EXHIBIT 10.5 
 
 FORM OF
 NON-COMPETITION AND
SEVERANCE AGREEMENT
 
 This
Agreement is made and entered into by and between Chattem, Inc., a Tennessee
corporation (“Chattem”) and _______________________ (the “Executive”) effective
on the Effective Date.
 
 WITNESSETH
 
 WHEREAS,
Chattem desires to enter into this Agreement with Executive; and
  WHEREAS,
Executive desires to enter into this Agreement with Chattem;
 
 NOW,
THEREFORE, Chattem and Executive for such consideration as each deems full and
adequate do hereby agree as follows:
 
 § 1.           Term.  The
initial term of this Agreement shall commence on the Effective Date and shall
expire on the third anniversary of such date; provided, however, the initial
term automatically shall extend for 1 additional year on each anniversary of the
Effective Date unless either Chattem or Executive delivers written notice to the
other no less than 90 days before such anniversary of the Effective Date to the
effect that there will be no such extension.
 
 § 2.           Definitions.
 
 Board.  The
term “Board” for purposes of this Agreement means the Board of Directors of
Chattem.
 
 Cause.  The
term “Cause” for purposes of this Agreement means (i) willful or gross
misconduct by Executive that is materially detrimental to Chattem or a
Chattem  Affiliate, including but not limited to, a violation of
Chattem’s trading policy or code of business conduct, (ii) acts of personal
dishonesty or fraud by an Executive toward Chattem or a Chattem Affiliate which
is materially detrimental to Chattem or a Chattem Affiliate, (iii) Executive’s
conviction of a felony, except for a conviction related to vicarious liability
based solely on Executive’s position with Chattem or a Chattem Affiliate,
provided that Executive had no involvement in actions leading to such liability
or had acted upon the advice of Chattem’s or a Chattem Affiliate’s counsel or
(iv) Executive’s refusal to cooperate in an investigation of Chattem if
requested to do so by the Board.
 
 Change in
Control.  The term “Change in Control” for purposes of this
Agreement means:
 
 (a)
              the
      sale by Chattem of all or substantially all of its assets or the
      consummation by Chattem of any merger, consolidation, reorganization, or
      business combination with any person, in each case, other than in a
      transaction:
 
 
 (i)
              in
      which persons who were shareholders of Chattem 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”);
 
 (ii)
              in
      which the Successor Entity is an employee benefit plan sponsored or
      maintained by Chattem or any person controlled by Chattem;
    or
 
 (iii)
              after
      which more than 50% of the members of the board of directors of the
      Successor Entity were members of 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);
 
 (b)
              the
      acquisition directly or indirectly by any “person” or “group” (as those
      terms are used in Sections 13(d), and 14(d) of the Exchange Act, including
      without limitation, Rule 13d-5(b)) of “beneficial 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 Chattem that represent 30% or more of the combined voting
      power of Chattem’s then-outstanding voting securities, other
      than:
 
 (i)
              an
      acquisition by a trustee or other fiduciary holding securities under any
      employee benefit plan (or related trust) sponsored or maintained by
      Chattem or any person controlled by Chattem or by any employee benefit
      plan (or related trust) sponsored or maintained by Chattem or any person
      controlled by Chattem;
 
 (ii)
              an
      acquisition of voting securities by Chattem or a person owned, directly or
      indirectly, by the holders of at least 50% of the voting power of
      Chattem’s then outstanding securities in substantially the same
      proportions as their ownership of the stock of
  Chattem;
 
 (iii)
              an
      acquisition of voting securities from Chattem;
  or
 
 2
 (iv)
              an
      acquisition of voting securities pursuant to a transaction described in
      clause (a) of this definition that would not be a Change in Control under
      clause (a); and
 
 for
purposes of clarification, an acquisition of Chattem’s securities by Chattem
that causes Chattem’s voting securities beneficially owned by a person or group
to represent 30% or more of the combined voting power of Chattem’s
then-outstanding voting securities is not to be treated as an “acquisition” by
any person or group for purposes of this clause (b);
 
 (c)
              a
      change in the composition of the Board that causes less than a majority of
      the directors of Chattem to be directors that meet one or more of the
      following descriptions:
 
 (i)
              a
      director who has been a director of Chattem for a continuous period of at
      least 24 months;
 
 (ii)
              a
      director whose election or nomination as director was approved by a vote
      of at least 2/3 of the then directors described in clauses (c)(i), (ii) or
      (iii) of this definition by prior nomination or election, but excluding,
      for the purposes of this subclause (ii), any director whose initial
      assumption of office occurred as a result of an actual or threatened (y)
      election contest with respect to the election or removal of directors or
      other actual or threatened solicitation of proxies or consents by or on
      behalf of a person or group other than the Board or (z) tender offer,
      merger, sale of substantially all of Chattem’s assets, consolidation,
      reorganization, or business combination that would be a Change in Control
      under clause (a) on the consummation thereof;
or
 
 (iii)
              a
      director who was serving on the Board as a result of the consummation of a
      transaction described in clause (a) that would not be a Change in Control
      under clause (a); or
 
 (d)
              the
      approval by Chattem’s shareholders of a liquidation or dissolution of
      Chattem other than in connection with a transaction described in clause
      (a) of this definition that would not be a Change in Control
      thereunder.
 
 Except as
otherwise specifically defined in this definition, the term “person” means an
individual, corporation, partnership, trust, association or any other entity or
organization.
 3
 
 Chattem.  The
term “Chattem” for purposes of this Agreement means Chattem, Inc. and any
successor to Chattem, Inc.
 
 Chattem
Affiliate.  The term “Chattem Affiliate” for purposes of this
Agreement means any organization whose employees are treated as employed by
Chattem under § 414(c) of the Code.
 
 COBRA
Coverage.  The term “COBRA Coverage” means the health, vision
and dental care coverage which Chattem is required to provide pursuant to §4980B
of the Code.
 
 Code.  The
term “Code” for purposes of this Agreement means the Internal Revenue Code of
1986, as amended.
 
 Compensation
Committee.  The term “Compensation Committee” for purposes of
this Agreement means the Compensation Committee of the Board or any successor to
such committee.
 
 Confidential or Proprietary
Information.  The term “Confidential or Proprietary
Information” for purposes of this Agreement means any secret, confidential, or
proprietary information of Chattem or a Chattem Affiliate (not otherwise
included in the definition of Trade Secret in this Agreement) that has not
become generally available to the public by the act of one who has the right to
disclose such information without violating any right of Chattem or a Chattem
Affiliate.
 
 Current Cash Compensation
Package.  The term “Current Cash Compensation Package” for
purposes of this Agreement means the sum of the following:
 
 (a)
              Executive’s
      highest annual base salary from Chattem and any Chattem Affiliate which
      (but for any salary deferral election) is in effect at any time during the
      1 year period which ends on the date Executive has a Separation from
      Service under the circumstances described in § 4.1;
    and
 
 (b)
              The
      greater of (i) Executive’s bonus for the calendar year which immediately
      precedes the calendar year in which Executive has a Separation from
      Service under the circumstances described in § 4.1 or (ii) 100% of
      Executive’s target bonus for the calendar year in which Executive has a
      Separation from Service under the circumstances described in §
      4.1.
 
 Effective
Date.  The term “Effective Date” for purposes of this Agreement
means the date shown in the signature section of this Agreement as the date
Chattem signs this Agreement.
 4
 
 Equity
Grants.  The term “Equity Grants” for purposes of this
Agreement means any equity or equity-type grant made by Chattem or by a Chattem
Affiliate, including stock option grants, restricted stock grants, stock
appreciation right grants and restricted stock unit grants.
 
 Exchange
Act.  The term “Exchange Act” for purposes of this Agreement
means the Securities Exchange Act of 1934, as amended.
 
 Good
Reason.  The term “Good Reason” for purposes of this Agreement
means (i) a material demotion or a material diminution of Executive’s duties,
responsibilities and status; (ii) a material reduction in base salary or annual
incentive opportunities; (iii) the assignment to a primary workplace which is
more than 50 miles from Executive’s primary workplace on the date of this
Agreement, unless Executive voluntarily consents to the applicable change
described in clause (i), (ii), or (iii) of this definition; or (iv) any material
breach of this Agreement by Chattem.
 
 Gross Up
Payment.  The term “Gross Up Payment” for purposes of this
Agreement means a payment to or on behalf of Executive which shall be sufficient
to pay (i) any excise tax described in § 4.4(c)(3) in full, (ii) any
federal, state and local income tax and social security and other employment tax
on the payment made to pay such excise tax as well as any additional taxes,
including excise taxes, on such payment and (iii) any interest or penalties
assessed by the Internal Revenue Service on Executive which are related to the
payment of such excise tax unless such interest or penalties are attributable to
Executive’s willful misconduct or negligence.
 
 Restricted
Period.  The term “Restricted Period” for purposes of this
Agreement means the period which starts on the effective date of a Change in
Control and ends on the first anniversary of the date of Executive’s Separation
from Service following such Change in Control.
 
 Separation from
Service.  The term “Separation from Service” means a
“separation from service” within the meaning of §409A of the Code from Chattem
and from any Chattem Affiliate.
 
 Trade
Secret.  The term “Trade Secret” for purposes of this Agreement
means information, including, but not limited to, technical or nontechnical
data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a drawing, a process, financial data, financial plans, product plans,
or a list of actual or potential customers or suppliers that:
 
 (a)
              derives
      economic value, actual or potential, from not being generally known to,
      and not being readily ascertainable by proper means by, other persons who
      can obtain economic value from its disclosure or use,
  and
 
 5
 (b)
              is
      the subject of reasonable efforts by Chattem or a Chattem Affiliate to
      maintain its secrecy.
 
 § 3.           Restrictive
Covenants
 
 3.1           No Competitive
Activity.  Absent the Compensation Committee’s written consent,
Executive shall not, during the Restricted Period 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,
over-the-counter drugs, functional toiletries or dietary supplements which are
competitive with the products of Chattem marketed and sold during the term of
this Agreement up through the date of termination of employment with annual
sales for Chattem's most recently completed fiscal year in excess of $10
million.  This provision applies only to persons or entities selling
the above-specified products in competition with Chattem through food, drug or
mass merchandiser channels of distribution in the United States.
 
 3.2           No Solicitation of Customers
or Clients.  Executive shall not during the Restricted Period
solicit any customer or client of Chattem or any Chattem Affiliate with whom
Executive had any material business contact during the 2 year period which ends
on the date Executive has a Separation from Service on behalf of any business
that engages directly or indirectly in the sale of health and beauty aid
products over-the-counter, either individually, or as an owner, partner,
employee, agent, consultant, advisor, contractor, stockholder, investor, officer
or director of, or service provider to, any corporation, partnership, venture or
other business entity.
 
 3.3           Antipirating of
Employees   Absent the Compensation Committee's written
consent, Executive will not during the Restricted Period solicit to employ on
Executive's own behalf or on behalf of any other person, firm or corporation,
any person who was employed by Chattem or a Chattem Affiliate during the term of
Executive’s employment by Chattem or a Chattem Affiliate (whether or not such
employee would commit a breach of contract) unless at the time of such
solicitation such person had not been employed by Chattem or a Chattem Affiliate
for a period of at least 1 year.
 
 3.4           Trade Secrets and
Confidential Information.  Executive agrees that Executive will
hold in a fiduciary capacity for the benefit of Chattem and each Chattem
Affiliate, and will not directly or indirectly use or disclose, any Trade Secret
that Executive may have acquired during the term of Executive's employment by
Chattem or a Chattem Affiliate for so long as such information remains a Trade
Secret.  Executive in addition agrees that during the Restricted
Period Executive will hold in a fiduciary capacity for the benefit of Chattem
and each Chattem Affiliate, and will not directly or indirectly use or disclose,
any Confidential or Proprietary Information that Executive may have acquired
(whether or not developed or compiled by Executive and whether or not Executive
was authorized to have access to such information) during the term of, in the
course of, or as a result of Executive's employment by Chattem or a Chattem
Affiliate.
 6
  This
§ 3.4 is intended to provide rights to Chattem which are in addition to,
and not in lieu of, any rights which Chattem has under applicable
law.
 
 3.5           Reasonable and Necessary
Restrictions and Non-Disparagement.  Executive acknowledges
that the restrictions, prohibitions and other provisions set forth in this
Agreement, including without limitation the Territory and Restricted Period, are
reasonable, fair and equitable in scope, terms and duration; are necessary to
protect the legitimate business interests of Chattem; and are a material
inducement to Chattem to enter into this Agreement.  Executive
covenants that Executive will not challenge the enforceability of this Agreement
nor will Executive raise any equitable defense to its
enforcement.  Further, Executive and Chattem each agree not to
knowingly make false or materially misleading statements or disparaging comments
about the other during the Restricted Period.
 
 3.6           Injunction.  Executive
expressly recognizes that any breach of the provisions of this §3 is likely
to result in irreparable injury to Chattem and that monetary damages may not
adequately compensate Chattem for such breach.  Therefore, Executive
agrees that Chattem shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction not only to obtain
damages for any breach of this Agreement, but also to enforce the specific
performance of this Agreement by Executive and to enjoin Executive from
activities in violation of this Agreement.  Further, Executive agrees
that any breach of the provisions of this Agreement shall automatically toll and
suspend the period of restraint for the amount of time that the breach
continues.
 
 § 4.         Severance
Benefits
 
 4.1           Cash
Severance.
 
 (a)           General
Rule.  Subject to § 4.1(b), if Executive has a Separation
from Service initiated by Chattem without Cause or Executive has a Separation
from Service initiated by Executive’s resignation for Good Reason during the 1
year period which starts immediately following a Change in Control, Chattem
shall pay Executive in cash 2 times Executive’s then Current Cash Compensation
Package (less applicable tax withholdings) within 30 days after Executive’s
employment so terminates or, if Chattem acting in good faith reasonably
determines such payment at that time would subject Executive to an additional
tax under § 409A of the Code because Executive is a “specified employee”
under §409A of the Code, within 30 days after the 6 month anniversary of the
date of Executive’s Separation from Service or, if Executive dies before the end
of such 6 month period, within 30 days after Chattem has notice of Executive’s
death.
 
 (b)           Special
Rules.
 
 (1)
              Cause.  Any
      determination of “Cause” shall be made by the Compensation Committee
      acting in good faith after offering Executive a reasonable opportunity to
      “cure” in the case of an act described in clause (iv) of the definition of
      Cause and after offering Executive the opportunity to make a presentation
      in Executive’s defense in the case of an act described in clause (i) or
      (ii) of the definition of Cause.
 
 7
 (2)
              Good
      Reason.
 
 (A)           Cure
Period.  Executive must give written notice to Chattem within
the 60 day period which starts on the date on which Executive has actual notice
of the applicable change described in clause (i), (ii) or (iii) in the
definition of “Good Reason”, and Chattem will have a 30 day cure period from
date of the delivery of such notice to reverse such change.  Executive
shall have the right to resign for “Good Reason” only if Chattem fails to
reverse such change before the end of such 30 day cure period.
 
 (B)           Extension of Deadline to
Resign.  If the 60 day period described in § 4.1(b) (2)
(A) begins before the 1 year period described in § 4.1(a) ends and
Executive resigns for Good Reason within the 10 consecutive business day period
which immediately follows the last day of the 30 day cure period described in
§ 4.1(b) (2) (A), Executive’s deadline for resigning under § 4.1(a)
shall automatically be extended through the last day of such 10 consecutive
business day period.
 
 (3)
              Shareholder
      Approval.  If Chattem’s shareholders approve a merger or
      other transaction which results in a Change in Control and Executive has a
      Separation from Service initiated by Chattem without Cause or Executive
      has a Separation from Service initiated by Executive’s resignation for
      Good Reason on or after the date of the related shareholder meeting,
      Executive shall be deemed under §4.1(a) to have a Separation from Service
      initiated by Chattem without Cause or to have a Separation from Service
      initiated by Executive’s resignation for Good Reason immediately following
      a Change in Control.
 
 4.2           COBRA
Coverage.
 
 (a)           General
Rule.  If Executive is eligible for a cash payment under
§ 4.1 and timely elects COBRA Coverage in connection with Executive’s
Separation from Service, Chattem shall reimburse Executive for the COBRA
Coverage premiums Executive pays each month to purchase such coverage from
Chattem for Executive and, if so elected, for Executive’s eligible dependents,
and the reimbursement for one month shall be made no later than the end of the
immediately following month; provided, however, such reimbursement shall be made
for no more than 24 months of COBRA Coverage.
 8
 
 (b)           Special
Rules.
 
 (1)           COBRA Coverage
Expires.  If Executive’s COBRA Coverage expires in less than 24
months and Executive elects before the expiration of such COBRA Coverage to
continue to purchase from Chattem coverage identical to COBRA Coverage under
this §4.2(b) (1) at 100% of the then COBRA Coverage premium, Executive may
purchase such coverage until the total number of months of coverage Executive
has purchased under §4.2(a) and this §4.2(b) (1) equals 24.  Chattem
shall reimburse Executive for such premiums, and the reimbursement for premiums
paid for one month shall be made no later than the end of the following
month.
 
 (2)           Additional
Coverage.  If Executive elects before the expiration of
Executive’s coverage under §4.2(a) or §4.2(b)(1), whichever comes
last,  to continue to purchase from Chattem coverage identical to
COBRA Coverage under this §4.2(b)(2), Executive may purchase such coverage at
Executive’s expense at 100% of the then COBRA Coverage premium for a period
which shall not exceed 18 additional months, provided Executive pays such
premiums at the same time and in the same manner as Chattem then requires for
premium payments to purchase COBRA Coverage.
 
 4.3           Equity
Grants.
  If
Executive has any outstanding Equity Grants on Executive’s Separation from
Service, Executive’s rights with respect to such Equity Grants shall be
determined under the related plans or agreement pursuant to which such grants
were made.
 
 4.4           Golden Parachute
Tax.
 
 (a)           Determination.  Chattem
shall engage Chattem’s independent accountants, compensation consultants or
legal counsel (“Independent Advisor”) to determine in accordance with §4.4(b)
whether any payment and any benefit coverage called for under this Agreement
together with Executive’s Equity Grants and any other payments and benefits made
available to Executive by Chattem or a Chattem Affiliate (collectively
Executive’s “Change in Control Benefits”) will result in Executive being subject
to an excise tax under § 4999 of the Code.  If Chattem’s
Independent Advisor determines that Executive will be subject to an excise tax
under §4999 of the Code,  such Independent Advisor in accordance with
§4.4(b) shall further determine whether the net amount of Executive’s Change in
Control Benefits which Executive would receive after paying such excise tax
under §4999 of the Code would be more or less than the net amount of the Change
in Control Benefits which Executive would receive if such Change in Control
Benefits were reduced by the minimum amount required so that Executive would not
be subject to an excise tax under §4999 of the Code.
 
 (b)           Process.  The
determinations called for in §4.4(a) shall be made by Chattem’s Independent
Advisor reasonably and in good faith in accordance with § 280G of the Code
and any related regulations (whether proposed, temporary or final) and any
 9
 related
Internal Revenue Service rulings and any related case law.  Chattem
and Executive shall provide such information to Chattem’s Independent Advisor as
such advisor shall reasonably request in order to make such determinations, and
a copy of any proposed determinations shall be made available when completed to
Executive and Executive’s advisors.  Executive or Executive’s advisors
shall be provided a reasonable opportunity to review and comment on any such
proposed determinations before such determinations are finalized, and any such
comments shall be taken into account in making the final determinations to the
extent that there is clear support for such comments in §280G of the Code or any
related regulations or rulings or case law.
 
 (c)           Reduction in Change in
Control Benefits.
 
 (1)           If
Chattem’s Independent Advisor's final determination under §4.4(a) is that the
net amount of Executive’s Change in Control Benefits which Executive would
receive after paying such excise tax under §4999 of the Code would be less than
the net amount of the Change in Control Benefits which Executive would receive
if such Change in Control Benefits were reduced by the minimum amount required
so that Executive would not be subject to an excise tax under §4999 of the Code,
Executive hereby irrevocably waives Executive’s right to such Change in Control
Benefits to the extent provided in such final determination under §4.4(a);
provided,
 
 (2)           Executive
shall have the right (consistent with such final determination) to request which
specific payments and benefits, including Equity Grants, shall be subject to the
waiver described in §4.4(c)(1), and Chattem shall honor such request to the
maximum extent practicable under the circumstances, and
 
 (3)           If
the Internal Revenue Service proposes to assess an excise tax under §4999 of the
Code on Executive notwithstanding the waiver by Executive under this §4.4(c),
Chattem and Executive shall cooperate in preparing a response to such proposal,
Chattem shall reimburse Executive for any expenses, including legal expenses,
which Executive incurs in connection with such response, and Chattem shall make
a Gross Up Payment to or on Executive’s behalf to the extent such assessment is
made and Executive is responsible for paying such
tax.   Executive shall submit a claim to Chattem for any
reimbursement called for under this 4.4(c)(3) within 30 normal business days at
Chattem after Executive incurs an expense which is reimbursable under this
§4.4(c)(3) and such reimbursement shall be made within 10 normal business days
at Chattem after Executive submits such claim to Chattem for reimbursement, and
any Gross Up Payment called for under this §4.4(c)(3) shall be made by Chattem
before the due date for Executive paying such tax so that the tax is timely paid
by Chattem or Executive has the Gross Up Payment in hand to timely pay such
tax.
 10
 
 4.5.           Release.  Chattem
shall have the right to condition any payment and any benefit coverage described
in § 4.1 and § 4.2 on Executive timely executing a release in favor of
Chattem in substantially the same form as set forth in Exhibit A to this
Agreement.
 
 4.
6           Insurance and
Indemnification.  If Executive is eligible for a cash payment
under § 4.1, Chattem shall continue to provide to Executive following
Executive’s Separation from Service such insurance protection and
indemnification protection with respect to claims made against Executive based
on Executive’s status as an officer or employee of Chattem or a Chattem
Affiliate as Chattem provided immediately before Executive’s Separation from
Service for as long as Executive is at risk for being subject to any such
claims.
 
 § 5.           Dispute
Allowance.  If there is any dispute regarding any claim made by
Executive with respect to Executive’s rights under this Agreement, Chattem
promptly shall pay, or at Executive’s election, promptly reimburse Executive for
paying, 100% of Executive’s reasonable legal, accounting and other fees and
related expenses incurred in connection with such claim except to the extent
that there is a final determination by a court of competent jurisdiction that
Executive’s claim is frivolous.    Any such payments or
reimbursement shall be made subject to any applicable tax
withholdings.
 
 § 6.           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 Executive has filed in
writing with Chattem or, in the case of Chattem, at its principal executive
offices addressed to the President.
 
 § 7.           Non-Alienation.  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
under this Agreement 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
Executive dies following a Discharge or Constructive Discharge after a Change in
Control but before receiving all of Executive’s benefits under § 4, the
unpaid benefits shall be paid to Executive’s Estate in accordance with the terms
of this Agreement.  All cash payments to Executive shall be made from
Chattem’s general assets, and Executive shall be a general and unsecured
creditor of Chattem with respect to such payments.
 
 § 8.           Governing Law and
Forum.  This Agreement shall be construed, interpreted and
applied in accordance with the laws of the State of Tennessee (without giving
effect to the choice of law principles thereof), except to the extent superseded
by federal law.  Executive and Chattem agree to submit any dispute
arising out of or relating to this Agreement to the exclusive concurrent
jurisdiction of the federal and state courts located in the State of
Tennessee.  Executive and Chattem also irrevocably
 11
 waive, to
the fullest extent permitted by applicable law, any objection either may now or
hereafter have to the laying of venue of any such dispute brought in such court
and any defense of inconvenient forum for the maintenance of such dispute, and
Executive and Chattem agree to accept service of legal process issuing in the
State of Tennessee.
 
 § 9.          Amendment.  This
Agreement may not be amended or cancelled except by the mutual agreement of
Executive and Chattem in writing.
 
 § 10.        Successors to
Chattem.  Except as otherwise provided in this Agreement, this
Agreement shall be binding upon and inure to the benefit of Chattem and any
successor of Chattem.
 
 § 11.        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.
 
 § 12.        Entire
Agreement.  This Agreement constitutes the entire understanding
and agreement of Chattem and Executive with respect to the matters contemplated
in this Agreement and supersedes all prior understanding and agreements between
Chattem and Executive with respect to such matters.
 
 IN
WITNESS WHEREOF, Executive and Chattem, intending to be legally bound, have
signed this Agreement.
  CHATTEM,
      INC.
                  
                  
                  By:    ____________________________
                  Title:
      ____________________________
                  Date:
      ____________________________
   12
  EXHIBIT
A
 
 FULL AND
COMPLETE RELEASE
 
 
 I, ______________, in consideration for
the payment of the severance to me which is described in the Amended
Non-Competition and Severance Agreement dated ___________ between me and
Chattem, Inc. (“Agreement”), for myself and my heirs, executors, administrators
and assigns, do hereby knowingly and voluntarily release and forever discharge
Chattem, Inc. and its affiliates, and their respective current and former
directors, officers and employees from any and all claims, actions and causes of
action under those federal, state and local laws prohibiting employment
discrimination based on age, sex, race, color, national origin, religion,
disability, veteran or marital status, sexual orientation, or any other
protected trait or characteristic, or retaliation for engaging in any protected
activity, including without limitation, the Age Discrimination in Employment Act
of 1967, 29 U.S.C. § 621 et seq., as amended by
the Older Workers Benefit Protection Act, P.L. 101-433, the Equal Pay Act
of 1963, 9 U.S.C.§ 206, et seq., Title VII
of The Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., the Civil
Rights Act of 1866, 42 U.S.C. § 1981, the Civil Rights Act of
1991, 42 U.S.C. § 1981a, the Americans with Disabilities Act,
42 U.S.C. § 12101, et seq., the
Rehabilitation Act of 1973, 29 U.S.C. § 791 et seq., the Family and
Medical Leave Act of 1993, 28 U.S.C. §§ 2601 and 2611 et seq., whether KNOWN
OR UNKNOWN, fixed or contingent, which I ever had, now have, or may have, or
which I, my heirs, executors, administrators or assigns hereafter can, shall or
may have, from the beginning of time through the date on which I sign this Full
and Complete Release (this “Release”), arising out of or related to my
employment by Chattem and my separation from employment with Chattem
(collectively the “Released Claims”).
 
 I warrant and represent that I have
made no sale, assignment, or other transfer, or attempted sale, assignment, or
other transfer, of any of the Released Claims.
 
 I fully understand and agree
that:
 
 1.
              this
      Release is in exchange for severance payments to which I would otherwise
      not be entitled;
 2.
              no
      rights or claims are released or waived that may arise after the date this
      Release is signed by me;
 3.
              I
      am hereby advised to consult with an attorney before signing this
      Release;
 4.
              I
      have 21 days from my receipt of this Release within which to consider
      whether or not to sign it;
 5.
              I
      have 7 days following my signature of this Release to revoke the Release;
      and
 6.
              this
      Release shall not become effective or enforceable until the revocation
      period of 7 days has expired.
  
 If I choose to revoke this Release, I
must do so by notifying Chattem in writing.  This written notice of
revocation must be mailed by U.S. first class mail or by U.S. certified mail
within the 7 day revocation period and addressed as follows:
 
 Chattem,
Inc.
 1715 West
38th
Street
 Chattanooga,
Tennessee 37409
 
 This Release is the complete
understanding between me and Chattem in respect of the subject matter of this
Release and supersedes all prior agreements relating to the same subject
matter.  I have not relied upon any representations, promises or agreements
of any kind except those set forth herein in signing this Release.
 
 In the event that any provision of this
Release should be held to be invalid or unenforceable, each and all of the other
provisions of this Release shall remain in full force and effect.  If any
provision of this Release is found to be invalid or unenforceable, such
provision shall be modified as necessary to permit this Release to be upheld and
enforced to the maximum extent permitted by law.
 
 This Release is to be governed and
enforced under the laws of the State of Tennessee (except to the extent that
Tennessee conflicts of law rules would call for the application of the law of
another jurisdiction).
 
 This Release inures to the benefit of
Chattem and its successors and assigns.
 
 I have carefully read this Release,
fully understand each of its terms and conditions, and intend to abide by this
Release in every respect.  As such, I knowingly and voluntarily sign this
Release.
 
  Date: