Exhibit 10.3
AMENDED AND RESTATED
NON-COMPETITION AND 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; 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 Company and the Executive have previously entered
that certain Non-Competition and Severance Agreement dated February 18, 2000,
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 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:
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.
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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. The determination as
to whether there is any adjustment (and the
extent thereof) in the payments due the
Executive because of this
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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.
5. 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.
6. CONTINUATION OF BENEFITS. The Company shall
continue to provide to the Executive at its cost and expense health, medical
and life insurance benefits at substantially the same level of benefits as
the Executive has at the date he becomes entitled to the Severance Benefit in
accordance with Section 4 hereof for a period of two (2) years following the
date the Executive becomes entitled to such Severance Benefit.
7. 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
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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.
8. 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.
9. 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.
10. GOVERNING LAW. The provisions of this Agreement
shall be construed in accordance with the laws of the State of Tennessee.
11. AMENDMENT. This Agreement may not be amended or
cancelled except by the mutual agreement of the parties in writing.
12. 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.
13. 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.
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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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[Exeuctive]
CHATTEM, INC.
By:
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Title:
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ATTEST:
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Secretary
(SEAL)
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