to Chattem and that monetary damages may
not adequately compensate Chattem for such breach. Therefore, Xx. Xxxxxx agrees
that Chattem 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 seek to enforce the specific
performance of this Agreement by Xx. Xxxxxx and to seek to enjoin Xx. Xxxxxx
from activities in violation of this Agreement. Further, Xx. Xxxxxx 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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19. 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, the prevailing party 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. Chattem will pay the reasonable attorneys and
accountants fees incurred by Xx. Xxxxxx in connection with the negotiation of
the terms of this Agreement in an amount not to exceed $20,000.
20. 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. 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.
21. 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. Xxxxxx or any other person, and Chattem specifically disclaims any
liability to or discrimination against Xx. Xxxxxx or any other person, on the
part of itself, its employees or its agents.
22. 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. The parties hereto hereby consent to the exclusive
jurisdiction of any applicable state or federal court of general jurisdiction
located in Xxxxxxxx County, Tennessee, and each party irrevocably submits to the
jurisdiction of such courts and waives any objection he or it may have to either
the jurisdiction or venue of such court.
23. BINDING EFFECT. All covenants, representations, and agreements made by
or on behalf of Xx. Xxxxxx and Chattem contained in the Agreement will be
binding upon the parties and their respective spouses, successors,
representatives, assigns, heirs and estates.
24. 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.
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25. ARBITRATION. Xx. Xxxxxx 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. Except for
injunctive or other equitable relief that either party may seek to enforce the
terms of this Agreement, any and all disputes arising regarding the
interpretation, enforcement, or performance of this Agreement shall be resolved
by binding, confidential arbitration governed by the Arbitration Rules
established by the American Arbitration Association. The arbitration shall be
conducted in Xxxxxxxx County, Tennessee. The arbitrator shall have full
authority to enforce the Agreement, including injunctive or other equitable
relief.
26. OPTION TO ACCELERATE DEFERRED COMPENSATION. With respect to (i) the
$335,416 which otherwise would have been payable to Xx. Xxxxxx under his
Employment Agreement on the date of his termination without cause, (ii) $172,500
which otherwise would have been payable to Xx. Xxxxxx under his Employment
Agreement on a monthly basis in the amount of $28,750 per month beginning on the
month following such termination and (iii) the bonus which otherwise would have
been payable to Xx. Xxxxxx in January 2006 (collectively, the "Deferred
Compensation") the parties agree that such Deferred Compensation is being
deferred until March 1, 2006, in order to comply with Section 409A of the
Internal Revenue Code and avoid the potential application of the excise tax to
the distribution of such compensation prior to such time. Chattem agrees that
notwithstanding the anticipated deferral as outlined above, it will accelerate
the distribution of the Deferred Compensation to the payment schedule that
otherwise would have been observed under Xx. Xxxxxx'x Employment Agreement if,
in the opinion of legal counsel chosen by Xx. Xxxxxx, future pronouncements from
the U.S. Congress, the U.S. Treasury or the Internal Revenue Service clarify
that payments of such amounts prior to March 1, 2006 will not violate any
provisions of Section 409A of the Internal Revenue Code.
PLEASE READ THE FOLLOWING CAREFULLY: IT CONTAINS A FINAL RELEASE AND/OR WAIVER
OF RIGHTS THAT YOU MAY HAVE.
I have had the opportunity to consider this Agreement and sign it freely
and voluntarily. I understand that this is a full and final release of any and
all claims I might have or have had against Chattem. I have had the opportunity
and have consulted with the law firm of Xxxxxx Xxxxxxx Xxxxxx & Xxxxx and have
carefully read this Agreement and Release and know and understand the contents.
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The undersigned have executed this Agreement on the dates reflected by
their signatures.
Chattem, Inc.
/s/ A. Xxxxxxxxx Xxxxxx, XX By: /s/ Xxx Xxxxxx
----------------------------------- ----------------------------
A. Xxxxxxxxx Xxxxxx, XX Xxx Xxxxxx, Chairman and Chief
Executive Officer
Date: 8/23/05 Date: 8/24/05
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APPENDIX 1
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Stock Options
-------------
--------- ------------- ------- -------- ------- --------- --------
Options Exercise Options Options Options
Plan Year Date of Grant Granted Price Vested Exercised Unvested
--------- ------------- ------- -------- ------- --------- --------
2003 05/29/2003 125,000 $14.500 62,500 0 62,500
--------- ------------- ------- -------- ------- --------- --------
2003 04/27/2004 60,000 $28.39 15,000 0 45,000
--------- ------------- ------- -------- ------- --------- --------
2005 04/20/2005 65,000 $42.09 0 0 65,000
--------- ------------- ------- -------- ------- --------- --------
APPENDIX 2
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Restricted Stock
----------------
------------------ ------------------- ----------------- ------------------
Issue Date Restricted Shares Retained Shares Forfeited Shares
------------------ ------------------- ----------------- ------------------
10/29/02 25,000 25,000 0
------------------ ------------------- ----------------- ------------------
02/10/04 26,250 6,750 19,500
------------------ ------------------- ----------------- ------------------
01/26/05 12,000 12,000 0
------------------ ------------------- ----------------- ------------------
