EXHIBIT
10.3
SECOND AMENDED AND RESTATED SEVERANCE AGREEMENT
This
Second Amended and Restated Severance Agreement (the
“
Agreement ”
) is made and entered into as of the 8 th day of July,
2008, by and between CHATTEM, INC., a Tennessee corporation
(the “Company”) and ZAN GUERRY (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 foster 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, and as further amended by
that certain Amended and Restated Severance Agreement dated
August 1, 2000, which provides certain benefits in the event
of a change in control of the Company;
WHEREAS,
the Company desires to amend and restate the Agreement in the
form hereinafter set forth to comply with the provisions of
Section 409A of the Internal Revenue Code of 1986, as amended,
(the “Code”) and to make certain other beneficial
changes; and
WHEREAS,
the Executive is willing to continue to provide services for
the long-term benefit of the Company and its shareholders and
to agree to the changes set forth herein in exchange for the
specified additional 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 with the termination of
the Executive ’ s
employment with the Company. Notwithstanding the
foregoing, the expiration of the term of this Agreement shall not
affect any rights or obligations continuing thereafter as
specifically set forth herein.
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, the Executive shall receive the Severance
Benefit.
If
the Company’s shareholders approve a merger or other
transaction which results in a Change in Control and the Company
Discharges or Constructively Discharges the Executive on or after
the date of the related shareholder meeting but before the actual
date of the Change in Control, Executive shall be deemed to have
been Discharged or Constructively Discharged immediately following
the Change in Control. In addition, after a Change in
Control, the Executive shall be entitled to resign his employment
with the Company and receive the Severance Benefit (a
“Resignation”) 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 the fact that no Discharge or Constructive
Discharge has occurred. These terms are hereby defined
as follows:
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A.
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“Change
in Control” shall mean the occurrence of any one of the
following events:
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(i)
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the
sale by the Company of all or substantially all of its assets
or the consummation by the Company of any merger,
consolidation, reorganization, or business combination with
any person, in each case, other than in a
transaction:
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(a)
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in
which persons who were shareholders of the Company immediately
prior to such sale, merger, consolidation, reorganization, or
business combination own, immediately thereafter, (directly or
indirectly) more than 50% of the combined voting power of the
outstanding voting securities of the purchaser of the assets
or the merged, consolidated, reorganized or other entity
resulting from such corporate transaction (the
“Successor Entity”);
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(b)
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in
which the Successor Entity is an employee benefit plan
sponsored or maintained by the Company or any person
controlled by the Company; or
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(c)
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after
which more than 50% of the members of the board of directors
of the Successor Entity were members of the Board of Directors
of the Company (the “Board”) at the time of the
action of the Board approving the transaction (or whose
nominations or elections were approved by at least 2/3 of the
members of the Board at that time);
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(ii)
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the
acquisition directly or indirectly by any “person”
or “group” (as those terms are used in Sections
13(d), and 14(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”), including without limitation,
Rule 13d-5(b)) of “beneficial
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ownership”
(as determined pursuant to Rule 13d-3 under the Exchange Act)
of securities entitled to vote generally in the election of
directors (“voting securities”) of the Company
that represent 30% or more of the combined voting power of the
Company’s then-outstanding voting securities, other
than:
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(a)
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an
acquisition by a trustee or other fiduciary holding securities
under any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the
Company or by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any person
controlled by the Company;
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(b)
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an
acquisition of voting securities by the Company or a person
owned, directly or indirectly, by the holders of at least 50%
of the voting power of the Company’s then outstanding
securities in substantially the same proportions as their
ownership of the stock of the Company;
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(c)
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an
acquisition of voting securities from the Company;
or
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(d)
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an
acquisition of voting securities pursuant to a transaction
described in clause (i) of this definition that would not be a
Change in Control under clause (i); and
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for
purposes of clarification, an
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