EXHIBIT 10.2
AMENDED AND RESTATED SEVERANCE AGREEMENT
This Agreement is made and entered into as of the 1st of
August, 2000, by and between CHATTEM, INC., a Tennessee corporation (the
"Company") and ____________ (the "Executive").
WITNESSETH
WHEREAS, the Company is desirous of assuring itself of
continuity of management through the hiring and retention of certain key
executives, and to xxxxxx their unbiased and analytical assessment of any offer
to acquire control of the Company;
WHEREAS, the Company believes it is in the best interests of
the Company and its stockholders to provide the Executive with adequate
financial security and sufficient encouragement to the Executive to remain with
the Company notwithstanding the possibility of a change of control of the
Company;
WHEREAS, the Company and the Executive have previously entered
that certain Non-Competition and Severance Agreement dated November 6, 1985, as
amended May 31, 1995, which provides certain benefits in the event of a change
in control of the Company, which the Company desires to amend and restate in the
form hereinafter set forth; and
WHEREAS, the Executive is willing to continue to provide
services for the long-term benefit of the Company and its shareholders in
exchange for the specified severance benefits provided hereunder.
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. 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: 1.
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 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.
D. "Severance Benefit": a payment equal to two-hundred
ninety-nine (299%) percent of the Executive's average
annual includible compensation from the Company
during the five (5) most recently completed taxable
years before the date on which the Change in Control
occurs. Any partial taxable years shall be
annualized. If the event that the Executive's
employment is less than five (5) years, the average
annual compensation should be calculated based on the
rate of compensation for the actual term of
employment.
Notwithstanding the foregoing Severance Benefit
formula, any payments to which the Executive is
entitled upon Discharge or Constructive Discharge
from the Company shall be adjusted so that the
aggregate present value of all "parachute
payments" (as defined in Section 280G of the
Internal Revenue Code of 1986, as amended from
time to time (the "Code") to which the Executive
is entitled is less than 300% of the Executive's
"annualized includible compensation for the base
period" as defined in the Code, unless, taking
into account the applicable federal, state and
local income taxes and the excise tax imposed by
Section 4999, the payment of the full Severance
Benefit results in the receipt by the Executive on
an after-tax basis of the greatest amount of
benefit under this Section 2 notwithstanding that
all or some portion of such Severance Benefit may
be taxable under Section 4999 of the Code. The
determination as to whether there is any
adjustment (and the extent thereof) in the
payments due the Executive because of this
paragraph shall be made in writing within thirty
(30) days after Discharge or Constructive
Discharge or Election, by the Company's
independent certified public accounts on the date
of the Change in Control and shall be final and
binding on the Executive and the Company. The
Company shall furnish said independent certified
public accountants with all data required to make
said determination within ten (10) days after
Discharge or Constructive Discharge or Election.
If there is any such adjustment, the Executive may
elect in the Executive's sole discretion which
payments or distributions shall be reduced and/or
which payments or distributions shall be deferred
and promptly notify the Company in writing of such
election.
3. PAYMENT. The Severance Benefit shall be paid to the
Executive in a lump sum or, at the Executive's
election, in two (2) equal installments with the first
to be made not later than thirty (30) days after
Discharge or Constructive Discharge or Election and
the second installment one (1) year after the first
installment was paid. No interest shall be due upon
the Severance Benefit unless it is not paid when due
and in which case interest shall accrue thereon at the
applicable Federal rate used to determined present
value under Section 280G of the Internal Revenue Code
of 1986, as amended.
4. ARBITRATION OF ALL DISPUTES. Any controversy or claim
arising out of or relating to this Agreement or the
breach thereof, shall be settled by arbitration in the
City of Chattanooga in accordance with the laws of the
State of Tennessee by three (3) arbitrators, one of
whom shall be appointed by the Company, one by the
Executive and the third of whom shall be appointed by
the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third
arbitrator, then the third arbitrator shall be
appointed by the American Arbitration Association. The
arbitration shall be conducted in accordance with the
rules of the American Arbitration Association.
Judgement upon the award rendered by the arbitrators
may be entered in any court having jurisdiction
thereof. In the event that it shall be necessary or
desirable for the Executive to retain legal counsel
and/or incur other costs and expenses in connection
with the enforcement of any and all of his rights
under this Agreement, the Company shall pay (or the
Executive shall be entitled to recover from the
Company, as the case may be) his reasonable attorneys'
fees and costs and expenses in connection with the
enforcement of his
said rights (including the enforcement of any
arbitration award in court), regardless of the final
outcome, unless the arbitrators shall determine that
under the circumstances recovery by the Executive of
all or a part of any such fees and costs and expenses
would be unjust.
5. NOTICES. Any notices, requests, demands and other
communications provided for by this Agreement shall be
sufficient if in writing and if sent by registered or
certified mail to the Executive at the last address he
has filed in writing with the Company or, in the case
of the Company, at its principal executive offices
addressed to the President.
6. NON-ALIENATION. The Executive shall not have any
right to pledge, hypothecate, anticipate or in any way
create a lien upon any amounts provided under this
Agreement; and no benefits payable hereunder shall be
assignable in anticipation of payment either by
voluntary or involuntary acts, or by operation of law.
Notwithstanding the foregoing provisions, in the event
that the Executive dies following Discharge or
Constructive Discharge after a Change in Control but
before receiving all of his Severance Benefit, the
unpaid Severance Benefit shall be paid to his Estate
in accordance with the terms of this Agreement.
7. GOVERNING LAW. The provisions of this Agreement shall
be construed in accordance with the laws of the State of
Tennessee.
8. AMENDMENT. This Agreement may not be amended or
cancelled except by the mutual agreement of the parties
in writing.
9. SUCCESSORS TO THE COMPANY. Except as otherwise
provided herein, this Agreement shall be binding upon
and inure to the benefit of the Company and any
successor of the Company.
10. SEVERABILITY. In the event that any provision or
portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its Secretary, all as of
the day and year first above written.
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[Executive]
CHATTEM, INC.
By:
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Title:
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ATTEST:
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Secretary
(SEAL)
