EXHIBIT 10.4
CHATTEM, INC.
NON-STATUTORY STOCK OPTION PLAN - 2000
1. PURPOSE
The Chattem, Inc. Non-Statutory Stock Option Plan - 2000 (the "2000
Plan") is designed to enable officers and key management employees of Chattem,
Inc. (the "Company") and its Subsidiaries to continue to acquire shares of the
Company's common stock and thus to share in the future success of the Company's
business. Accordingly, the 2000 Plan is intended as a further means not only of
attracting and retaining outstanding management personnel, but also of promoting
a closer identity of interest between key management employees and the Company
and its shareholders.
2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms,
when used in the 2000 Plan, shall have the meanings set forth in this Section 2.
(a) "BENEFICIARY" means the person or persons designated in writing
by the Optionee or, in the absence of such a designation or if
the designated person or persons predecease the Optionee, the
Optionee's Beneficiary shall be the person or persons who acquire
the right to exercise the Option by bequest or inheritance. In
order to be effective, an Optionee's designation of a Beneficiary
must be on file with the Committee before the Optionee's death.
Any such designation may be revoked in writing and a new written
designation substituted therefor at any time before the
Optionee's death.
(b) "BOARD OF DIRECTORS" or "BOARD" means the board of directors of
the Company.
(c) "CHANGE IN CONTROL" means:
(i) Change of 1/3 or more of the directors of the Company within
any 12-month period; or
(ii) Change of 1/2 or more of the directors of the Company within
any 24-month period; or
(iii) Acquisition by any person of the ownership of or right to
vote 35% or more of the Company's outstanding voting stock.
For purposes of this
paragraph (iii): (A) "person" shall mean any person,
corporation, partnership or other entity and any affiliate
or associate thereof and (B) "affiliate" and "associate"
shall have the meanings given to them in Rule 12b-2
promulgated under the Exchange Act.
(d) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) "COMMITTEE" means the Compensation Committee of the Board of
Directors or, in the event the Board of Directors terminates the
existence of the Compensation Committee, then Committee shall
refer to the Board as a whole.
(f) COMPANY means Chattem, Inc., a corporation incorporated under the
laws of the State of Tennessee, and its successors.
(g) "DISABILITY" means a disability that entitles the Optionee to
benefits under the Company's Long-Term Disability Plan, as
amended from time to time.
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(i) "FAIR MARKET VALUE" means the closing sale price on the last
business day prior to the date on which Fair Market Value needs
to be determined as reported in THE WALL STREET JOURNAL, or the
average of the high and low bids on such day if no sale exists.
(j) "OPTION" means an option to purchase a share or shares of the
Company's common stock.
(k) "OPTION AGREEMENT" means the written agreement to be entered into
by the Company and the Optionee, as provided in Section 7 hereof.
(1) "OPTIONEE" means a person to whom an Option has been granted
under the 2000 Plan.
(m) "RETIREMENT" means retirement from employment with the Company
and its Subsidiaries, as determined by the Committee in its sole
discretion.
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(n) "SHARES" means shares or the Company's common stock.
(o) "SUBSIDIARY" means a subsidiary corporation as defined in Section
425(f) of the Code (or a successor provision of similar import).
(p) "TERM" means the period during which a particular Option may be
exercised in accordance with Section 10 hereof.
3. EFFECTIVE DATE OF THE 2000 PLAN
The 2000 Plan shall become effective when adopted by the Board of
Directors; provided, however, that if the 2000 Plan is not approved by the
holders of a majority of the outstanding Shares present, or represented, and
entitled to vote at the meeting before the first anniversary of its adoption by
the Board, the 2000 Plan and all Options granted under the 2000 Plan prior to
such anniversary shall be null and void and shall be of no effect.
4. NUMBER AND SOURCE OF SHARES SUBJECT TO THE 2000 PLAN
(a) The Company may grant Options under the 2000 Plan for not more
than Seven Hundred Fifty Thousand(750,000) Shares (subject,
however, to adjustment as provided in Section 14 hereof) which
shall be provided by the issuance of Shares authorized but
unissued.
(b) In the event that an Option shall for any reason lapse or be
terminated without being exercised in whole or in part, the
Shares subject to the Option shall be restored to the total
number of Shares with respect to which Options may be granted
under the 2000 Plan, but only to the extent that the Option has
not been exercised previously.
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5. ADMINISTRATION OF THE 2000 PLAN
(a) The 2000 Plan shall be administered by the Committee.
(b) The Committee shall adopt such rules and regulations (including
amendments thereto) as it may deem proper; provided, however,
that it may take action only upon the agreement of a majority of
its members then in office. Any action that the Committee may
take through a written instrument signed by a majority of its
members then in office shall be as effective as though taken at a
meeting duly called and held.
(c) The powers of the Committee shall include plenary authority to
interpret the 2000 Plan, and, subject to the provisions hereof,
the Committee shall determine the persons to whom Options shall
be granted, the number of Shares subject to each Option, the Term
of each Option, the date on which each Option shall be granted,
and the provisions of each Option Agreement.
6. 2000 PLAN PARTICIPANTS ELIGIBLE TO RECEIVE OPTIONS
Options may be granted under the 2000 Plan to key management employees
of the Company or any Subsidiary, including officers who, in the judgment of the
Committee, have a substantial impact on the Company's attainment of corporate
goals. All determinations by the Committee as to the identity of the persons to
whom Options shall be granted hereunder shall be conclusive.
7. OPTION AGREEMENTS
(a) No Option shall be exercised by an Optionee unless the Optionee
shall have executed and delivered an Option Agreement.
(b) Appropriate officers of the Company are hereby authorized to
execute and deliver Option Agreements in the name of the Company
as directed from time to time by the Committee.
8. NON-STATUTORY OPTIONS
It is intended that the Options granted hereunder shall not be
"incentive stock options" within the meaning of the Code.
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9. OPTION PRICE
The Option price to be paid by the Optionee to the Company for each
Share purchased upon the exercise of the Option shall be determined by the
Committee and shall be not less than the Fair Market Value of the Share on the
date the option is granted but may exceed Fair Market Value in the sole
discretion of the Committee.
10. TERM OF OPTION; EXERCISE OF OPTION
(a) Each Option granted under the 2000 Plan shall be exercisable as
provided in this Section 10. In no event may an Option be
exercised before the approval of the 2000 Plan by the
shareholders of the Company at the meeting within the period
specified by Section 3 hereof. The Term of each Option shall end
(unless the Option shall have terminated earlier under any other
provisions of the 2000 Plan) on a date ten (10) years from the
date of grant of the Option.
(b) Each Option shall become exercisable and vested with respect to
twenty-five percent (25%) of the Shares purchasable thereunder on
the first anniversary of the date of the grant of the Option. The
option to purchase an additional twenty-five percent (25%) of
such Shares shall become exercisable and vested, on a cumulative
basis, on each of the three succeeding anniversaries of the date
of the grant of the Option, so that four years from the date of
such grant the option to purchase all such Shares shall have
become exercisable and vested. Notwithstanding the foregoing
vesting schedule (i) each Option shall become exercisable in full
immediately upon a Change in Control and (ii) upon the death,
disability or retirement of an Optionee or termination of an
Optionee's employment pursuant to Section 12(e), any Option held
by such Optionee shall be exercisable in full in accordance with
the provisions of Section 12. When exercising an Option, the
Optionee may purchase less than the full number of Shares then
available under the Option.
(c) Options shall be exercised by delivering or mailing to the
Committee:
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(1) a notice, in the form and in the manner prescribed by the
Committee, specifying the number of Shares to be purchased,
and
(2) payment in full of the Option price for the Shares in cash
and/or by the tender of Shares (by delivering the
appropriate stock certificates) to the Committee; provided,
however, that (i) the Committee shall determine acceptable
methods for tendering shares to exercise an Option under the
2000 Plan, and may impose such limitations and prohibitions
on the use of Shares to exercise an Option as it deems
appropriate and (ii) the Committee may permit Optionees to
pay for any Shares subject to an option by delivering to the
Committee a properly executed exercise notice together with
a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds
to pay the purchase price.
The Company may enter into agreements for coordinated
procedures with one or more brokerage firms in connection
with exercises of Options. The value of any Shares tendered
in accordance with this Paragraph (c) shall be determined on
the basis of their Fair Market Value on the date of
exercise.
(d) Subject to the provisions of Section 11(a) hereof, upon receipt
of the notice of exercise and upon payment of the Option price,
the Company shall promptly deliver to the Optionee a certificate
or certificates for the Shares purchased, without charge to the
Optionee for issue or transfer tax.
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11. CONDITIONS ON EXERCISE
(a) The exercise of each Option granted under the 2000 Plan shall be
subject to the condition that if at any time the Company shall
determine in its discretion that the satisfaction of withholding
tax or other withholding liabilities, or that the listing,
registration or qualification of any Shares otherwise deliverable
upon such exercise upon any securities exchange or under any
State or Federal law, or the consent or approval of any
regulatory body, is necessary or desirable as a condition of, or
in connection with, such exercise or the delivery or purchase of
Shares, then in any such event such exercise or payment shall not
be effective or be made unless such withholding, listing,
registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the
Company. Any such postponement shall not extend the time within
which the Option may be exercised; and neither the Company nor
its directors or officers shall have any obligation or liability
to the Optionee or to a Beneficiary with respect to any Shares as
to which the option shall lapse because of such postponement.
(b) Except with the prior written approval of the Committee, all
Options granted under the 2000 Plan shall be nontransferable
other than by will or by the laws of descent and distribution in
accordance with Section 12(a) hereof, and an Option may be
exercised during the lifetime of the Optionee only by the
Optionee.
(c) Subject to the provisions of Section 11(b), upon the purchase of
Shares under an option, the stock certificate or certificates
may, at the request of the Optionee (or the Optionee's
Beneficiary, where the Option is exercised by the Beneficiary),
be issued in the name of the Optionee (or Beneficiary) and the
name of another person as joint tenants with the right of
survivorship.
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12. EXERCISE OF OPTION AFTER DEATH, DISABILITY, RETIREMENT, OR OTHER
TERMINATION OF EMPLOYMENT
(a) DEATH. If an Optionee's employment with the Company or a
Subsidiary shall cease due to the Optionee's death, any Option
held by the Optionee on the date of the Optionee's death may be
exercised only within three (3) years after the Optionee's death
and only by the Optionee's Beneficiary. If an Optionee shall die
within three (3) years after cessation of employment while the
Option is exercisable pursuant to Paragraph (b) below, or if the
Optionee shall die within three (3) years after cessation of
employment while the Option is exercisable pursuant to Paragraph
(c) below, any Option held by the Optionee on the date of his
death may be exercised after the Optionee's death only within the
remainder of the period prescribed by Paragraph (b) or Paragraph
(c), as the case may be, and only by the Optionee's Beneficiary.
Notwithstanding the foregoing, in no event shall the Option be
exercisable after the expiration date thereof specified in the
Option Agreement.
(b) DISABILITY. If an Optionee's employment with the Company or a
Subsidiary ceases due to Disability, the Optionee may exercise
the Option at any time within three (3) years after the Optionee
shall so cease to be an employee; provided, however, that in no
event shall the Option be exercisable after the expiration date
thereof specified in the Option Agreement.
(c) RETIREMENT. If an Optionee's employment with the Company or a
Subsidiary ceases due to Retirement, the Optionee may exercise
the Option at any time within three (3) years after the Optionee
shall so cease to be an employee; provided, however, that in no
event shall the Option be exercisable after the expiration date
thereof specified in the Option Agreement.
(d) LEAVE OF ABSENCE. The Committee shall have the sole authority to
determine whether, in any particular case, a leave of absence
shall result in a termination of employment for purposes of this
Section 12.
(e) DIVESTITURE. If an Optionee's employment with the Company or a
Subsidiary ceases due to divestiture of a Subsidiary or other
distinct business unit of the Company, the Optionee may exercise
the Option at any
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time within ninety (90) days after the divestiture, provided that
the Optionee is an employee on the actual date of the
divestiture; and further provided, that in no event shall the
Option be exercisable after the expiration date thereof specified
in the Option Agreement.
(f) TERMINATION FOR OTHER REASONS. Upon termination of an Optionee's
employment with the Company or a Subsidiary for any reason other
than those specified in Paragraphs (a) through (e) above, the
Optionee may exercise the Option (to the extent vested) at any
time within thirty (30) days after such termination; provided,
however, that in no event shall the Option be exercisable after
the expiration date thereof specified in the Option Agreement.
13. SHAREHOLDER RIGHTS
No person shall have any rights of a shareholder by virtue of an Option
except with respect to Shares actually issued to him or her, and the issuance of
Shares shall confer no retroactive right to dividends.
14. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
In the event that there is any change in the Shares through merger,
consolidation, reorganization, recapitalization or otherwise, or if there shall
be any dividend on the Company's Shares, payable in such Shares, or if there
shall be a stock split or combination of Shares, the aggregate number of Shares
available for Options, the number of Shares subject to outstanding Options, and
the Option price per share of each outstanding Option shall be proportionately
adjusted by the Committee as it deems equitable in its absolute discretion, to
prevent dilution or enlargement of the rights of the Optionee; provided, that
any fractional Shares resulting from such adjustments shall be eliminated. The
Committee's determination with respect to any such adjustments shall be
conclusive.
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15. EFFECT OF MERGER OR OTHER REORGANIZATION
If the Company shall be the surviving corporation in a merger or other
reorganization, Options shall extend to stock and securities of the Company to
the same extent that a holder of that number of Shares immediately before the
merger or consolidation corresponding to the number of Shares covered by the
Option would be entitled to have or obtain stock and securities of the Company
under the terms of the merger or consolidation.
16. TERMINATION, SUSPENSION OR MODIFICATION OF 2000 PLAN
The Committee may at any time terminate, suspend, amend or modify the
2000 Plan, except that the Committee shall not, without the authorization of the
holders of a majority of the Company's Shares voting at a shareholders' meeting
duly called and held, change (other than through adjustment for changes in
capitalization as provided in Section 14 hereof): (a) the aggregate number of
Shares with respect to which Options may be granted; (b) the class of persons
eligible for Options; (c) the Option price; or (d) the maximum duration of the
2000 Plan. No termination, suspension or modification of the 2000 Plan shall
adversely affect any right acquired by an Optionee, or by any Beneficiary, under
the terms of an Option granted before the date of such termination, suspension
or modification, unless such Optionee or Beneficiary shall consent; but it shall
be presumed conclusively that any adjustment for changes in capitalization in
accordance with Section 14 hereof does not adversely affect any such right.
17. DURATION OF THE 2000 PLAN
Unless sooner terminated in accordance with Section 16 hereof, the 2000
Plan shall remain in effect for a period of five (5) years from the date of its
adoption by the Board of Directors. Expiration of such five (5) year period
shall not affect the vesting of previously granted Options pursuant to Section
10(b) hereof.
18. GOVERNING LAW
The 2000 Plan shall be construed and its provisions enforced and
administered in accordance with the laws of the State of Tennessee except to the
extent that such laws may be superseded by any Federal law.
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