EXHIBIT 10.1
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NON-COMPETITION AND SEVERANCE AGREEMENT
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This Agreement
is made and entered into as of the 28th of October, 2005,
by and between CHATTEM, INC., a Tennessee
corporation (the Company") and Robert
E. Bosworth (the "Executive").
WITNESSETH
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WHEREAS, the
Company is desirous of assuring itself of continuity of
management through the hiring and retention
of certain key executives, and to
foster their unbiased and analytical
assessment of any offer to acquire control
of the Company; and
WHEREAS, the
Company desires to impose upon the Executive obligations of
confidentiality and to restrict his ability
to obtain employment with certain
competitors of the Company; and
WHEREAS, the
Executive is willing to accept obligations of confidentiality
and non-competition in exchange for
specified severance benefits;
NOW, THEREFORE,
the Company and the Executive do hereby agree as follows:
1. Term. The
term of this Agreement shall commence as of the day and year
first above written and continue
indefinitely thereafter for a period ending
three (3) years after the termination of
the Executive's employment with the
Company.
2.
Confidentiality Obligations. During the term of this Agreement,
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.
3. Non-Compete.
In the event of a Change in Control (as hereinafter
defined) while Executive is employed by the
Company and during the term of this
Agreement, Executive will not 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 which has or does a
significant business involving, in whole or
in part, health and beauty aid
products sold over the counter. This
provision applies only to entities selling
the above specified products in competition
with the Company in the United
States.
4. Severance
Benefits. If the Company Discharges or Constructively
Discharges the Executive during the term of
this Agreement within twenty-four
(24) months after the occurrence of a
Change in Control, he shall receive a
Severance Benefit. In addition, after a
Change in Control, the Executive shall
be entitled to resign his position with the
Company and elect to receive the
Severance Benefit (the "Election") at any
time during the period commencing
one-hundred and eighty (180) days after the
Change in Control and ending
two-hundred and forty (240) days after the
Change in Control notwithstanding
that the fact that no Discharge or
Constructive Discharge has occurred. These
terms are hereby defined as follows:
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A. "Change in
Control":
(i) Change of one-third (1/3) or more of any directors of
the Company within any twelve (12) month period; or
(ii)Change of one-half (1/2) or more of the directors of the
Company within any twenty-four (24) month period; or
(iii)Acquisition by any person of the ownership or right to
vote of thirty-five (35%) percent or more of the Company's
outstanding voting shares. "Person" shall mean any person,
corporation, partnership, or any entity and any affiliate or
associate thereof. "Affiliate" and "associate" shall have the
meanings assigned to them in Rule 12(b)(2) of the General Rules
and Regulations under the Securities Exchange Act of 1934.
B. "Discharges":
terminates the Executive for any reason other than
indictment or conviction for a felony or other crime involving
substantial moral turpitude, disability, death, alcoholism,
drug
addiction or the gross, active misfeasance of the Executive
with
regard to his duties with the Company.
C.
"Constructively Discharges": changes location or reduces the
Executive's status, duties, responsibilities or direct or
indirect compensation, (including future increases commensurate
with those given other ma
