Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is entered
into as of the 7th day of August 2006 by and between Atrion Corporation, a
Delaware corporation (the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and the Company are currently parties to an employment
agreement dated as of the 1st day of January, 2002 and amended as of the 3rd day
of December, 2002 (the "Current Employment Agreement"), pursuant to which the
Executive is employed by the Company as the Chairman of the Board of Directors
of the Company (the "Board") and as its President and Chief Executive Officer;
and
WHEREAS, the Company and the Executive desire to continue the Executive's
employment by the Company following the expiration of the Current Employment
Agreement on December 31, 2006, upon the terms and conditions set forth in this
Agreement, which shall be effective as of the 1st day of January, 2007 (the
"Commencement Date").
NOW, THEREFORE, in consideration of the foregoing, the mutual provisions
contained herein, and for other good and valuable consideration, the parties
hereto agree as follows:
1. EMPLOYMENT.
(a)Continuation of Employment. The Company hereby agrees to continue to
employ the Executive and the Executive hereby accepts continued employment as
the Company's Chairman of the Board ("Chairman") and President and Chief
Executive Officer on the terms and conditions hereinafter set forth. The
Executive shall perform such duties, and have such powers, authority, functions,
and responsibilities (commensurate with his position and title), as may be
reasonably assigned to him from time to time by the Board which are not (except
with the Executive's prior written consent) inconsistent with and which do not
interfere with or detract from those vested in or being performed by the
Executive for the Company.
(b)Duties. During the Employment Term (as defined below), the Executive
shall devote such time and effort as is reasonably necessary to perform his
duties and responsibilities as Chairman and President and Chief Executive
Officer of the Company; provided, however that the Executive shall be allowed,
to the extent that such activities do not materially interfere with the
performance of his duties and responsibilities hereunder, to manage his personal
financial affairs and to serve on corporate, civic, not-for-profit, charitable
industry boards and advisory committees.
2. TERM. The initial term of the Executive's employment under this Agreement
shall be for period of five (5) years from the Commencement Date (the "Initial
Term"). The term of the Executive's employment under this Agreement shall be
automatically renewed for additional one (1) year terms (each referred to as an
"Additional Term") at the end of the Initial Term and at the end of each
Additional Term, as the case may be, unless either party delivers written notice
of termination to the other at least thirty (30) days prior to the end of the
Initial Term or Additional Term, as the case may be. The Initial Term and the
Additional Terms shall be referred to herein as the "Employment Term."
3. COMPENSATION. The Company shall pay the Executive the following, subject to
withholding and other applicable employment taxes:
(a)Base Salary and Bonuses. The Company shall pay the Executive a base
salary (the "Base Salary") of Five Hundred Thousand and no/100 Dollars
($500,000.00) for each calendar year in the Employment Term.
In addition to the Base Salary, the Company shall pay the Executive a cash bonus
(the "Annual Bonus") for each calendar year in the Employment Term (with the
first Annual Bonus hereunder to be paid in 2008 (within the period set forth
below) for the year 2007) equal to the amount that is 8% of the Increase in
Operating Income for such calendar year. For purposes of this Agreement,
"Increase in Operating Income" shall be equal to the excess, if any, of the
Company's operating income for the calendar year of determination over the
Company's operating income for the previous calendar year. The Compensation
Committee of the Board shall have discretion to adjust the Increase in Operating
Income calculated pursuant to the previous sentence to disregard one-time,
non-recurring extraordinary adjustments and shall make such equitable
adjustments as are required to give effect to acquisitions, divestitures, or
similar corporate transactions by or involving the Company.
The Base Salary shall be payable in intervals consistent with the Company's
normal payroll schedules (but in no event less frequently than monthly). The
Base Salary, as in effect from time to time, may be increased but not reduced
without the written consent of the Executive. The Annual Bonus for each calendar
year in the Employment Term shall be payable as soon as practicable following
the date on which the Annual Bonus can be determined, but in no event later than
March 15 of the year following such calendar year.
In addition to the Base Salary and the Annual Bonus, the Company shall pay the
Executive such other incentive compensation as the Company may from time to time
determine.
(b) Benefits and Expenses. The Executive shall have the right to
participate in the employee benefit plans, equity and incentive plans, insurance
contracts, policies, arrangements or agreements maintained by the Company for
the benefit of its employees and relating to retirement, health, disability and
other employee benefits, subject to the Executive's qualification for
participation in such benefit plans pursuant to the terms and conditions under
which such benefit plans are offered, at a level commensurate with the
Executive's position. The Executive's rights and entitlements with respect to
any such benefits shall be subject to the provisions of the relevant agreements,
contracts, policies, arrangements or plans providing such benefits. Nothing
contained herein shall be deemed to impose any obligation on the Company to
adopt or maintain any such plans, policies, arrangements, contracts or
agreements. In accordance with its policies and procedures, the Company shall
pay or reimburse the Executive for all reasonable or necessary travel and other
out-of-pocket expenses incurred by the Executive in performing his obligations
under this Agreement. The Executive shall comply with all such policies and
procedures applicable to the Company's senior executive employees relating to
the nature and extent of reimbursable expenses, the manner of accounting
therefor and the manner or reimbursement of same. The Company shall also furnish
the Executive with such office and clerical assistance as shall be suitable to
the character of the Executive's position with the Company and adequate for the
performance of his duties hereunder.
(c) Vacation and Holidays. The Executive shall be entitled to such
vacation with pay during each fiscal year of the Company as determined by the
Company, but in no event less than four (4) weeks per year, such vacation to be
taken at such time or times as shall be approved by the Company, which approval
shall not be unreasonably withheld. In addition, the Executive shall be entitled
to such holidays with pay as the Company makes available to its other senior
executive employees. Unless otherwise agreed between the parties, unused days of
vacation and unused holidays may not be carried over from one fiscal year of the
Company to another.
4. TERMINATION.
(a) Termination by the Company. The Company may terminate the employment of
the Executive prior to the expiration of the Employment Term (i) for "just
cause" (as defined below) by delivering written notice of termination to the
Executive or (ii) without "just cause" upon thirty (30) days written notice of
termination to the Executive.
(b) Termination by Executive. The Executive may terminate his employment
under this Agreement prior to the expiration of Employment Term (i) for "good
reason" (as defined below) by giving the Company ninety (90) days written notice
of his intention to terminate such employment or (ii) without "good reason" by
giving the Company ninety (90) days written notice of his intention to terminate
such employment.
(c) Termination Upon Death or Disability. The Executive's employment
shall terminate immediately upon his death. In the event that the Executive
becomes subject to a Disability (as defined below), the Executive's employment
may be terminated upon thirty (30) days written notice by either party to the
other.
(d) Definitions. For purposes of this Agreement, the following terms shall
have the respective meanings indicated below:
(i) Just Cause. The term "just cause" shall mean (A) the
Executive's continuing willful failure to perform his material duties and
obligations under this Agreement (except by reason of his death or incapacity
due to his Disability) after written notice thereof by the Company to the
Executive, and the Executive's failure or refusal to perform such duties and
obligations within thirty (30) days after the receipt of such notice by the
Executive or (B) the conviction of, or the entering of a plea of nolo contendere
by, the Executive with respect to a felony (other than as a result of a traffic
violation or as a result of vicarious liability), provided that on or after a
Change in Control (as defined in Exhibit A hereto), "just cause" shall be
limited to only subsection (B) above. For purposes of this Section 4(d)(i), no
act, or failure to act, on Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interests of the Company. The
Company must assert a "just cause" termination event no later than ninety (90)
days after discovery of such event.
The date of termination for a termination for "just cause" shall be the date
indicated in the Notice of Termination (as defined herein). A "Notice of
Termination" for "just cause" shall mean a notice that shall indicate the
specific termination provision in Section 4(d)(i) relied upon and shall set
forth in reasonable detail the facts and circumstances which provide for a basis
for termination for "just cause." Further, a Notice for Termination for "just
cause" shall be required to include a copy of a resolution duly adopted by the
Board, with at least two-thirds (2/3) of the non-management members of the Board
voting in favor thereof, at a meeting of the Board which was called for the
purpose of considering such termination and which Executive and his
representative had the right to attend and address the Board, finding that, in
the good faith of the Board, Executive engaged in conduct set forth in the
definition of "just cause" herein and specifying the particulars thereof in
reasonable detail. Any purported termination for "just cause" which is held by
an arbitrator not to have been based on the grounds set forth in this Agreement
or not to have followed the procedures set forth in this Agreement shall be
deemed a termination by the Company without "just cause."
(ii) Good Reason. The term "good reason" shall mean any
one or more of the following:
(A) Without the Executive's express written consent,
any diminution in the Executive's titles, authorities, responsibilities or the
assignment of the Executive to any duties inconsistent with his position,
duties, responsibilities and status with the Company as its Chairman, President
and Chief Executive Officer or the removal by the Board, or the failure or
refusal of the Board to re-elect, the Executive as the Chairman, President and
Chief Executive Officer of the Company at any time during the term of this
Agreement. For purposes hereof, a "diminution in the Executive's titles,
authorities or responsibilities" shall be deemed to have occurred if the Company
is no longer required to file reports pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended.
(B) The Company's breach of any provision of this
Agreement or any other agreement between the Company and the Executive and
failure, within the ten (10) day period following its receipt of written notice
from the Executive describing such breach in reasonable detail, to promptly
commence in good faith to cure such breach (if curable); provided that such cure
must be effected no later than thirty (30) days following such notice and
provided further that such cure right shall not be available on more than one
occasion in any twelve (12) month period.
(C) Adoption by a majority of the Board of any
resolution or series of related resolutions that, individually or collectively,
has or could reasonably be expected to have a material effect on the strategic
direction, operations, financial condition or results of operations of the
Company and that is voted against by the Executive in a good faith exercise of
his fiduciary duty or the failure or refusal of a majority of the Board to adopt
a proposed resolution or series of related resolutions that, individually or
collectively, has or could reasonably have been expected to have a material
effect on the strategic direction, operations, financial condition or results of
operations of the Company and that the Executive proposed, by a motion or series
of motions (whether or not seconded), be adopted by the Board in a good faith
exercise of his fiduciary duty.
(D) Failure of the Company to obtain the assumption
in writing (a copy of which is delivered to the Executive) of the Company's
obligations hereunder to the Executive by any successor to the Company prior to
or at the time of a merger, acquisition, consolidation, disposition of
substantially all of the assets of the Company or similar transaction.
The Executive must assert a "good reason" termination event no later than ninety
(90) days after the Executive discovers such event.
(iii) Disability. The Executive shall be considered to be
subject to a "Disability" if, as a result of physical or mental sickness or
incapacity or accident, the Executive is unable to perform the normal duties of
his employment with the Company for a period of ninety (90) days in any one
hundred twenty (120) day period. If there is any disagreement between the
Company and the Executive as to whether the Executive was unable to perform the
normal duties of his employment due to Disability, the same shall be determined
after examination of the Executive by a physician selected by the Executive (or,
if the Executive is unable to make such selection, it shall be made by the
Executive's spouse or, if the Executive is not married or if his spouse is
unable or unwilling to make the selection, by any other adult member of the
Executive's immediate family) and approved by the Company. The costs and
expenses of such examination shall be borne by the Company. The determination of
such physician shall be conclusive evidence as to whether the Executive was
unable to perform the normal duties of his employment due to Disability. If the
Executive does not permit such examination by such physician, then, for purposes
hereof, the determination as to whether the Executive was unable to perform the
normal duties of his employment due to Disability shall be made by the Board.
Nothing herein shall have any effect upon the Executive's eligibility to receive
any disability benefits from the Company pursuant to the terms and conditions of
any disability plan or other arrangement which the Company may have in effect
from time to time.
(e) Termination Payment.
(i) Termination for Just Cause. In the event the Company
terminates the Executive's employment pursuant to Section 4(a)(i) of this
Agreement, the Company shall have no further obligation under Sections 3 and 4
of this Agreement except to pay the Executive any compensation earned but not
yet paid, including without limitation, the Base Salary and Annual Bonus for the
calendar year in which the date of termination falls, in each case prorated for
the number of days of the calendar year that elapsed prior to the date of
termination, any accrued vacation pay payable pursuant to the Company's
policies, and any unreimbursed business expenses (collectively the "Accrued
Amounts").
(ii) Termination Without Just Cause. In the event the Company
terminates Executive's employment pursuant to Section 4(a)(ii) of this
Agreement, the Executive's employment under this Agreement shall terminate at
the expiration of said thirty (30) day period, and the Company shall have no
further obligation under Sections 3 and 4 of this Agreement except to pay to the
Executive a cash lump sum amount equal to the sum of:
(A) the Accrued Amounts; and
(B) the Executive's Base Salary and the average of
the annual bonuses received by the Executive for the three years prior to the
year in which such termination occurs (collectively, the "Severance Payment");
which sum shall be paid by the Company as soon as practicable after the
termination date, but in no event later than ten (10) days after the termination
of the Executive's employment; provided, however, that in the event of any
termination without just cause that occurs in contemplation of or within two
years following a Change in Control, the Company shall instead pay to the
Executive a cash lump sum amount equal to the sum of the Accrued Amounts and two
times the Severance Payment. Any such payment shall be subject to a six-month
delay to the extent necessary for the avoidance of adverse tax consequences to
the Executive under Section 409A of the Internal Revenue Code of 1986, as
amended (the "Code"). Notwithstanding the foregoing, in the event the Company
terminates Executive's employment pursuant to Section 4(a)(ii), the Company may,
at its option, require the Executive to cease providing services hereunder and
serving as an employee of the Company at any time during said thirty (30) day
period. In addition, all stock options and/or equity granted to the Executive
shall fully vest and become exercisable upon the termination date. The Company
shall continue to provide the Executive (and his spouse and dependents) with
group health plan benefits (or substantially similar substitute arrangements),
at its sole expense, for one year (the "One Year Medical Benefits").
(iii) Termination for Good Reason. In the event the Executive
terminates the Executive's employment pursuant to Section 4(b)(i) of this
Agreement, the Company shall have no further obligation under Sections 3 and 4
of this Agreement except to pay to the Executive a cash lump sum equal to the
Accrued Amounts and the Severance Payment, which shall be paid by the Company as
soon as practicable after the termination date, but in no event later than ten
(10) days after the termination of the Executive's employment; provided,
however, that in the event of any termination for good reason that occurs in
contemplation of or within two years following a Change in Control, the Company
shall instead pay to the Executive a cash lump sum amount equal to the sum of
the Accrued Amounts and two times the Severance Payment. Any such payment shall
be subject to a six-month delay to the extent necessary for the avoidance of
adverse tax consequences to the Executive under Section 409A of the Code. In
addition, all stock options and/or equity granted to the Executive shall fully
vest and become exercisable upon the termination date. The Company shall also
provide the Executive (and his spouse and dependents) with the One Year Medical
Benefits.
(iv) Termination Without Good Reason. In the event the
Executive terminates the Executive's employment pursuant to Section 4(b)(ii) of
this Agreement, the Executive's employment under this Agreement shall terminate
at the expiration of said thirty (30) day period, and the Company shall have no
further obligation under Sections 3 and 4 of this Agreement except to pay the
Executive a cash lump sum equal to the Accrued Amounts as soon as practicable
after the termination date, but in no event later than ten (10) days after the
termination of Executive's employment. Notwithstanding the foregoing, in the
event the Executive terminates his employment pursuant to Section 4(b)(ii), the
Company may, at its option, require the Executive to cease providing services
hereunder and serving as an employee of the Company at any time during said
thirty (30) day period; provided that the Executive shall be entitled to such
payments as would have otherwise been due to him had he continued in the
employment of the Company for such thirty (30) day period, including, without
limitation, payments of the Accrued Amounts and amounts to be paid under any
other plan, agreement or policy which survives the termination of this
Agreement.
(v) Termination upon Death or Disability. In the event the
Executive's employment is terminated pursuant to Section 4(c) hereof, the
Company shall have no further obligation under Sections 3 and 4 of this
Agreement except to pay to the Executive (or his personal representative or
guardian) a cash lump sum amount equal to the Accrued Amounts and the Severance
Payment, which shall be paid by the Company as soon as practicable after the
termination date, but in no event later than ten (10) days after the termination
of the Executive's employment. In addition, all stock options and/or equity
granted to the Executive shall fully vest and become exercisable upon the
termination date. The Company shall also provide the Executive (and/or his
spouse and dependents as applicable) with the One Year Medical Benefits.
(f) COBRA. In the event that the Company's group health plan does not
permit the Company to provide continuation coverage for the Executive for the
one (1) year period in which the One Year Medical Benefits are to be provided
and does not permit the Executive to elect COBRA coverage within sixty (60) days
after the expiration of said one (1) year period and for COBRA coverage to begin
on the first day following the expiration of said one (1) year period, the
Company shall use reasonable good faith efforts within ninety (90) days after
the Commencement Date to amend its group health plan to permit the Company to
provide continuation coverage for the Executive for said one (1) year period and
to permit the Executive to make such election and, if made, for COBRA coverage
to begin on the first day following the expiration of said one (1) year period;
provided, however, that the Company shall not be required to change health
insurance companies or to pay additional premiums for any employee or former
employee other than the Executive in order to effect, or as a result of, such
amendment. Nothing herein shall be construed as limiting the COBRA rights of the
Executive (or his spouse and dependents).
5. WITHHOLDING. The Company shall be entitled to withhold from amounts to be
paid to the Executive hereunder any federal, state, or local withholding or
other taxes or charges which it is from time to time required to withhold;
provided, that the amount so withheld shall not exceed the minimum amount
required to be withheld by law in light of the circumstances. The Company shall
be entitled to rely on an opinion of tax counsel if any question as to the
amount or requirement of any such withholding shall arise.
6. NOTICES. All notices provided for by this Agreement shall be in writing and
shall be (a) personally delivered to the party thereunto entitled or (b)
deposited in the United States mail, postage prepaid, addressed to the party to
be notified at the address listed below (or at such other address as may have
been designated by written notice), certified or registered mail, return receipt
requested. The notice shall be deemed to be received (a) if by personal
delivery, on the date of its actual receipt by the party entitled thereto or (b)
if by mail, two (2) days following the date of deposit in the United States
mail.
To the Company: Atrion Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
To Executive: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
To the most recent address
on file with the Company.
7. PARTIES BOUND. This Agreement and the rights and obligations hereunder shall
be binding upon and inure to the benefit of the Company, Executive, and their
respective heirs, personal representatives, successors and assigns; provided,
however, that Executive may not assign any rights or obligations hereunder
without the express written consent of Company. This Agreement shall also bind
and inure to the benefit of any successor of the Company by merger or
consolidation, or any assignee of all or substantially all of the Company's
properties.
8. INVALID PROVISIONS. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom.
9. EXCISE TAX GROSS-UP.
(a) Payment of Excise Tax Amount. In the event any of the payments or
benefits provided to the Executive hereunder or under any other plan, agreement
or arrangement (the "Company Payments") will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (or any similar tax that may be
imposed by any taxing authority), the Company shall pay to the Executive at the
time specified below an additional amount (the "Gross-up Payment") such that the
net amount retained by the Executive, after the deduction of any Excise Tax on
the Company Payments and any U.S. federal, state and local income or payroll tax
on the Gross-Up Payment provided for herein but before deduction for any
federal, state or local income or payroll tax on the Company Payments, shall be
equal to the Company Payments.
(b) Applicability of Excise Tax. For purposes of determining whether
any of the Company Payments and Gross-up Payments (collectively the "Total
Payments") will be subject to the Excise Tax and the amount of such Excise Tax,
(x) the Total Payments shall be treated as "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, and all "parachute payments" in
excess of the "base amount" (as defined under Section 280G(b)(3) of the Code)
shall be treated as subject to the Excise Tax, to the extent that, in the
opinion of a national independent accounting firm designated by the Executive or
tax counsel with a nationally-recognized law firm selected by such accountants
(the "Accountants"), such Total Payments (in whole or in part) constitute
"parachute payments," do not represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code in excess
of the "base amount" or are otherwise subject to the Excise Tax, and (y) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Accountants in accordance with the principles of Section 280G
of the Code.
(c) Amount of Gross-Up Payment. For purposes of determining the amount
of the Gross-up Payment, the Executive shall be deemed to pay U.S. federal
income taxes at the highest marginal rate of U.S. federal income taxation in the
calendar year in which the Gross-up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the state and locality
of the Executive's residence for the calendar year in which the Company Payment
is to be made, net of the maximum reduction in U.S. federal income taxes which
could be obtained from deduction of such state and local taxes if paid in such
year. In the event that the Excise Tax is subsequently determined by the
Accountants to be less than the amount taken into account hereunder at the time
the Gross-up Payment is made, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined, the
portion of the prior Gross-up Payment attributable to such reduction (plus the
portion of the Gross-up Payment attributable to the Excise Tax and U.S. federal,
state and local income tax imposed on the portion of the Gross-up Payment being
repaid by the Executive if such repayment results in a reduction in Excise Tax
or a U.S. federal, state and local income tax deduction), plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code; provided, however, that if it is reasonably likely that such repayment
could constitute a violation of Section 402 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
(or other applicable law), no such payment shall be required. Notwithstanding
the foregoing, in the event any portion of the Gross-up Payment to be refunded
to the Company has been paid to any U.S. federal, state and local tax authority,
repayment thereof (and related amounts) shall not be required until actual
refund or credit of such portion has been made to the Executive, and interest
payable to the Company shall not exceed the interest received or credited to the
Executive by such tax authority for the period it held such portion. The
Executive and the Company shall mutually agree upon the course of action to be
pursued (and the method of allocating the expense thereof) if the Executive's
claim for refund or credit is denied.
In the event that the Excise Tax is later determined by the Accountants or the
Internal Revenue Service to exceed the amount taken into account hereunder at
the time the Gross-up Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-up
Payment), the Company shall make an additional Gross-up Payment in respect of
such excess (plus any interest or penalties payable with respect to such excess)
at the time that the amount of such excess is finally determined.
(d) Time of Payment. The Gross-up Payment or portion thereof provided
for in subsection (c) above shall be paid not later than the thirtieth (30th)
day following an event occurring which subjects the Executive to the Excise Tax;
provided, however, that if the amount of such Gross-up Payment or portion
thereof cannot be finally determined on or before such day, the Company shall
pay to the Executive on such day an estimate, as determined in good faith by the
Accountants, of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code), subject to further payments pursuant to subsection
(c) hereof, as soon as the amount thereof can reasonably be determined, but in
no event later than the ninetieth day after the occurrence of the event
subjecting the Executive to the Excise Tax. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
(e) Procedures. In the event of any controversy with the Internal
Revenue Service (or other taxing authority) with regard to the Excise Tax, the
Executive shall permit the Company to control issues related to the Excise Tax
(at its expense), provided that such issues do not potentially materially
adversely affect the Executive, but the Executive shall control any other
issues. In the event the issues are interrelated, the Executive and the Company
shall in good faith cooperate so as not to jeopardize resolution of either
issue, but if the parties cannot agree the Executive shall make the final
determination with regard to the issues. In the event of any conference with any
taxing authority as to the Excise Tax or associated income taxes, the Executive
shall permit the representative of the Company to accompany the Employee, and
the Executive and the Executive's representative shall cooperate with the
Company and its representative.
(f) Costs. The Company shall be responsible for all charges of the
Accountant.
(g) Notices. The Company and the Executive shall promptly deliver to
each other copies of any written communications, and summaries of any verbal
communications, with any taxing authority regarding the Excise Tax.
10. NO MITIGATION; NO SET-OFF.
(a) No Duty to Mitigate. In the event of any termination of employment
hereunder, Executive shall be under no obligation to seek other employment and
there shall be no offset against any amounts due Executive under this Agreement
on account of any remuneration attributable to any subsequent employment that
Executive may obtain.
(b) Other Payments. Any amounts or benefits payable to the Executive
under this Agreement are, in addition to, and are not in lieu of, amounts
payable to the Executive under any other salary continuation or cash severance
arrangement of the Company or any other type of agreement entered into between
the parties, and to the extent paid or provided under any other such arrangement
or agreement shall not be offset from the amounts or benefits due hereunder,
except to the extent expressly provided in such other arrangement or agreement.
11. ATTORNEYS' FEES AND COSTS. In the event that it becomes necessary for the
Executive to seek legal counsel with regard to a dispute, claim or issue under
this Agreement or the Executive deems it necessary to initiate arbitration in
order to enforce his rights hereunder, then the Company shall bear and, upon
notification to the Company by the Executive, immediately advance to the
Executive all expenses of such dispute, claim, issue or arbitration, including
the reasonable fees and expenses of the counsel of the Executive incurred in
connection with such dispute, claim, issue or arbitration, unless an arbitrator
determines that the Executive's position was frivolous or otherwise taken in bad
faith, in which case an arbitrator may determine that Executive shall bear his
own legal fees. Notwithstanding any existing or prior attorney-client
relationship between the Company and the counsel selected by the Executive, the
Company irrevocably consents to the Executive's entering into an attorney-client
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel.
12. ARBITRATION. All disputes and controversies arising under or in connection
with this Agreement, shall be settled by arbitration conducted before one (1)
arbitrator sitting in New York, New York, or such other location agreed by the
parties hereto, in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association then in effect. The
determination of the arbitrator shall be final and binding on the parties.
Judgment may be entered on the award of the arbitrator in any court having
proper jurisdiction. All expenses of such arbitration, including the fees and
expenses of the counsel of the Executive, shall be borne by the Company unless
the arbitrator determines that Executive's position was frivolous or otherwise
taken in bad faith, in which case the arbitrator may determine that Executive
shall bear his own legal fees.
13. LEGAL FEES. The Company shall pay the Executive's reasonable legal fees and
costs associated with entering into this Agreement.
14. INDEMNIFICATION. The Company shall indemnify and hold harmless Executive to
the fullest extent permitted under the Company's Bylaws as in effect on the date
hereof or the date of termination of employment, if on such date the Bylaws
provide the Executive with greater rights to indemnification, and to the fullest
extent permitted by law for any action or inaction of Executive while serving as
an officer or director of the Company or, at the Company's request, as an
officer or director of any other entity or as a fiduciary of any benefit plan.
The Company shall cover the Executive under directors and officers liability
insurance both during and, while potential liability exists, after the
Employment Term (but in no event for a period which is less than six (6) years
after termination) in the same amount and to the same extent as the Company
covers its other officers and directors as of the Commencement Date or the date
of termination of employment, if on such date the Executive will receive greater
coverage under such insurance.
15. WAIVERS AND CONSENTS. One or more waivers of any breach of any covenant,
term or provision of this Agreement by any party shall not be construed as a
waiver of a subsequent breach of the same covenant, term or provision, nor shall
it be considered a waiver of any other then existing or subsequent breach of a
different covenant, term or provision. The consent or approval of either party
to or of any act by the other party requiring such consent or approval shall not
be deemed to waive or render unnecessary consent to or approval or any
subsequent similar act. No custom or practice of the parties shall constitute a
waiver of either party's rights to insist upon strict compliance with the terms
hereof.
16. SECTION HEADINGS. The headings contained in this Agreement are for reference
purposes only and do not affect in any way the meaning or interpretation of this
Agreement.
17. MULTIPLE COUNTERPARTS. This Agreement may be executed in counterparts, each
of which for all purposes is to be deemed an original, and both of which
constitute, collectively, one agreement; but in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.
18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to its
conflict-of-law rules.
19. SECTION 409A. The intent of the parties is that, effective as of January 1,
2005, this Agreement and, while effective, the Current Employment Agreement,
will be in full compliance with Section 409A of the Code, and in the event that
any provision of this Agreement and, while effective, the Current Employment
Agreement, or any payment of compensation or benefits paid pursuant to this
Agreement is determined to be inconsistent with the requirements of Section 409A
of the Code, the Company shall reform this Agreement and, while effective, the
Current Employment Agreement, to the extent necessary to comply therewith and to
avoid the imposition of any penalties or taxes pursuant to Section 409A of the
Code, provided that any such reformation shall to the maximum extent possible
retain the originally intended economic and tax benefits to the Executive and
the original purpose of this Agreement and, if applicable, the Current
Employment Agreement, without violating Section 409A of the Code or creating any
unintended or adverse consequences to the Executive. Such reformation may
include imposition of a six month delay in the payment of certain benefits if
the Executive is a "specified employee" under Section 409A of the Code at the
relevant time.
20. ENTIRE AGREEMENT. The Current Agreement, the provisions of which (as
supplemented by Section 19 hereof) shall remain in full force and effect until
January 1, 2007, and this Agreement contain the entire agreement of the parties
hereto, and supersede all prior agreements and understandings, oral or written,
if any, between the parties hereto, with respect to the subject matter hereof.
No modification or amendment of any of the terms, conditions, or provisions
herein may be made otherwise than by written agreement signed by the parties
hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date first above written.
ATRION CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Vice President and Chief Financial Officer,
Secretary and Treasurer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit A
(a) For purposes of the Agreement, the term "Change in Control" shall
mean the occurrence of any one of the following events:
(i) any person (as the term "person" is used in Section 13(d)
(3) or Section 14(d) (2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (other than the Company, any of its subsidiaries, or any
trustee or other fiduciary holding securities of the Company under an employee
benefit plan of the Company or any of its subsidiaries) becomes the beneficial
owner (as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of securities
of the Company representing 25% or more of the combined voting power of the
then-outstanding voting securities of the Company
(ii) the Company is merged, consolidated or reorganized into
or with another corporation or other person and as a result of such merger,
consolidation or reorganization less than 50% of the combined voting power of
the then-outstanding securities of such corporation or person immediately after
such transaction are held in the aggregate by the holders of voting securities
of the Company immediately prior to such transaction;
(iii) the stockholders of the Company approve a plan of
complete liquidation of the Company or the Company sells all or substantially
all of its assets to any other corporation or other person and as a result of
such sale less than 50% of the combined voting power of the then-outstanding
voting securities of such corporation or person immediately after such
transaction are held in the aggregate by the holders of voting securities of the
Company immediately prior to such sale; or
(iv) during any period of two consecutive years, individuals
who, at the beginning of any such period, constitute the directors of the
Company cease for any reason to constitute at least a majority thereof unless
the election or the nomination for election by the Company's stockholders of
each director of the Company first elected during such period was approved by a
vote of at least two-thirds of the directors of the Company then still in office
who were directors of the Company at the beginning of any such period.