UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q

[ x ]
Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 2011
or
[    ]
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period from    to

 
Commission File Number 0-10763
 
Atrion Corporation
(Exact Name of Registrant as Specified in its Charter)
 
Delaware
 
63-0821819
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
One Allentown Parkway, Allen, Texas  75002
(Address of Principal Executive Offices)        (Zip Code)
 
(972) 390-9800
(Registrant’s Telephone Number, Including Area Code)

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   x Yes            o No

Indicate by check whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “accelerated filer.” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):
 
Large accelerated filer   o Accelerated filer   x Non-accelerated filer   o Smaller reporting company o
 
Indicate by check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes           x No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 
Title of Each Class
 
Number of Shares Outstanding at
July 11, 2011
Common stock, Par Value $0.10 per share
 
2,024,089

 
 
 

 

ATRION CORPORATION AND SUBSIDIARIES


TABLE OF CONTENTS
 

 
PART I.    Financial Information 2
       
 
Item 1.
Financial Statements
 
       
     
    For the Three and Six months Ended  
    June 30, 2011 and 2010 3
       
    Consolidated Balance Sheets (Unaudited)  
 
 
June 30, 2011 and December 31, 2010 4
       
    Consolidated Statements of Cash Flows (Unaudited)  
    For the Six months Ended  
    June 30, 2011 and 2010 5
       
    6
       
   
    Financial Condition and Results of Operations 8
       
 
13
       
 
13
       
PART II.    Other Information 13
       
 
13
       
  Item 1A. Risk Factors 13
       
 
14
       
15
       
16

 
1

 
 
 
 

 
PART I


FINANCIAL INFORMATION
 
 
 

 
 
2

 

 
Item 1.   Financial Statements
 
ATRION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
    Three Months Ended     Six Months Ended  
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
   
(in thousands, except per share amounts)
 
       
Revenues
  $ 31,139     $ 27,881     $ 61,728     $ 54,782  
Cost of goods sold
    14,684       14,851       29,721       29,727  
Gross profit
    16,455       13,030       32,007       25,055  
                                 
Operating expenses:
                               
Selling
    1,341       1,346       2,836       2,764  
General and administrative
    3,949       2,829       7,333       5,783  
Research and development
    728       675       1,305       1,290  
      6,018       4,850       11,474       9,837  
Operating income
    10,437       8,180       20,533       15,218  
                                 
Interest income
    342       213       668       374  
Other income
    --       --       2       1  
      342       213       670       375  
                                 
Income before provision for income taxes
    10,779       8,393       21,203       15,593  
Provision for income taxes
    (3,760 )     (2,962 )     (7,326 )     (5,464 )
                                 
Net Income
  $ 7,019     $ 5,431     $ 13,877     $ 10,129  
                                 
Income per basic share
  $ 3.48     $ 2.69     $ 6.88     $ 5.01  
Weighted average basic shares outstanding
    2,019       2,022       2,018       2,020  
                                 
                                 
Income per diluted share
  $ 3.46     $ 2.67     $ 6.84     $ 4.98  
Weighted average diluted shares outstanding
    2,030       2,033       2,030       2,032  
                                 
Dividends per common share
  $ 0.42     $ 0.36     $ 0.84     $ 6.72  
 

The accompanying notes are an integral part of these statements.
 
 
3

 
 
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
   
June 30,
   
December 31,
 
   
2011
   
2010
 
Assets
  (in thousands)  
             
Current assets:            
Cash and cash equivalents
  $ 9,744     $ 10,670  
Short-term investments
    19,166       10,715  
Accounts receivable
    14,835       11,521  
Inventories
    21,088       17,400  
Prepaid expenses
    2,780       1,050  
Deferred income taxes
    625       625  
      68,238       51,981  
                 
Long-term investments
    18,742       20,291  
                 
Property, plant and equipment
    108,810       103,789  
Less accumulated depreciation and amortization
    55,676       53,125  
      53,134       50,664  
                 
Other assets and deferred charges:                
Patents
    1,135       1,249  
Goodwill
    9,730       9,730  
Other
    779       737  
      11,644       11,716  
                 
    $ 151,758     $ 134,652  
                 
                 
Liabilities and Stockholders’ Equity                
                 
Current liabilities:                
Accounts payable and accrued liabilities
  $ 9,938     $ 7,200  
Accrued income and other taxes
    807       552  
      10,745       7,752  
                 
Line of credit
    --       --  
                 
Other non-current liabilities
    11,736       10,283  
                 
Stockholders’ equity:                
Common shares, par value $0.10 per share; authorized                
10,000 shares, issued 3,420 shares
    342       342  
Paid-in capital
    24,805       24,331  
Retained earnings
    143,453       131,286  
Treasury shares,1,396 at June 30, 2011 and 1,404                
at December 31, 2010, at cost
    (39,323     (39,342
Total stockholders’ equity
    129,277       116,617  
                 
                 
    $ 151,758     $ 134,652  
 
The accompanying notes are an integral part of these financial statements.
 
 
4

 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    Six Months Ended  
   
June 30,
 
   
2011
   
2010
 
    (in thousands)  
Cash flows from operating activities:            
Net income
  $ 13,877     $ 10,129  
Adjustments to reconcile net income to                
net cash provided by operating activities:                
Depreciation and amortization
    3,163       3,884  
Deferred income taxes
    1,395       (197
Stock-based compensation
    461       323  
      18,896       14,139  
                 
Changes in operating assets and liabilities:                
Accounts receivable
    (3,314     (778
Inventories
    (3,688     507  
Prepaid expenses
    (1,730     (435
Other non-current assets
    18       (159
Accounts payable and accrued liabilities
    2,738       244  
Accrued income and other taxes
    255       1,555  
Other non-current liabilities
    58       10  
      13,233       15,083  
                 
Cash flows from investing activities:                
Property, plant and equipment additions
    (5,519     (1,806
Purchase of investments
    (9,723     (19,373
Proceeds from maturities of investments
    2,400       3,000  
Net change in accrued interest on investments
    361       (130
      (12,481     (18,309
                 
Cash flows from financing activities:                
Exercise of stock options
    --       343  
Shares tendered for employees’ taxes on stock-based                 
compensation
    --       (501
Tax benefit related to stock options
    19       1,060  
Dividends paid
    (1,697     (13,584
      (1,678     (12,682
                 
Net change in cash and cash equivalents
    (926     (15,908
Cash and cash equivalents at beginning of period
    10,670       20,694  
Cash and cash equivalents at end of period
  $ 9,744     $ 4,786  
                 
                 
                 
Cash paid for:                
Income taxes
  $ 6,893     $ 3,027  
 
The accompanying notes are an integral part of these financial statements.
 
 
5

 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
 
(1)           Basis of Presentation
 
The accompanying unaudited consolidated financial statements of Atrion Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these statements include all adjustments necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. Preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the financial statements and notes. Actual results could differ from those estimates. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2010 ("2010 Form 10-K").  References herein to "Atrion," the "Company," "we," "our," and "us" refer to Atrion Corporation and its subsidiaries.

(2)           Inventories
 
Inventories are stated at the lower of cost or market. Cost is determined by using the first-in, first-out method. The following table details the major components of inventories (in thousands):
 
   
June 30,
   
December 31,
 
   
2011
   
2010
 
Raw materials
  $ 9,065     $ 7,888  
Work in process
    4,871       3,985  
Finished goods
    7,152       5,527  
Total inventories
  $ 21,088     $ 17,400  

(3)           Income per share
 
The following is the computation for basic and diluted income per share:

    Three months ended     Six months ended  
 
 
June, 30
   
June 30,
 
 
 
2011
   
2010
   
2011
   
2010
 
 
 
(in thousands, except per share amounts)
 
Net income
  $ 7,019     $ 5,431     $ 13,877     $ 10,129  
                                 
Weighted average basic shares outstanding
    2,019       2,022       2,018       2,020  
Add:  Effect of dilutive securities
    11       11       12       12  
Weighted average diluted shares outstanding
    2,030       2,033       2,030       2,032  
 

Earnings per share:
                       
Basic
  $ 3.48     $ 2.69     $ 6.88     $ 5.01  
Diluted
  $ 3.46     $ 2.67     $ 6.84     $ 4.98  
 
 
6

 
 
ATRION CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
 
Incremental shares from stock options, unvested restricted stock, restricted stock units and deferred stock units were included in the calculation of weighted average diluted shares outstanding using the treasury stock method. Dilutive securities representing 6,322 shares of common stock for the three and six month periods ended June 30, 2011 and dilutive securities representing 35 shares of common stock for the three and six month periods ended June 30, 2010 were excluded from the computation of weighted average diluted shares outstanding because their effect would have been anti-dilutive.

(5)           Investments
 
As of June 30, 2011, we held certain investments that are required to be measured for disclosure purposes at fair value on a recurring basis. These investments are considered Level 2 investments. We consider as current assets those investments which will mature in the next 12 months. The remaining investments are considered non-current assets. The amortized cost and fair value of our investments that are being accounted for as held-to-maturity securities, and the related gross unrealized gains and losses, were as follows as of June 30, 2011 ( in thousands):

         
Gross Unrealized
       
   
Cost
   
Gains
   
Losses
   
Fair Value
 
Short-term Investments:
                       
Corporate bonds
  $ 19,166     $ 214     $     $ 19,380  
                                 
Long-term Investments:
                               
Corporate bonds
  $ 18,742     $ 466     $     $ 19,208  

At June 30, 2011, the length of time until maturity of these securities ranged from two to 36 months.

(6)           Income Taxes
 
Our effective tax rate for the second quarter of 2011 was 34.9 percent, compared with 35.3 percent for the second quarter of 2010. The decrease in the effective tax rate for the 2011 period is primarily a result of the absence of tax incentives for research and development, or R&D, expenditures in the 2010 period.
 
(7)           Recent Accounting Pronouncements

From time to time, new accounting standards updates applicable to us are issued by the Financial Accounting Standards Board or, FASB, which we will adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of recently issued standards updates that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

 
7

 
 
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We develop and manufacture products primarily for medical applications. We market components to other equipment manufacturers for incorporation in their products and sell finished devices to physicians, hospitals, clinics and other treatment centers. Our medical products primarily serve the fluid delivery, cardiovascular, and ophthalmology markets. Our other medical and non-medical products include instrumentation and disposables used in dialysis, and valves and inflation devices used in marine and aviation safety products.
 
Our products are used in a wide variety of applications by numerous customers. We encounter competition in all of our markets and compete primarily on the basis of product quality, price, engineering, customer service and delivery time.
 
Our strategy is to provide a broad selection of products in the areas of our expertise. R&D efforts are focused on improving current products and developing highly-engineered products that meet customer needs and have the potential for broad market applications and significant sales. Proposed new products may be subject to regulatory clearance or approval prior to commercialization and the time period for introducing a new product to the marketplace can be unpredictable. We also focus on controlling costs by investing in modern manufacturing technologies and controlling purchasing processes. We have been successful in consistently generating cash from operations and have used that cash to reduce indebtedness, to fund capital expenditures, to repurchase stock and to pay dividends.
 
Our strategic objective is to further enhance our position in our served markets by:
 
Focusing on customer needs;
Expanding existing product lines and developing new products;
Maintaining a culture of controlling cost; and
Preserving and fostering a collaborative, entrepreneurial management structure.
 
For the three months ended June 30, 2011, we reported revenues of $31.1 million, operating income of $10.4 million and net income of $7.0 million, up 12 percent, 28 percent and 29 percent, respectively, from the three months ended June 30, 2010. For the six months ended June 30, 2011, we reported revenues of $61.7 million, operating income of $20.5 million and net income of $13.9 million, up 13 percent, 35 percent and 37 percent, respectively, from the six months ended June 30, 2010.
 
Results for the three months ended June 30, 2011

Consolidated net income totaled $7.0 million, or $3.48 per basic and $3.46 per diluted share, in the second quarter of 2011. This is compared with consolidated net income of $5.4 million, or $2.69 per basic and $2.67 per diluted share, in the second quarter of 2010. The income per basic share computations are based on weighted average basic shares outstanding of 2,019,320 in the 2011 period and 2,021,755 in the 2010 period. The income per diluted share computations are based on weighted average diluted shares outstanding of 2,030,402 in the 2011 period and 2,032,961 in the 2010 period.

 
8

 
 
Consolidated revenues of $31.1 million for the second quarter of 2011 were 12 percent higher than revenues of $27.9 million for the second quarter of 2010. This increase was generally attributable to higher sales volumes and increased prices.

Revenues by product line were as follows (in thousands):

    Three Months ended  
   
June 30,
 
   
2011
   
2010
 
             
Fluid Delivery
  $ 12,490     $ 10,728  
Cardiovascular
    8,222       7,836  
Ophthalmology
    5,407       4,507  
Other
    5,020       4,810  
Total
  $ 31,139     $ 27,881  


Cost of goods sold of $14.7 million for the second quarter of 2011 was $167,000 lower than in the comparable 2010 period. Our cost of goods sold in the second quarter of 2011 was 47.2 percent of revenues compared with 53.3 percent of revenues in the second quarter of 2010. The primary contributors to this improvement were favorable product mix, the impact of continued cost improvement initiatives and favorable operational efficiencies.

Gross profit of $16.5 million in the second quarter of 2011 was $3.4 million, or 26 percent, higher than in the comparable 2010 period. Our gross profit percentage in the second quarter of 2011 was 52.8 percent of revenues compared with 46.7 percent of revenues in the second quarter of 2010. The increase in gross profit percentage in the 2011 period compared to the 2010 period was primarily related to favorable product mix, cost improvement initiatives and favorable operational efficiencies.

Our second quarter 2011 operating expenses of $6.0 million were $1.2 million higher than the operating expenses for the second quarter of 2010. This increase was comprised of a $1.1 million increase in General and Administrative, or G&A, expenses and a $53,000 increase in R&D expenses partially offset by a $5,000 decrease in Selling expenses. The increase in G&A expenses for the second quarter of 2011 was principally attributable to increased outside services and increased compensation. The increase in R&D expenses for the second quarter of 2011 was primarily related to increased outside services and compensation partially offset by decreased supplies.

Operating income in the second quarter of 2011 increased $2.3 million to $10.4 million, a 28 percent increase over operating income in the quarter ended June 30, 2010. Operating income was 34 percent of revenues in the second quarter of 2011 compared to 29 percent of revenues in the second quarter of 2010. The major contributor to the operating income improvement in the second quarter of 2011 was the previously mentioned increase in gross profit partially offset by the increase in operating expenses.

 
9

 
 
Income tax expense for the second quarter of 2011 was $3.8 million compared to income tax expense of $3.0 million for the same period in the prior year. The effective tax rate for the second quarter of 2011 was 34.9 percent, compared with 35.3 percent for the second quarter of 2010. The decrease in the effective tax rate for the 2011 period was primarily a result of the reinstatement in December 2010 of the federal tax credit for R&D expenditures. We expect the effective tax rate for the remainder of 2011 to be within a range of 34.0 to 35.0 percent.

Results for the six months ended June 30, 2011

Consolidated net income totaled $13.9 million, or $6.88 per basic and $6.84 per diluted share, in the first six months of 2011. This is compared with consolidated net income of $10.1 million, or $5.01 per basic and $4.98 per diluted share, in the first six months of 2010.  The income per basic share computations are based on weighted average basic shares outstanding of 2,017,759 in the 2011 period and 2,020,116 in the 2010 period. The income per diluted share computations are based on weighted average diluted shares outstanding of 2,029,993 in the 2011 period and 2,031,614 in the 2010 period.

Consolidated revenues of $61.7 million for the first six months of 2011 were 13 percent higher than revenues of $54.8 million for the first six months of 2010. This increase was generally attributable to higher sales volumes.

Revenues by product line were as follows (in thousands):

    Six Months ended  
   
June 30,
 
   
2011
   
2010
 
             
Fluid Delivery
  $ 24,217     $ 20,283  
Cardiovascular
    16,631       16,037  
Ophthalmology
    10,951       8,971  
Other
    9,929       9,491  
Total
  $ 61,728     $ 54,782  
 
Cost of goods sold of $29.7 million for the first six months of 2011 was $6,000 lower than in the comparable 2010 period. Our cost of goods sold in the first six months of 2011 was 48.1 percent of revenues compared with 54.3 percent of revenues in the first six months of 2010. The primary contributors to this improvement were favorable product mix, the impact of continued cost improvement initiatives and favorable operational efficiencies.

Gross profit of $32.0 million in the first six months of 2011 was $7.0 million, or 28 percent, higher than in the comparable 2010 period. Our gross profit percentage in the first six months of 2011 was 51.9 percent of revenues compared with 45.7 percent of revenues in the first six months of 2009. The increase in gross profit percentage in the 2011 period compared to the 2010 period was primarily related to favorable product mix, cost improvement initiatives and favorable operational efficiencies.

Our operating expenses for the first six months of 2011 of $11.5 million were $1.6 million higher than the operating expenses for the first six months of 2010. This increase was comprised of a $1.6 million increase in G&A expenses, a $72,000 increase in Selling expenses and a $15,000 increase in R&D expenses. The increase in G&A expenses for the first six months of 2011 was principally attributable to increased compensation and increased outside services. The increase in Selling expenses for the first six months of 2011 was primarily related to outside services. The increase in R&D costs was primarily related to increased compensation partially offset by reduced supplies.

 
10

 
 
Operating income in the first six months of 2011 increased $5.3 million to $20.5 million, a 35 percent increase over operating income in the six months ended June 30, 2010. Operating income was 33 percent of revenues in the first six months of 2011 compared to 28 percent of revenues in the first six months of 2010. The major contributor to the operating income improvement in the first six months of 2011 was the previously mentioned increase in gross profit.

Interest income for the six months ended June 30, 2011 increased $294,000 over the same period in 2010 primarily as a result of increased levels of investments. Income tax expense for the first six months of 2011 was $7.3 million compared to income tax expense of $5.5 million for the same period in the prior year. The effective tax rate for the first six months of 2011 was 34.6 percent, compared with 35.0 percent for the first six months of 2010. The decrease in the effective tax rate for the 2011 period is primarily a result of the absence of tax incentives for R&D expenditures in 2010.
 
Liquidity and Capital Resources
 
We have a $25.0 million revolving credit facility with a money center bank to be utilized for the funding of operations and for major capital projects or acquisitions, subject to certain limitations and restrictions. Borrowings under the credit facility bear interest that is payable monthly at 30-day, 60-day or 90-day LIBOR, as selected by us, plus one percent. We had no outstanding borrowings under our credit facility at June 30, 2011 or at December 31, 2010. The credit facility, which expires November 12, 2012, and may be extended under certain circumstances, contains various restrictive covenants, none of which is expected to impact our liquidity or capital resources. At June 30, 2011, we were in compliance with all financial covenants and had $25.0 million available for borrowing under the credit facility. We believe that the bank providing the credit facility is highly-rated and that the entire $25.0 million under the credit facility is currently available to us. If that bank were unable to provide such funds, we believe that such inability would not impact our ability to fund operations.

At June 30, 2011, we had $47.7 million in cash and cash equivalents and short-term and long-term investments, an increase of $6.0 million from December 31, 2010. The principal contributor to this increase was the cash generated by operating activities.

As of June 30, 2011, we had working capital of $57.5 million, including $9.7 million in cash and cash equivalents and $19.2 million in short-term investments. The $13.3 million increase in working capital during the first six months of 2011 was primarily related to increases in short-term investments, receivables and inventories partially offset by increases in accounts payable and accrued liabilities. The increase in short-term investments is primarily related to purchases of short-term bonds. The increase in accounts receivable was primarily related to the increase in revenues for the second quarter of 2011 as compared with the fourth quarter of 2010. The change in inventories is related to increased stocking levels necessary to support current operations. In addition, the Company began purchasing critical raw material in large volumes to hedge against future price increases and take advantage of volume discounts.  The increase in accounts payable and accrued liabilities was primarily related to increased inventory levels.

 
11

 
 
Cash flows from operating activities generated $13.2 million for the six months ended June 30, 2011 as compared to $15.1 million for the six months ended June 30, 2010. The decrease in the 2011 period was primarily attributable to increased cash requirements for working capital items for the 2011 period partially offset by increased operational results as compared to the 2010 period. During the first six months of 2011, we expended $5.5 million for the addition of property and equipment, $3.6 million of which was spent in the 2011 second quarter. Maturities of investments generated $2.4 million during the first six months of 2011. We expended $9.7 million for the purchase of investments and we paid dividends of $1.7 million during the first six months of 2011.

We believe that our $47.7 million in cash, cash equivalents, short-term investments and long-term investments, along with cash flows from operations and available borrowings of up to $25.0 million under our credit facility will be sufficient to fund our cash requirements for at least the foreseeable future. We believe that our strong financial position would allow us to access equity or debt financing should that be necessary and our capital resources should not be materially impacted by the current economic environment. Additionally, we believe that our cash and cash equivalents, short-term investments and long-term investments, as a whole, will continue to increase during the remainder of 2011.

Forward-Looking Statements
 
Statements in this Management’s Discussion and Analysis and elsewhere in this Quarterly Report on Form 10-Q that are forward-looking are based upon current expectations, and actual results or future events may differ materially. Therefore, the inclusion of such forward-looking information should not be regarded as a representation by us that our objectives or plans will be achieved. Such statements include, but are not limited to, our effective tax rate for the remainder of 2011, our ability to fund our cash requirements for the foreseeable future with our current assets, long-term investments, cash flow and borrowings under the credit facility, the impact that the inability of the bank providing the credit facility to provide funds thereunder would have on our ability to fund operations, our access to equity and debt financing, the impact of the current economic environment on our capital resources and the increase in cash, cash equivalents, and investments during the remainder of 2011. Words such as “expects,” “believes,” “anticipates,” “intends,” “should,” “plans,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements contained herein involve numerous risks and uncertainties, and there are a number of factors that could cause actual results or future events to differ materially, including, but not limited to, the following: changing economic, market and business conditions; acts of war or terrorism; the effects of governmental regulation; the impact of competition and new technologies; slower-than-anticipated introduction of new products or implementation of marketing strategies; implementation of new manufacturing processes or implementation of new information systems; our ability to protect our intellectual property; changes in the prices of raw materials; changes in product mix; intellectual property and product  liability claims and product recalls; the ability to attract and retain qualified personnel; and the loss of, or any material reduction in sales to, any significant customers. In addition, assumptions relating to budgeting, marketing, product development and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic review which may cause us to alter our marketing, capital expenditures or other budgets, which in turn may affect our results of operations and financial condition.

 
For the quarter ended June 30, 2011, we did not experience any material changes in market risk exposures that affect the quantitative and qualitative disclosures presented in our 2010 Form 10-K.
 
 
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2011. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting for the quarter ended June 30, 2011 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
 
 
PART II

OTHER INFORMATION
Item 1.   Legal Proceedings
 
From time to time, we may be involved in claims or litigation that arise in the normal course of business. We are not currently a party to any legal proceedings, which, if decided adversely, would have a material adverse effect on our business, financial condition, or results of operations .

Item 1A. Risk Factors
 
There were no material changes to the risk factors disclosed in our 2010 Form 10-K.
 
 
13

 
 
Item 6.   Exhibits
 
Exhibit
 
Number
Description
   
10.1
Amended and Restated Atrion Corporation 2006 Equity Incentive Plan (as last amended on May 26, 2011)
   
10.2
Form of Award Agreement for Incentive Stock Option Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
10.3
Form of Award Agreement for Non-Qualified Stock Option Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
10.4
Form of Award Agreement for Common Stock Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
10.5
Form of Award Agreement for Restricted Stock Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
10.6
Form of Award Agreement for Restricted Stock Units Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
31.1
Sarbanes-Oxley Act Section 302 Certification of Chief Executive Officer
   
31.2
Sarbanes-Oxley Act Section 302 Certification of Chief Financial Officer
   
32.1
Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of The Sarbanes – Oxley Act Of 2002
   
32.2
Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of The Sarbanes – Oxley Act Of 2002
   
 101.INS
XBRL Instance Document
   
 101.SCH
XBRL Taxonomy Extension Schema Document
   
 101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
   
 101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
   
 101.LAB
XBRL Taxonomy Extension Label Linkbase Document
   
 101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
14

 
 
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




 
Atrion Corporation
 
(Registrant)
     
     
Date:  August 4, 2011
By:
/s/ David A. Battat
   
David A. Battat
   
President and Chief
   
Executive Officer
     
     
     
     
Date:  August 4, 2011
By:
/s/ Jeffery Strickland
   
Jeffery Strickland
   
Vice President and
   
Chief Financial Officer
   
(Principal Accounting and
   
Financial Officer)
 
 
15

 
 
Exhibit Index
 
Exhibit
 
Number
Description
   
10.1
Amended and Restated Atrion Corporation 2006 Equity Incentive Plan (as last amended on May 26, 2011)
   
10.2
Form of Award Agreement for Incentive Stock Option Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
10.3
Form of Award Agreement for Non-Qualified Stock Option Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
10.4
Form of Award Agreement for Common Stock Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
10.5
Form of Award Agreement for Restricted Stock Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
10.6
Form of Award Agreement for Restricted Stock Units Award under Amended and Restated Atrion Corporation 2006 Equity Incentive Plan
   
31.1
Sarbanes-Oxley Act Section 302 Certification of Chief Executive Officer
   
31.2
Sarbanes-Oxley Act Section 302 Certification of Chief Financial Officer
   
32.1
Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of The Sarbanes – Oxley Act Of 2002
   
32.2
Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of The Sarbanes – Oxley Act Of 2002
   
 101.INS
XBRL Instance Document
   
 101.SCH
XBRL Taxonomy Extension Schema Document
   
 101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
   
 101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
   
 101.LAB
XBRL Taxonomy Extension Label Linkbase Document
   
 101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
16
Exhibit 10.1
 
 
 
 
 
AMENDED AND RESTATED

ATRION CORPORATION 2006 EQUITY INCENTIVE PLAN

(As last amended on May 26, 2011)
 

 


 
 

 

Table of Contents  
       
ARTICLE 1 . DEFINITIONS 3
       
ARTICLE 2.  COMMON STOCK SUBJECT TO PLAN 5
 
2.1
Common Stock Subject to Plan
5
 
2.2
Add-back of Grants
5
       
ARTICLE 3.  ELIGIBILITY; GRANTS; AWARD AGREEMENTS 6
 
3.1
Eligibility
6
 
3.2
Awards
6
 
3.3
Provisions Applicable to Section 162(m)
6
 
3.4
Award Agreement
6
       
ARTICLE 4.  OPTIONS 7
 
4.1
Award Agreement for Option Grant
7
 
4.2
Option Price
7
 
4.3
Qualification for Incentive Stock Options
7
 
4.4
Change in Incentive Stock Option Grant
7
 
4.5
Option Term
7
 
4.6
Option Exercisability and Vesting
7
       
ARTICLE 5.  EXERCISE OF OPTIONS 8
 
5.1
Exercise
8
 
5.2
Manner of Exercise
8
 
5.3
Conditions to Issuance of Common Stock
9
 
5.4
Rights as Stockholders
9
 
5.5
Ownership and Transfer Restrictions
9
 
5.6
Limitations on Exercise of Options
9
       
  ARTICLE 6.  STOCK AWARDS 9
 
6.1
Award Agreement
9
 
6.2
Awards of Restricted Common Stock, Restricted Stock Units and Deferred Stock Units
9
 
6.3
Rights as Stockholders.
10
 
6.4
Restriction
10
 
6.5
Lapse of Restrictions
11
 
6.6
Repurchase of Restricted Common Stock
11
 
6.7
Escrow
11
 
6.8
Legend
11
 
6.9
Conversion
11
       
ARTICLE 7.  STOCK APPRECIATION RIGHTS   11
 
7.1
Award Agreement for SARs
11
 
7.2
General Requirements
11
 
7.3
Base Amount
11
 
7.4
Tandem SARs
11
 
7.5
SAR Exercisability
12
 
7.6
Value of SARs
12
 
7.7
Form of Payment
12
       
ARTICLE 8.  PERFORMANCE UNITS 12
 
8.1
Award Agreement for Performance Units
12
 
8.2
General Requirements
12
 
8.3
Performance Period and Performance Goals
12
 
8.4
Payment With Respect to Performance Units
12
 
 
i

 
 
Table of Contents  
(continued)
       
ARTICLE 9.  DIVIDEND EQUIVALENTS 13
 
9.1
Grant of Dividend Equivalents
13
       
ARTICLE 10.  OTHER STOCK-BASED AWARDS 13
 
10.1
Grant of Other Stock-Based Awards
13
       
ARTICLE 11.  ADMINISTRATION 13
 
11.1
Committee
13
 
11.2
Duties and Powers of Committee
13
 
11.3
Compensation; Professional Assistance; Good Faith Actions
13
       
ARTICLE 12.  MISCELLANEOUS PROVISIONS 14
 
12.1
Transferability
14
 
12.2
Amendment, Suspension or Termination of this Plan
14
 
12.3
Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and
 
   
Other Corporate Events
15
 
12.4
Continued Employment
16
 
12.5
Tax Withholding
16
 
12.6
Forfeiture Provisions
16
 
12.7
Limitations Applicable to Section 16 Persons and Performance-Based Compensation
16
 
12.8
Effect of Plan Upon Option and Compensation Plans
16
 
12.9
Compliance with Laws
17
 
12.10
Titles
17
 
12.11
Governing Law
17
 
12.12
Effective Date
17
 
 
 
ii

 
 
AMENDED AND RESTATED
ATRION CORPORATION 2006 EQUITY INCENTIVE PLAN

Atrion Corporation, a Delaware corporation (the "Company"), has established the Amended and Restated Atrion Corporation 2006 Equity Incentive Plan (the "Plan") for the benefit of Employees, Non-Employee Directors and Consultants.

The purposes of this Plan are (a) to recognize and compensate selected Employees, Non-Employee Directors and Consultants who contribute to the success of the Company and its Subsidiaries, (b) to attract and retain Employees, Non-Employee Directors and Consultants, and (c) to provide incentive compensation to Employees, Non-Employee Directors and Consultants based upon the performance of the Company and its Subsidiaries.

DEFINITIONS
Whenever the following initially capitalized terms are used in the Plan, they shall have the meanings specified below, unless the context clearly indicates otherwise.

"Award" shall mean the grant or award of Options, Restricted Common Stock, Restricted Stock Units, Deferred Stock Units, SARs, Dividend Equivalents, Performance Units or Other Stock-Based Awards under this Plan.

"Award Agreement" shall mean an agreement between the Company and a Participant setting forth the terms and conditions of an Award granted to a Participant.

"Board" shall mean the Board of Directors of the Company, as comprised from time to time.

"Change in Control" shall mean the occurrence of any of the following events: (a) any person, entity or affiliated group, excluding the Company or any employee benefit plan of the Company, acquiring more than twenty-five percent (25%) of the then outstanding shares of voting stock of the Company, (b) the consummation of any merger or consolidation of the Company into another company, such that the holders of the shares of the voting stock of the Company immediately before such merger or consolidation own less than fifty percent (50%) of the voting power of the securities of the surviving company or the parent of the surviving company, (c) the adoption of a plan for complete liquidation of the Company or the sale or disposition of all or substantially all of the Company's assets of the Company, such that after the transaction, the holders of the shares of the voting stock of the Company immediately prior to the transaction own less than fifty percent (50%) of the voting securities of the acquiror or the parent of the acquiror, or (d) during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Committee" shall mean the Compensation Committee of the Board.

"Common Stock " shall mean the common stock, par value ten cents ($0.10) per share, of the Company.

"Company" shall mean Atrion Corporation, a Delaware corporation, or any business organization which succeeds to all or substantially all of its business, whether by virtue of a purchase, merger, consolidation, or otherwise. For purposes of this Plan, the term Company shall include, where applicable, a Subsidiary that employs an Employee or engages a Consultant.

"Consultant" shall mean a professional or technical expert, consultant, advisor or independent contractor who provides services to the Company or a Subsidiary, and who may be selected to participate in the Plan.

"Deferred Stock Unit" shall mean a right to receive Common Stock awarded under Article 6 of this Plan.

"Director" shall mean a member of the Board.

 
3

 
 
"Dividend Equivalent" shall mean a right granted to a Participant under Article 9 of this Plan.

"Employee" shall mean any employee (as defined in accordance with the regulations and revenue rulings then applicable under Section 3401(c) of the Code) of the Company or a Subsidiary of the Company, whether such employee was so employed at the time this Plan was initially adopted or becomes so employed subsequent to the adoption of this Plan, who may be selected to participate in the Plan.

"Employment Agreement" shall mean the employment, consulting or similar contractual agreement entered into by an Employee or a Consultant, as the case may be, and the Company governing the terms of the Employee's or Consultant's employment or engagement with the Company, if any.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

"Fair Market Value" of a share of Common Stock, as of a given date, means (i) with respect to an Award of an Incentive Stock Option and an Award which is intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code, the average of the high and low sales price of shares of Common Stock on such date as reported by any national securities exchange on which the shares of Common Stock are traded or, if no shares of Common Stock are traded on any such exchange on such date, then on the next preceding date on which any shares of Common Stock were traded on such exchange; and (ii) with respect to all other Awards, the closing sales price of a share of Common Stock on such date as reported by any national securities exchange on which the shares of Common Stock are traded or, if no shares of Common Stock are traded on any such exchange on such date, then on the next preceding date on which any shares of Common Stock were traded on such exchange; or (iii) if shares of Common Stock are not publicly traded on any exchange, the fair market value of a share of Common Stock as determined by the Committee acting in good faith and after consultation with independent advisors.

"Incentive Stock Option" shall mean an option which conforms to the applicable provisions of Section 422 of the Code and which is designated as an Incentive Stock Option by the Committee.

"Non-Employee Director" shall mean a Director who is not an Employee.

"Non-Qualified Stock Option" shall mean an Option which the Committee does not designate as an Incentive Stock Option.

"Option" shall mean an option to purchase shares of Common Stock that is granted under Article 4 of this Plan. An option granted under this Plan shall, as determined by the Committee, be either a Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that Options granted to consultants shall be Non-Qualified Stock Options.

"Other Stock-Based Awards" shall mean a right granted to a Participant under Article 10 of this Plan.

"Participant" shall mean an Employee, Non-Employee Director or Consultant who has been granted an Award.

"Performance Units" shall mean performance units granted under Article 8 of this Plan.

"Permanent Disability" or "Permanently Disabled" shall mean the inability of a Participant, due to a physical or mental impairment, to perform the material services of the Participant's position with the Company for a period of six (6) months, whether or not consecutive, during any 365-day period.  A determination of Permanent Disability shall be made by a physician satisfactory to both the Participant and the Committee, provided that if the Participant and the Committee do not agree on a physician, each of them shall select a physician and those two physicians together shall select a third physician, whose determination as to Permanent Disability shall be binding on all parties.

"Plan" shall mean the Amended and Restated Atrion Corporation 2006 Equity Incentive Plan, as embodied herein and as amended from time to time.

 
4

 
 
"Plan Year" shall mean the fiscal year of the Company.

"Restricted Common Stock" shall mean Common Stock awarded under Article 6 of this Plan.

"Restricted Stock Unit" shall mean a right to receive Common Stock awarded under Article 6 of this Plan.

"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as such rule may be amended from time to time.

"SAR" shall mean stock appreciation rights awarded under Article 7 of this Plan.

"Stock Award" shall mean an Award of Restricted Common Stock, Restricted Stock Units or Deferred Stock Units under Article 6 of this Plan.

"Stock Award Account" shall mean the bookkeeping account reflecting Awards of Restricted Stock Units and Deferred Stock Units under Article 6 of this Plan.

"Subsidiary" shall mean an entity in an unbroken chain beginning with the Company if each of the entities other than the last entity in the unbroken chain owns fifty percent (50%) or more of the total combined voting power of all classes of equity in one of the other entities in such chain.

"Termination of Employment" shall mean the date on which the employee-employer, consulting, contractual, service or similar relationship between a Participant and the Company is terminated for any reason, with or without cause, including, but not by way of limitation, a termination of employment by resignation, discharge, death, Permanent Disability or Retirement, but excluding (i) termination of employment where there is a simultaneous reemployment or continuing employment of a Participant by the Company, and (ii) at the discretion of the Committee, termination of employment which results in a temporary severance of the employee-employer relationship. The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to a Termination of Employment (subject to the provisions of any Employment Agreement between a Participant and the Company), including, but not limited to all questions of whether particular leaves of absence constitute a Termination of Employment; provided, however, that, unless otherwise determined by the Committee in its discretion, a leave of absence, change in status from an employee to an independent contractor or other change the employee-employer, consulting, contractual, service or similar relationship shall constitute a Termination of Employment if, and to the extent that, such leave of absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable regulations and revenue rulings under said Section.

ARTICLE 2. COMMON STOCK SUBJECT TO PLAN

2.1              Common Stock Subject to Plan.

2.1.1           The Common Stock subject to an Award shall be shares of the Company's authorized but unissued, reacquired, or treasury Common Stock. Subject to adjustment as described in Section 12.3, the aggregate number of shares of Common Stock that may be issued under the Plan is two hundred thousand (200,000) shares.  The Company, during the term of the Plan, will at all times reserve and keep available such number of shares of Common Stock as shall be sufficient to satisfy the requirements of the Plan.
2.1.2           The maximum number of shares of Common Stock which may be awarded to any individual in any calendar year shall not exceed thirty-five thousand (35,000) shares.
 
2.2              Add-back of Grants .   If any Option or SAR expires or is canceled without having been fully exercised, is exercised in whole or in part for cash as permitted by this Plan, or is exercised prior to becoming vested as permitted under Section 4.6.3 and is forfeited prior to becoming vested, the number of shares of Common Stock subject to such Option or SAR but as to which such Option, SAR or other right was not exercised or vested prior to its expiration, cancellation or exercise may again be optioned, granted or awarded hereunder.  Shares of Common Stock which are delivered by the Participant or withheld by the Company upon the exercise of any Option or other Award under this Plan, in payment of the exercise price thereof, may again be optioned, granted or awarded hereunder.  If any shares of Common Stock awarded as Restricted Common Stock, Restricted Stock Units, Dividend Equivalents, Other Stock-Based Awards or other Award hereunder or as payment for Performance Units are forfeited by the Participant, such shares may again be optioned, granted or awarded hereunder.  Notwithstanding the provisions of this Section 2.2, no shares of Common Stock may again be optioned, granted or awarded pursuant to an Incentive Stock Option if such action would cause such Option to fail to qualify as an Incentive Stock Option under Section 422 of the Code.

 
5

 
 
ARTICLE 3. ELIGIBILITY; GRANTS; AWARD AGREEMENTS

3.1             Eligibility .   Any Employee, Non-Employee Director or Consultant selected to participate pursuant to Section 3.2 shall be eligible to participate in the Plan.

3.2             Awards .   The Committee shall determine which Employees, Non-Employee Directors and Consultants shall receive Awards, whether the Employee, Non-Employee Director or Consultant will receive Options, Restricted Common Stock, Restricted Stock Units, Deferred Stock Units, Dividend Equivalents, SARs, Performance Units or Other Stock-Based Awards, whether an Option grant shall be of Incentive Stock Options or Non-Qualified Stock Options, and the number of shares of Common Stock subject to such Award.  Notwithstanding the foregoing, the terms and conditions of an Award intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall include, but not be limited to, such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code.

3.3           Provisions Applicable to Section 162(m).

3.3.1           Notwithstanding anything in the Plan to the contrary, the Committee may grant Options, Restricted Common Stock, Restricted Stock Units, SARs, Dividend Equivalents, Performance Units or Other Stock Based Awards to an Employee that vest upon the attainment of performance targets for the Company which are related to one or more of the following performance goals:  (i) pre-tax income, (ii) operating income, (iii) cash flow,  (iv) earnings per share, (v) return on equity, (vi) return on invested capital or assets, (vii) cost reductions or savings, (viii) earnings from continuing operations, (ix) total stockholder return, or (x) such other identifiable and measurable performance objectives, as determined by the Committee.
3.3.2           To the extent necessary to comply with the performance-based compensation  requirements of Section 162(m)(4)(C) of the Code, no later than ninety (90) days following the commencement of any fiscal year in question or any other designated fiscal period (or such other time as may be required or permitted by Section 162(m) of the Code), the Committee shall, in writing, (i) select the performance goal or goals applicable to the fiscal year or other designated fiscal period, (ii) establish the various targets and bonus amounts which may be earned for such fiscal year or other designated fiscal period, (iii) specify the relationship between performance goals and targets and the amounts to be earned by each Employee for such fiscal year or other designated fiscal period and (iv) take such other action as the Committee may deem appropriate to comply with the performance-based compensation requirements of Section 162(m)(4)(C) of the Code. Following the completion of each fiscal year or other designated fiscal period, the Committee shall certify in writing whether the applicable performance targets have been achieved for such fiscal year or other designated fiscal period. In determining the amount earned by such Employee, the Committee shall have the right to reduce (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the fiscal year or other designated fiscal period.
 
3.4             Award Agreement .  Upon the selection of an Employee, Non-Employee Director or Consultant to receive an Award, the Committee shall cause a written Award Agreement to be issued to such individual encompassing the terms and conditions of such Award, as determined by the Committee in its sole discretion; provided, however, that, if applicable, the terms of such Award Agreement shall comply with the terms of such Employee’s or Consultant’s Employment Agreement, if any. Such Award Agreement shall provide for the exercise price for Options and SARs; the purchase price, if any, for Restricted Common Stock, Restricted Stock Units, Deferred Stock Units and Other Stock-Based Awards; the performance criteria for Performance Units; and the exercisability and vesting schedule, payment terms and such other terms and conditions of such Award that are consistent with the Plan, as determined by the Committee in its sole discretion.  Each Award Agreement shall be executed by the Participant and an officer of the Company authorized to sign such Award Agreement. All Awards shall be made conditional upon the Participant's acknowledgment, in writing in the Award Agreement or otherwise by acceptance of the Award, that all decisions and determinations of the Committee shall be final and binding on the Participant, his beneficiaries and any other person having or claiming an interest under such Award.

 
6

 
 
ARTICLE 4. OPTIONS
 
4.1             Award Agreement for Option Grant .   Option grants shall be evidenced by an Award Agreement, pursuant to Section 3.4.  All Award Agreements evidencing Options intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code. All Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.
 
4.2             Option Price.   The price per share of the Common Stock subject to each Option shall be set by the Committee; provided, however, that (i) such price shall not be less than the par value of a share of Common Stock and shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date the Option is granted, (ii) in the case of Incentive Stock Options granted to an individual then owning (within the meaning of Section 424(d) of the Code) more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation thereof (within the meaning of Section 422 of the Code), such price shall not be less than one hundred and ten percent (110%) of the Fair Market Value of a share of Common Stock on the date the Option is granted.
 
4.3             Qualification for Incentive Stock Options.   The Committee may grant an Incentive Stock Option to an individual only if such person is an employee of the Company or is an employee of a Subsidiary as permitted under Section 422(a)(2) of the Code.
 
4.4             Change in Incentive Stock Option Grant .  Any Incentive Stock Option granted under this Plan may be modified by the Committee to disqualify such Option from treatment as an Incentive Stock Option under Section 422 of the Code. To the extent that the aggregate Fair Market Value of shares of Common Stock with respect to which Incentive Stock Options (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by a Participant during any calendar year (under the Plan and all other Incentive Stock Option plans of the Company) exceeds one hundred thousand dollars ($100,000), such Options shall be treated as Non-Qualified Stock Options to the extent required or permitted by Section 422 of the Code. The rule set forth in the preceding sentence shall be applied by taking Options into account in the order in which they were granted. For purposes of this Section 4.4, the Fair Market Value of shares of Common Stock shall be determined as of the time the Option with respect to such shares of Common Stock is granted.
 
4.5             Option Term .  The term of an Option shall be set by the Committee in its discretion; provided, however, in the case of Incentive Stock Options, the term shall not be more than ten (10) years from the date the Incentive Stock Option is granted, or five (5) years from such date if the Incentive Stock Option is granted to an Employee then owning (within the meaning of Section 424(d) of the Code) more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation thereof (within the meaning of Section 422 of the Code). Such Incentive Stock Options shall be subject to Section 5.6, except as limited by the requirements of Section 422 of the Code and regulations and rulings thereunder applicable to Incentive Stock Options.

4.6           Option Exercisability and Vesting.

4.6.1           The period during which Options in whole or in part become exercisable and vest in the Participant shall be set by the Committee and shall be as provided for in the Award Agreement. At any time after the grant of an Option, the Committee may, in its sole and absolute discretion and subject to whatever terms and conditions it selects, accelerate the period during which an Option becomes exercisable and vests.
4.6.2           Each Award Agreement shall set forth the extent to which, if any, the Participant shall have the right to exercise the Options after the Participant's Termination of Employment.  Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among the Options granted and may differentiate between the reasons for the Participants’ Termination of Employment.
4.6.3           At any time on or after the grant of an Option, the Committee may provide in an Award Agreement that the Participant may elect to exercise part or all of an Option before it otherwise has become exercisable. Any shares of Common Stock so purchased shall be restricted Common Stock and shall be subject to a repurchase right in favor of the Company during a specified restriction period, with the repurchase price equal to the lesser of (i) the price per share paid by the Participant for the Common Stock, or (ii) the Fair Market Value of such Common Stock at the time of repurchase, or such other restrictions as the Committee deems appropriate. The Participant shall have, unless otherwise provided by the Committee in the Award Agreement, all the rights of an owner of Common Stock, subject to the restrictions and provisions of his Award Agreement, including the right to vote such Common Stock and to receive all dividends and other distributions paid or made with respect to Common Stock.
4.6.4           Any Options which are not exercisable and vested immediately prior to a Change in Control, including shares of restricted Common Stock received upon the exercise of an Option as described in Section 4.6.3 above, shall, upon a Change in Control, become one hundred percent (100%) exercisable, if not previously exercised, and one hundred percent (100%) vested, unless the Award Agreement or the Participant's Employment Agreement provides otherwise.

 
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ARTICLE 5. EXERCISE OF OPTIONS

5.1             Exercise.   At any time and from time to time prior to the time when any exercisable Option or portion thereof becomes unexercisable under the Plan or the Award Agreement, such Option or portion thereof may be exercised in whole or in part; provided, however, that the Company shall not be required to issue fractional shares of Common Stock and the Committee may, by the terms of the Option, require any partial exercise to be with respect to a minimum number of shares of Common Stock.

5.2             Manner of Exercise .  An exercisable Option, or any exercisable portion thereof, may be exercised solely by delivery to the Company of all of the following prior to the time when such Option or such portion becomes unexercisable under the Plan or the Award Agreement:

5.2.1           A written notice signed by the Participant or other person then entitled to exercise such Option or portion thereof, stating that such Option or portion is being exercised, provided such notice complies with all applicable rules established by the Committee from time to time.
5.2.2           Such representations and documents as the Committee, in its absolute discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act of 1933, as amended, and any other federal or state securities laws or regulations. The Committee may, in its absolute discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, causing legends to be placed on certificates for shares of Common Stock and issuing stop-transfer notices to agents and registrars.
5.2.3           In the event that the Option shall be exercised pursuant to Section 12.1 by any person or persons other than the Participant, appropriate proof of the right of such person or persons to exercise the Option or portion thereof.
5.2.4           Unless otherwise determined by the Committee, the exercise price of an Option or portion thereof, including the amount of any withholding tax due, may be paid as follows:
5.2.4.1                      In cash or by check;
5.2.4.2                      Through the delivery of shares of Common Stock owned by the Participant, duly endorsed for transfer to the Company with a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, provided, that shares of Common Stock used to exercise the Option have been held by the Participant for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the Option;
5.2.4.3                      Through the surrender of shares of Common Stock then issuable upon exercise of the Option having a Fair Market Value on the date of Option exercise equal to the aggregate exercise price of the Option or exercised portion thereof;
5.2.4.4                      Through an exercise complying with Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System; or
5.2.4.5                      Through any combination of the consideration provided for in this Section 5.2.4 or such other method approved by the Committee consistent with applicable law.
 
 
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5.3             Conditions to Issuance of Common Stock .  The Company shall not be required to issue or deliver any certificate or other indicia evidencing ownership of shares of Common Stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions:

5.3.1           The obtaining of any approval or other clearance from any state or federal governmental agency which the Committee shall, in its sole discretion, determine to be necessary or advisable.
5.3.2           The lapse of such reasonable period of time following the exercise of the Option as the Committee may establish from time to time for reasons of administrative convenience.
5.3.3           The receipt by the Company of full payment for such Common Stock, including payment of any applicable withholding tax.
5.3.4           The Participant agreeing to the terms and conditions of the Plan and the Award Agreement.

5.4             Rights as Stockholders .  The holders of Options shall not be, nor have any of the rights or privileges of, stockholders of the Company in respect of any shares of Common Stock purchasable upon the exercise of any part of an Option unless and until certificates or other indicia representing such shares of Common Stock have been issued by the Company to such holders.

5.5             Ownership and Transfer Restrictions.   The Committee, in its absolute discretion, may impose at the time of grant such restrictions on the ownership and transferability of the shares of  Common Stock purchasable upon the exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the Award Agreement and may be referred to on the certificates or other indicia evidencing such shares of Common Stock.

5.6           Limitations on Exercise of Options.

5.6.1           Vested Incentive Stock Options may not be exercised after the earliest of (i) their  expiration date, (ii) twelve (12) months from the date of the Participant's Termination of Employment by reason of his death, (iii) twelve (12) months from the date of the Participant's Termination of Employment by reason of his Permanent Disability, or (iv) the expiration of three (3) months from the date of the Participant's Termination of Employment for any reason other than such Participant's death or Permanent Disability, unless the Participant dies within said three (3) month period and the Award Agreement or the Committee permits later exercise.  Leaves of absence for less than ninety (90) days shall not cause a Termination of Employment for purposes of Incentive Stock Options.
5.6.2           Non-Qualified Stock Options may be exercised up until their expiration date, unless the Committee provides otherwise in the Award Agreement.

ARTICLE 6. STOCK AWARDS
 
6.1             Award Agreement.   Awards of Restricted Common Stock, Restricted Stock Units and Deferred Stock Units shall be evidenced by an Award Agreement, pursuant to Section 3.4.  All Award Agreements evidencing Restricted Common Stock, Restricted Stock Units and Deferred Stock Units intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code.

6.2             Awards of Restricted Common Stock, Restricted Stock Units and Deferred Stock Units .
 
 
 
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6.2.1           The Committee may from time to time, in its absolute discretion, consistent with this Plan:
6.2.1.1                      determine which Employees, Non-Employee Directors and Consultants shall receive Stock Awards;
6.2.1.2                      determine the aggregate number of shares of Common Stock to be awarded as Stock Awards to Employees, Non-Employee Directors and Consultants;
6.2.1.3                      determine the terms and conditions applicable to such Stock Awards; and
6.2.1.4                      determine when the restrictions, if any, lapse.
6.2.2           The Committee may establish the purchase price, if any, and form of payment for a Stock Award.  If the Committee establishes a purchase price, the purchase price shall be no less than the par value of the Common Stock to be purchased, unless otherwise permitted by applicable state law.
6.2.3           Upon the selection of an Employee, Non-Employee Director or Consultant to be awarded Restricted Common Stock, the Committee shall instruct the Secretary of the Company to issue such Restricted Common Stock and may impose such conditions on the issuance of such Restricted Common Stock as it deems appropriate, subject to the provisions of Article 11.
6.2.4           Upon the selection of an Employee, Non-Employee Director or Consultant to be awarded Restricted Stock Units or Deferred Stock Units, the Committee shall instruct the Secretary of the Company to establish a Stock Award Account on behalf of each such Participant.  The Committee may impose such conditions on the issuance of such Restricted Stock Units or Deferred Stock Units as it deems appropriate.
6.2.5           Awards of Restricted Common Stock and Restricted Stock Units shall vest pursuant to the Award Agreement.
6.2.6           Upon the occurrence of a Change in Control, all Restricted Common Stock and Restricted Stock Units shall become one hundred percent (100%) vested, unless the Participant’s Award Agreement or the Participant’s Employment Agreement provides otherwise.
6.2.7           A Participant shall be one hundred percent (100%) vested in the number of Deferred Stock Units held in his or her Stock Award Account at all times.  The term for which the Deferred Stock Units shall be deferred shall be provided for in the Award Agreement.
 
6.3           Rights as Stockholders.
 
6.3.1           Upon delivery of the shares of Restricted Common Stock to the Participant or the escrow holder pursuant to Section 6.7, the Participant shall have, unless otherwise provided by the Committee in the Award Agreement, all the rights of an owner of Common Stock, subject to the restrictions and provisions of his Award Agreement; provided, however, that in the discretion of the Committee, any extraordinary distributions with respect to the Common Stock shall be subject to the restrictions set forth in Section 6.4.
6.3.2           Nothing in this Plan shall be construed as giving a Participant who receives an Award of Restricted Stock Units or Deferred Stock Units any of the rights of an owner of Common Stock unless and until shares of Common Stock are issued and transferred to the Participant in accordance with the terms of the Plan and the Award Agreement.  Notwithstanding the foregoing, in the event that any dividend is paid by the Company with respect to the Common Stock (whether in the form of cash, Common Stock or other property), then the Committee shall, in the manner it deems equitable or appropriate, adjust the number of Restricted Stock Units or Deferred Stock Units allocated to each Participant's Stock Award Account to reflect such dividend.
 
6.4             Restriction .  All shares of Restricted Common Stock issued under this Plan (including any Common Stock received as a result of stock dividends, stock splits or any other form of recapitalization, if any) shall at the time of the Award, in the terms of each individual Award Agreement, be subject to such restrictions as the Committee shall, in its sole discretion, determine, which restrictions may include, without limitation, restrictions concerning voting rights, transferability, vesting, Company performance and individual performance; provided, however, that by action taken subsequent to the time shares of Restricted Common Stock are issued, the Committee may, on such terms and conditions as it may determine to be appropriate, remove any or all of the restrictions imposed by the terms of the Award Agreement. Restricted Common Stock may not be sold or encumbered until all restrictions are terminated or expire.
 
 
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6.5             Lapse of Restrictions.   The restrictions on Awards of Restricted Common Stock and Restricted Stock Units shall lapse in accordance with the terms of the Award Agreement. Each Award Agreement shall set forth whether shares of Restricted Common Stock or Restricted Stock Units then subject to restrictions are forfeited or if the restrictions shall lapse upon the Participant's Termination of Employment. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among the Awards of Restricted Common Stock or Restricted Stock Units and may differentiate between the reasons for the Participant's Termination of Employment.
 
6.6             Repurchase of Restricted Common Stock .  The Committee may provide in the terms of the Award Agreement awarding Restricted Common Stock that the Company shall have call rights, a right of first offer or a right of refusal regarding shares of Restricted Common Stock then subject to restrictions.
 
6.7             Escrow .  The Company may appoint an escrow holder to retain physical custody of each certificate or control of each other indicia representing shares of Restricted Common Stock until all of the restrictions imposed under the Award Agreement with respect to the shares of Common Stock evidenced by such certificate expire or shall have been removed.
 
6.8             Legend.   In order to enforce the restrictions imposed upon shares of Restricted Common Stock hereunder, the Committee shall cause a legend or restrictions to be placed on certificates of Restricted Common Stock that are still subject to restrictions under Award Agreements, which legend or restrictions shall make appropriate reference to the conditions imposed thereby.
 
6.9             Conversion.   Upon vesting in the case of Restricted Stock Units, and upon the lapse of the deferral period in the case of Deferred Stock Units, such Restricted Stock Units or Deferred Stock Units shall be converted into an equivalent number of shares of Common Stock that will be distributed to the Participant, or in the case of the Participant's death, to the Participant's legal representative.  Such distribution shall be evidenced by a stock certificate, appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company, or other appropriate means as determined by the Company.  All distributions shall be made no later than March 15 th of the calendar year following the year, with respect to the Restricted Stock Units, in which such Restricted Stock Units vest or, with respect to Deferred Stock Units, in which the deferral period lapses.  In the event ownership or issuance of the Common Stock is not feasible due to applicable exchange controls, securities regulations, tax laws or other provisions of applicable law, as determined by the Company in its sole discretion, the Participant, or, in the case of the Participant's death, the Participant's legal representative, shall receive cash proceeds in an amount equal to the value of the shares of Common Stock otherwise distributable to the Participant, net of tax withholding as provided in Section 12.5.

ARTICLE 7. STOCK APPRECIATION RIGHTS

7.1             Award Agreement for SARs .  Awards of SARs shall be evidenced by an Award Agreement, pursuant to Section 3.4.  All Award Agreements evidencing SARs intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code.

7.2             General Requirements .  The Committee may grant SARs separately or in tandem with any Option (for all or a portion of the applicable Option). The Committee shall determine which Employees, Non-Employee Directors and Consultants shall receive Awards of SARs and the amount of such Awards.

7.3             Base Amount .  The Committee shall establish the base amount of the SAR at the time the SAR is granted.  The base amount of each SAR shall be equal to the price per share of the related Option or, if there is no related Option, the Fair Market Value of a share of Common Stock as of the date of grant of the SAR, unless the Committee determines a higher base amount.

7.4             Tandem SARs .  Tandem SARs may be granted either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option, SARs may be granted only at the time of grant of the Incentive Stock Option. In the case of tandem SARs, the number of SARs granted to an Employee or Consultant that shall be exercisable during a specified period shall not exceed the number of shares of Common Stock that the Employee, Non-Employee Director or Consultant may purchase upon the exercise of the related Option during such period. Upon the exercise of an Option, the SARs relating to the Common Stock covered by such Option shall terminate. Upon the exercise of the SARs, the related Option shall terminate to the extent of an equal number of shares of Common Stock.

 
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7.5           SAR Exercisability.
 
7.5.1           The period during which SARs in whole or in part become exercisable shall be set by the Committee and shall be as provided for in the Award Agreement. At any time after the grant of an SAR, the Committee may, in its sole and absolute discretion and subject to whatever terms and conditions its selects, accelerate the period during which the SAR becomes exercisable.
7.5.2           In each Award Agreement, the Committee shall indicate whether the portion of the SAR, if any, that remains non-exercisable upon the Participant’s Termination of Employment with the Company is forfeited. In so specifying, the Committee may differentiate between the reason for the Participant’s Termination of Employment.

7.6             Value of SARs .  When a Participant exercises an SAR, the Participant shall receive in settlement of such SAR an amount equal to the value of the stock appreciation for the number of SARs exercised payable in cash, Common Stock or a combination thereof. The stock appreciation for an SAR is the amount by which the Fair Market Value of the underlying Common Stock on the date of exercise of the SAR exceeds the base amount of the SAR.
 
7.7             Form of Payment.   The Committee shall determine whether the appreciation in an SAR shall be paid in the form of cash, Common Stock or a combination of the two, in such proportion as the Committee deems appropriate. For purposes of calculating the number of shares of Common Stock to be received, shares of Common Stock shall be valued at their Fair Market Value on the date of exercise of the SAR. If shares of Common Stock are received upon exercise of a SAR, cash shall be delivered in lieu of any fractional shares of Common Stock.
 
ARTICLE 8. PERFORMANCE UNITS

8.1             Award Agreement for Performance Units.   Awards of Performance Units shall be evidenced by an Award Agreement, pursuant to Section 3.4.  All Award Agreements evidencing Performance Units intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code.

8.2             General Requirements .  Each Performance Unit shall represent the right of the Participant to receive an amount based on the value of the Performance Unit, if performance goals established by the Committee are met. A Performance Unit shall be based on the Fair Market Value of a share of Common Stock or such other measurement base as the Committee deems appropriate. The Committee shall determine and set forth in the Award Agreement the number of Performance Units to be granted and the requirements applicable to such Performance Units. The Committee shall determine which Employees and Consultants shall receive Awards of a Performance Unit and the amount of such Awards.

8.3             Performance Period and Performance Goals .  When Performance Units are granted, the Committee shall establish the performance period during which performance shall be measured (the "Performance Period"), performance goals applicable to the Performance Units ("Performance Goals") and such other conditions of the Award as the Committee deems appropriate. Performance Goals may relate to the financial performance of the Company or its Subsidiaries, the performance of Common Stock, individual performance or such other criteria as the Committee deems appropriate.

8.4             Payment With Respect to Performance Units.   At the end of each Performance Period, the Committee shall determine to what extent the Performance Goals and other conditions of the Performance Units are met, the value of the Performance Units (if applicable), and the amount, if any, to be paid with respect to the Performance Units. Payments with respect to Performance Units shall be made in cash, in Common Stock or in a combination of the two, as determined by the Committee.  All payments shall be made no later than March 15 of the calendar year following the year in which the Performance Period ends.

 
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ARTICLE 9.  DIVIDEND EQUIVALENTS

9.1             Grant of Dividend Equivalents .  The Committee is hereby authorized, in its sole discretion, to grant Dividend Equivalents to Employees, Non-Employee Directors and Consultants subject to such terms and conditions as may be selected by the Committee.  Dividend Equivalents shall entitle the Participant to receive payments (in cash, Common Stock, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Common Stock.  Dividend Equivalents may be granted on a free-standing basis or in connection with another Award.  Dividend Equivalents granted in connection with another Award may be granted with respect to all or a portion of the number of shares of Common Stock subject to such Award.  The Committee may provide that the Dividend Equivalents be paid or distributed when accrued or be deemed to have been reinvested in additional shares of Common Stock or otherwise reinvested; provided, however, that the terms of any reinvestment of Dividend Equivalents must comply with all applicable laws, rules and regulations, including, without limitation, Section 409A of the Code, and Dividend Equivalents (other than free-standing Dividend Equivalents) shall be subject to all conditions and restrictions of the underlying Awards to which they relate, unless otherwise provided by the Committee.  Notwithstanding the foregoing, the Committee may not grant Dividend Equivalents to Participants in connection with grants of Options or SARs to such Participants.

ARTICLE 10. OTHER STOCK-BASED AWARDS

10.1             Grant of Other Stock-Based Awards.   The Committee is authorized, subject to limitations under applicable law, to grant to Employees, Non-Employee Directors and Consultants such other Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, shares of Common Stock awarded purely as a "bonus" and not subject to any restrictions or conditions, convertible or exchangeable debt securities, other rights convertible or exchangeable into shares of Common Stock and other Awards valued by reference to book value of shares of Common Stock or the value of securities of or the performance of specified Subsidiaries.  The Committee shall determine the terms and conditions of such Awards, which shall be evidenced an Award Agreement, pursuant to Section 3.4.

ARTICLE 11. ADMINISTRATION
 
11.1             Committee.   The Plan shall be administered by the Compensation Committee of the Board. The Board may remove members, add members, and fill vacancies on the Committee from time to time, all in accordance with the Company's Certificate of Incorporation, Bylaws, and with applicable law. The majority vote of the Committee, or for acts taken in writing without a meeting by the unanimous written consent of the members of the Committee, shall be valid acts of the Committee.  Committee members may resign at any time by delivering written notice to the Board.

11.2             Duties and Powers of Committee.   It shall be the duty of the Committee to conduct the general administration of this Plan in accordance with its provisions.  The Committee shall have the power to designate the Employees, Non-Employee Directors and Consultants who shall participate in the Plan and to construe and interpret this Plan and the agreements pursuant to which Options, Restricted Common Stock, Restricted Stock Units, Deferred Stock Units, SARs, Dividend Equivalents, Performance Units or Other Stock-Based Awards are granted or awarded, and to adopt such rules for the administration, interpretation, and application of this Plan as are consistent therewith and to interpret, amend or revoke any such rules.  Any such Award under this Plan need not be the same with respect to each Participant. Any such interpretations and rules with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code.  All determinations and decisions made by the Committee pursuant to the provisions of the Plan shall be final, conclusive and binding.

11.3             Compensation; Professional Assistance; Good Faith Actions .  Unless otherwise determined by the Board, members of the Committee shall receive no compensation for their services pursuant to this Plan. All expenses and liabilities which members of the Committee incur in connection with the administration of this Plan shall be borne by the Company. The Committee may, with the approval of the Board, employ attorneys, consultants, accountants, appraisers, brokers, or other persons. The Committee, the Company and the Company's officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee or the Board in good faith shall be final and binding upon all Participants, the Company and all other interested persons.  No members of the Committee or Board shall be personally liable for any action, determination or interpretation made in good faith with respect to this Plan or any Awards made hereunder, and all members of the Committee and the Board shall be fully protected by the Company in respect of any such action, determination or interpretation.

 
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ARTICLE 12. MISCELLANEOUS PROVISIONS
12.1           Transferability.

12.1.1           No Award or any right therein or part thereof, shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means, whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that nothing in this Section 12.1.1 shall prevent transfers by will or by the applicable laws of descent and distribution or as permitted in Section 12.1.2 below. The Committee shall not be required to accelerate the exercisabilty of an Award or otherwise take any action pursuant to a divorce or similar proceeding in the event Participant's spouse is determined to have acquired a community property interest in all or any portion of an Award. Except as provided below, during the lifetime of the Participant, only he may exercise an Award (or any portion thereof) granted to him under the Plan. After the death of the Participant, any exercisable portion of an Award, prior to the time when such portion becomes unexercisable under the Plan or the applicable Award Agreement or other agreement, may be exercised by his personal representative or by any person empowered to do so under the deceased Participant's will or under the then applicable laws of descent and distribution.
12.1.2           Notwithstanding the foregoing, the Committee may provide in an Award Agreement, or amend an otherwise outstanding Award Agreement to provide, that a Participant may transfer an Award that is not an Incentive Stock Option or an SAR that is granted in relation to an Incentive Stock Option to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws, according to such terms as the Committee may determine; provided that the Participant receives no consideration for the transfer of such an Award and the transferred Award shall continue to be subject to the same terms and conditions as were applicable to the Award immediately before the transfer and shall be exercisable by the transferee according to the same terms as applied to the Participant.

12.2           Amendment, Suspension or Termination of this Plan.

12.2.1           Except as otherwise provided in this Section 12.2, this Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board; provided, however, no action of the Board may be taken that would otherwise require stockholder approval as a matter of applicable law, regulation or rule, without the consent of the stockholders.  In no event may any Option or SAR be amended, other than pursuant to Section 12.3, to decrease the exercise or grant price thereof, be cancelled in conjunction with the grant of any new Option or SAR with a lower exercise or grant price, or otherwise be subject to any action that would be treated, under generally accepted accounting principles, as a "repricing" of such Option or SAR, unless the stockholders of the Company provide prior approval.  No amendment, suspension or termination of this Plan shall impair any rights or obligations under any Award theretofore made to a Participant, unless such right has been reserved in the Plan or the Award Agreement, without the consent of the Participant holding such Award. No Award may be made during any period of suspension or after termination of this Plan. In no event may any Award be made under this Plan after December 31, 2019.
12.2.2           Notwithstanding the foregoing, the Board or the Committee may take any action necessary to comply with a change in applicable law, irrespective of the status of any Award as vested or unvested, exercisable or unexercisable, at the time of such change in applicable law.

 
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12.3           Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.

12.3.1           In the event that any dividend (other than an ordinary cash dividend) or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split up, spin-off, combination, repurchase or other similar transaction or event affects the Common Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of the following:
12.3.1.1                 the maximum number of shares of Common Stock available for Awards;
12.3.1.2                 the maximum number of shares of Common Stock subject to the Plan;
12.3.1.3                 the number and kind of Company stock with respect to which an Award may be made under the Plan;
12.3.1.4                 the number and kind of Company stock subject to an outstanding Award; and
12.3.1.5                 the exercise price or purchase price with respect to any Award.
12.3.2           In addition, in the event of any merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company or any unusual or nonrecurring transactions or events affecting the Company or the financial statements of the Company, or of changes in applicable laws, regulations, or accounting principles, the Committee in its discretion is hereby authorized to take any one or more of the following actions whenever the Committee determines, in its sole discretion, that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award or right under this Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:
12.3.2.1                 the Committee may provide, by the terms of the Award Agreement or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Participant's request, for (i) the purchase of any such Award for the payment of an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Participant's rights had such Award been currently exercisable, payable, fully vested or the restrictions lapsed, or (ii) the replacement of such Award with other rights or property selected by the Committee;
12.3.2.2                 the Committee may provide, by the terms of such Award Agreement or by action taken prior to the occurrence of such transaction or event, that the Award cannot be exercised after such event;
12.3.2.3                 the Committee may provide, by the terms of such Award or by action taken prior to the occurrence of such transaction or event, that for a specified period of time prior to such  transaction or event such Award shall be exercisable, notwithstanding anything to the contrary in Section 4.6 or the provisions of such Award;
12.3.2.4                 the Committee may provide, by the terms of such Award or by action taken prior to the occurrence of such transaction or event, that upon such event, such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar Awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;
12.3.2.5                 the Committee may make adjustments in the number, type and kind of shares of Common Stock subject to outstanding Options, Restricted Common Stock, Restricted Stock Units, Deferred Stock Units, SARs and Performance Units and in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards, and rights and awards which may be granted in the future; and
12.3.2.6                 the Committee may provide, by the terms of an Award of Restricted Common Stock or Restricted Stock Units or by action taken prior to the occurrence of such event, that for a specified period of time prior to such event, the restrictions imposed under an Award Agreement upon some or all shares of the Restricted Common Stock or the Restricted Stock Units may be terminated, and some or all shares of such Restricted Common Stock or some or all of such Restricted Stock Units may cease to be subject to forfeiture under Section 6.5 or repurchase under Section 6.6 after such event.
12.3.3           Subject to Section 12.7, the Committee may, in its sole discretion, at the time of grant, include such further provisions and limitations in any Award Agreement or certificate, as it may deem appropriate and in the best interests of the Company; provided, however, that no such provisions or limitations shall be contrary to the terms of the Participant's Employment Agreement or the terms of this Plan.
12.3.4           Notwithstanding the foregoing, no action pursuant to this Section 12.3 shall be taken that is specifically prohibited under applicable law, the rules and regulations of any governing governmental agency or national securities exchange, or the terms of the Participant's Employment Agreement, and no adjustment to an Option or SAR shall be made to the extent the same constitutes a "modification" within the meaning of Section 424(h)(3) of the Code, Regulation §1.424-1(a) thereunder or Section 409(A) of the Code or the regulations thereunder.

 
15

 
 
12.4             Continued Employment .  Nothing in this Plan or in any Award Agreement hereunder shall confer upon any Participant any right to continue his employment, consulting or similar relationship with the Company, whether as an employee or consultant or otherwise, or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge or terminate the relationship with any Participant at any time for any reason whatsoever, subject to the terms of any Employment Agreement entered into by the Participant and the Company.

12.5             Tax Withholding.   The Company shall be entitled to require payment in cash or deduction from other compensation payable to each Participant of any sums required by federal, state or local tax law to be withheld with respect to the issuance, vesting, exercise or lapse of any restriction of any Option, Restricted Common Stock, Restricted Stock Unit, Deferred Stock Unit, SAR or Performance Unit.  The Committee shall be authorized to establish procedures for election by Participants to satisfy such obligation for the payment of such taxes (i) by delivery of, or transfer of, shares of Common Stock to the Company or (ii) by directing the Company to retain shares of Common Stock otherwise deliverable under an Award; provided, however, that the total tax withholding where shares of Common Stock are being used to satisfy such obligation shall not exceed the minimum amount required to be withheld.  Shares of Common Stock withheld or delivered in accordance with this Section 12.5 shall be valued at Fair Market Value as of such date as may be specified in procedures established by the Committee.
 
12.6             Forfeiture Provisions.   Pursuant to its general authority to determine the terms and conditions applicable to Awards, the Committee shall have the right to provide, in the terms of such Award, or to require the Participant to agree by separate written instrument, that the Award shall terminate and any unexercised portion of such Award (whether or not vested) shall be forfeited if (i) a Termination of Employment occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, (ii) the Participant at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Committee or as specified in the Participant's Employment Agreement, or (iii) the Company terminates the Participant with or without cause.
 
12.7             Limitations Applicable to Section 16 Persons and Performance-Based Compensation .  Notwithstanding any other provision of this Plan, any Option, Restricted Common Stock, Restricted Stock Unit, Deferred Stock Unit, SARs, Divident Equivalents, Performance Units or Other Stock-Based Awards granted or awarded to any individual who is then subject to Section 16 of the Exchange Act shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 under the Exchange Act). To the extent permitted by applicable law, Options granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. Furthermore, notwithstanding any other provision of this Plan to the contrary, any Award that is intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall be subject to any additional limitations set forth in Section 162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or rulings issued thereunder that are requirements for qualification as performance-based compensation as described in Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the extent necessary to conform to such requirements.
 
12.8             Effect of Plan Upon Option and Compensation Plans.   The adoption of this Plan shall not affect any other compensation or incentive plans in effect for the Company. Nothing in this Plan shall be construed to limit the right of the Company (i) to establish any other forms of incentives or compensation for Employees, Non-Employee Directors and Consultants, or (ii) to grant or assume options or other rights otherwise than under this Plan in connection with any proper corporate purpose including but not by way of limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.

 
16

 
 
12.9             Compliance with Laws.   This Plan, the granting and vesting of Awards under this Plan and the issuance and delivery of shares of Common Stock and the payment of money under this Plan or under Awards awarded hereunder are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities law and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under this Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.  No Award under this Plan (or modification thereof) shall provide for the deferral of compensation that violates Section 409A of the Code.  If any provision of the Plan or an Award Agreement contravenes any regulations or Treasury guidance promulgated under Section 409A of the Code or could cause an Award to be subject to the interest and penalties under Section 409A of the Code, such provision of the Plan or any Award Agreement shall be modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A of the Code. Moreover, any discretionary authority that the Board or the Committee may have pursuant to the Plan shall not be applicable to an Award that is subject to Section 409A of the Code to the extent such discretionary authority will contravene Section 409A of the Code.

12.10             Titles.   Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Plan.

12.11             Governing Law.   This Plan and any agreements hereunder shall be administered, interpreted and enforced under the laws of the State of Texas, without regard to that state’s conflicts of laws rules.

12.12             Effective Date .  The Atrion Corporation 2006 Equity Incentive Plan first became effective on May 22, 2006.  This Amended and Restated Atrion Corporation 2006 Equity Incentive Plan shall be effective on the date it is approved by the stockholders of the Company.
 
 
17
Exhibit 10.2

AMENDED AND RESTATED
ATRION CORPORATION
2006 EQUITY INCENTIVE PLAN

FORM OF AWARD AGREEMENT FOR INCENTIVE STOCK OPTION AWARD

THIS AWARD AGREEMENT (the "Agreement") is made and entered into effective as of ________________, ____, by and between Atrion Corporation, a Delaware corporation (the "Company"), and ___________________ (the "Participant"), pursuant to the Amended and Restated Atrion Corporation 2006  Equity Incentive Plan, as it may be amended and restated from time to time (the "Plan").  Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.
 
W I T N E S S E T H :

WHEREAS , pursuant to the Plan and subject to the execution of this Agreement, the Committee has granted, and the Participant desires to receive, an Award.

NOW, THEREFORE , for and in consideration of the premises, the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

1.    AWARD OF OPTION .  On the date specified on Exhibit A attached hereto (the "Date of Grant") but subject to the execution of this Agreement, the Company granted to the Participant an Award in the form of an Incentive Stock Option (the "Option") to purchase from the Company the number of shares of Common Stock (the "Shares") set forth on said Exhibit A for the price per Share (the "Option Price") set forth on said Exhibit A.  This Option is designated as an Incentive Stock Option by the Committee.

2.    EFFECT OF PLAN .   The Option is in all respects subject to, and shall be governed and determined by, the provisions of the Plan (all of the terms of which are incorporated herein by reference) and to any rules which might be adopted by the Board or the Committee with respect to the Plan to the same extent and with the same effect as if set forth fully herein.  The Participant hereby acknowledges that all decisions and determinations of the Committee shall be final and binding on the Participant, his beneficiaries and any other person having or claiming an interest in the Option.

3.             VESTING AND EXERCISABILITY OF OPTION .  The Option may be exercised and Shares may be purchased by the Participant as the result of such exercise only during the term or terms set forth on Exhibit A attached hereto; provided, however, that in no event shall the total number of Shares purchased hereunder pursuant to the exercise of the Option exceed the number set forth on Exhibit A attached hereto, as the same may be adjusted in accordance with the Plan, and in no event shall the period for exercising the Option exceed ten (10) years from the date of the grant of the Option.
 
 
 

 
 
(a)            Limitations on Exercise of Option .  The Option may not be exercised after the earlier of (i) its expiration date, (ii) twelve (12) months from the date of the Participant's Termination of Employment by reason of his death, (iii) twelve (12) months from the date of the Participant's Termination of Employment by reason of his Permanent Disability, or (iv) the expiration of _______ [not more than three (3)] months from the date of the Participant's Termination of Employment for any reason other than such Participant's death or Permanent Disability, unless the Participant dies within said ________ month period and the Award Agreement or the Committee permits later exercise.  Leaves of absence for less than ninety (90) days shall not cause a Termination of Employment for purposes hereof.
 
(b)           No Vesting After Termination .  Notwithstanding any other provision hereof, in no event may the Option be exercised at any time after Termination of Employment with respect to any number of Shares in excess of the number of Shares as to which the Option was exercisable at the time of Termination of Employment.

4.            METHOD OF EXERCISE .   The Option shall be exercised by delivery to the Company at its principal office of written notice of the Participant's intent to exercise the Option with respect to the number of Shares then being purchased, accompanied by payment in full to the Company of the amount of the Option Price for the number of Shares then being purchased.  The Option Price may be paid as follows:
 
(a)           in the manner set forth in Sections [5.2.4.1-5.2.4.4] of the Plan; or
(b)           through any combination of the consideration provided for in this Section 4 or such other method approved by the Committee consistent with applicable law.
 
5.             SURRENDER OF AGREEMENT ON EXERCISE .  In case of any exercise of the Option, this Agreement shall be surrendered to the Company.  The Company shall thereupon cause to be issued and delivered to the Participant (or, in the event of a cashless exercise, to the Participant's broker-dealer), as soon as reasonably may be done in accordance with the terms of the Plan, a certificate or certificates, representing the Shares so purchased and fully paid for.  In the event of a partial exercise of the Option, the Company shall endorse on Exhibit B attached hereto the fact that the Option has been partially exercised on such date, setting forth the number of Shares as to which the Option has been exercised on such date and the number of Shares then remaining subject to the Option, and return this Agreement to the Participant.

6.             NO ASSIGNMENT .  The Option is personal to the Participant and may not in any manner or respect be assigned or transferred otherwise than by will or the laws of descent and distribution, and is exercisable during the Participant's lifetime only by the Participant.

7.             AUTHORITY OF COMMITTEE .  Notwithstanding any provision of the Plan or of this Award Agreement to the contrary, the Committee, in its sole and exclusive discretion, shall have the power at any time to (a) accelerate the vesting and exercisability of the Option including, without limitation, acceleration to such a date that would result in the Option becoming fully and immediately vested and exercisable or (b) waive any restrictions of the Option. Any interpretations and rules made by the Committee with respect to this Option shall be consistent with the provisions of Section 422 of the Code.
 
 
 

 
 
8.             TERMINATION .  This Agreement shall terminate on the earliest of:
 
(a)           the date on which the Option is exercised with respect to all of the Shares then subject to the Option;
(b)           the date on which the Option is forfeited; and
(c)           _________ (___) [not more than ten] years from the Date of Grant.

9.             GOVERNING LAW .  This Agreement is intended to comply with Section 409A of the Code.  This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, applied without giving effect to any conflict-of-law principles.  Any validity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

10 .           BINDING EFFECT .  This Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto and their respective executors, administrators, personal representatives, legal representatives, heirs, and successors in interest.

11 .           COUNTERPART EXECUTION .  This Agreement may be executed in any number of counterparts, each of which shall be considered an original, and such counterparts shall, together, constitute and be one and the same instrument.

12.            NO RIGHT TO CONTINUED EMPLOYMENT .  This Agreement shall not be deemed to confer upon Participant any right to continue Participant's employment by the Company, and the Company may terminate such employment at any time for any reason, subject to the provisions of any applicable employment agreement.

[Signatures appear on the following page]

 
 

 
 
IN WITNESS WHEREOF , the Company and the Participant have executed and delivered this Agreement as of the day and year first written above.

 
ATRION CORPORATION
     
     
 
By:
 
 
Name:
 
 
Title:
 
     
     
     
     
   
 
PARTICIPANT
 
 
 
 
 

 
 
EXHIBIT A
TO
AWARD AGREEMENT


Participant:
 
Grant Date:
 
Option Price:
$
     
 
Can Only Be
Must Be
Shares Subject to Option
Exercised After
Exercised Before

 
 
A-1

 

EXHIBIT B

TO
AWARD AGREEMENT


PARTIAL EXERCISE


Date of
 
No. of Shares
 
No. of Shares
 
Signature of
Exercise
 
Purchased
 
Remaining
 
Endorsing Officer    
             
             
             
             
             
             
             
             
             
             
             
             
 
 
 
 
B-1
Exhibit 10.3
 
AMENDED AND RESTATED
ATRION CORPORATION
2006 EQUITY INCENTIVE PLAN

FORM OF AWARD AGREEMENT FOR NON-QUALIFIED STOCK OPTION AWARD

THIS AWARD AGREEMENT (the "Agreement") is made and entered into effective as of ___________, 201_, by and between Atrion Corporation, a Delaware corporation (the "Company"), and ___________________ (the "Participant"), pursuant to the Amended and Restated Atrion Corporation 2006 Equity Incentive Plan, as amended and restated from time to time (the "Plan").  Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.
 
W I T N E S S E T H :

WHEREAS , pursuant to the Plan and subject to the execution of this Agreement, the Committee has granted, and the Participant desires to receive, an Award.

NOW, THEREFORE , for and in consideration of the premises, the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

1.    AWARD OF OPTION .   On the date specified on Exhibit A attached hereto (the "Date of Grant") but subject to the execution of this Agreement, the Company granted to the Participant an Award in the form of a Non-Qualified Stock Option (the "Option") to purchase from the Company the number of shares of Common Stock (the "Shares") set forth on said Exhibit A for the price per Share (the "Option Price") set forth on said Exhibit A .

2.    EFFECT OF PLAN .   The Option is in all respects subject to, and shall be governed and determined by, the provisions of the Plan (all of the terms of which are incorporated herein by reference) and to any rules which might be adopted by the Board or the Committee with respect to the Plan to the same extent and with the same effect as if set forth fully herein.  The Participant hereby acknowledges that all decisions and determinations of the Committee shall be final and binding on the Participant, his beneficiaries and any other person having or claiming an interest in the Option.

3.             VESTING AND EXERCISABILITY OF OPTION .   The Option may be exercised and Shares may be purchased by the Participant as the result of such exercise only during the term or terms set forth on Exhibit A attached hereto; provided, however, that in no event shall the total number of Shares purchased hereunder pursuant to the exercise of the Option exceed the number set forth on Exhibit A attached hereto, as the same may be adjusted in accordance with the Plan.
 
(a)             Limitations on Exercise of Option.   The Option may not be exercised after [the earliest of (i)] its expiration date[, (ii) _______ (__) months from the date of the Participant's Termination of Employment by reason of his death, (iii) ________ (__) months from the date of the Participant's Termination of Employment by reason of his Permanent Disability, or (iv) the expiration of ______ (__) months from the date of the Participant's   Termination of Employment for any reason other than such Participant's death or Permanent Disability, unless the Participant dies within said ________ (__) month period and the Award Agreement or the Committee permits later exercise.  Leaves of absence for less than ninety (90) days shall not cause a Termination of Employment for purposes hereof.]

 
 

 
 
(b)            No Vesting After Termination.   Notwithstanding any other provision hereof, in no event may the Option be exercised at any time after Termination of Employment with respect to any number of Shares in excess of the number of Shares as to which the Option was exercisable at the time of Termination of Employment.
 
4.             METHOD OF EXERCISE .  The Option shall be exercised by delivery to the Company at its principal office of written notice of the Participant's intent to exercise the Option with respect to the number of Shares then being purchased, accompanied by payment in full to the Company of the amount of the Option Price for the number of Shares then being purchased.  The Option Price may be paid as follows:
 
(a)           in the manner set forth in Sections [5.2.4.1-5.2.4.4] of the Plan; or
(b)          through any combination of the consideration provided for in this Section 4 or such other method approved by the Committee consistent with applicable law.

5.             SURRENDER OF AGREEMENT ON EXERCISE .  In case of any exercise of the Option, this Agreement shall be surrendered to the Company.  The Company shall thereupon cause to be issued and delivered to the Participant (or, in the event of a cashless exercise, to the Participant's broker-dealer), as soon as reasonably may be done in accordance with the terms of the Plan, a certificate or certificates, representing the Shares so purchased and fully paid for.  In the event of a partial exercise of the Option, the Company shall endorse on Exhibit B attached hereto the fact that the Option has been partially exercised on such date, setting forth the number of Shares as to which the Option has been exercised on such date and the number of Shares then remaining subject to the Option, and return this Agreement to the Participant.

6.    NO ASSIGNMENT .   The Option is personal to the Participant and may not in any manner or respect be assigned or transferred otherwise than by will or the laws of descent and distribution, and is exercisable during the Participant's lifetime only by the Participant;  provided, however, that the Participant may transfer the Option at any time or from time to time to any one or more of the Participant’s “family members” as that term is defined in the General Instructions to Form S-8 under the Securities Act of 1933.  Any transferee shall remain subject to all of the terms and conditions applicable to the Option prior to such transfer.

7.    AUTHORITY OF COMMITTEE .  Notwithstanding any provision of the Plan or of this Award Agreement to the contrary, the Committee, in its sole and exclusive discretion, shall have the power at any time to (a) accelerate the vesting and exercisability of the Option including, without limitation, acceleration to such a date that would result in the Option becoming fully and immediately vested and exercisable or (b) waive any restrictions of the Option.
 
 
 

 

8.             TERMINATION .  This Agreement shall terminate on the earliest of:
 
(a)           the date on which the Option is exercised with respect to all of the Shares then subject to the Option;
(b)           the date on which the Option is forfeited; and
(c)           ______ (__) years from the Date of Grant.

9.    GOVERNING LAW .  This Agreement is intended to comply with Section 409A of the Code.  This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, applied without giving effect to any conflict-of-law principles.  Any validity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

10.         BINDING EFFECT .  This Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto and their respective executors, administrators, personal representatives, legal representatives, heirs, and successors in interest.

11.         COUNTERPART EXECUTION .  This Agreement may be executed in any number of counterparts, each of which shall be considered an original, and such counterparts shall, together, constitute and be one and the same instrument.

12.         NO RIGHT TO CONTINUED EMPLOYMENT .  This Agreement shall not be deemed to confer upon Participant any right to continue Participant's employment by the Company, and the Company may terminate such employment at any time for any reason, subject to the provisions of any applicable employment agreement.

[Signatures appear on the following page.]

 
 

 
 
IN WITNESS WHEREOF , the Company and the Participant have executed and delivered this Agreement as of the day and year first written above.
 
 
ATRION CORPORATION
     
     
 
By:
 
 
Name:
 
 
Title:
 
     
     
     
     
   
 
PARTICIPANT
 
 
 
 
 

 
 
EXHIBIT A
TO
AWARD AGREEMENT


Participant:
 
Grant Date:
 
Option Price:
$
     
 
Can Only Be
Must Be
Shares Subject to Option
Exercised After
Exercised Before

 
 
 
A-1

 

EXHIBIT B

TO
AWARD AGREEMENT


PARTIAL EXERCISE


Date of
 
No. of Shares
 
No. of Shares
 
Signature of
Exercise
 
Purchased
 
Remaining
 
Endorsing Officer    
             
             
             
             
             
             
             
             
             
             
             
             
 
 
 
 
B-1
Exhibit 10.4
 
AMENDED AND RESTATED
ATRION CORPORATION
2006 EQUITY INCENTIVE PLAN

FORM OF AWARD AGREEMENT FOR COMMON STOCK AWARD

THIS AWARD AGREEMENT (the "Agreement') is made and entered into as of _________________, 201__ by and between Atrion Corporation, a Delaware corporation (the "Company"), and __________________ (the "Participant") pursuant to the Amended and Restated Atrion Corporation 2006 Equity Incentive Plan, as it may be further amended and restated from time to time (the "Plan").  Capitalized terms used but not defined herein shall have the same meanings set forth in the Plan.

WHEREAS , the Participant is a Non-Employee Director; and

WHEREAS , pursuant to the Plan and subject to the execution of this Agreement, the Committee has granted, and the Participant desires to receive, an Award.

NOW, THEREFORE , for an in consideration of the premises, the mutual promises and covenants therein contained, and other good and valuable consideration, the receipt, adequacy and sufficiency of which one hereby acknowledged, the parties hereto do hereby agree as follows:
 
1.    AWARD OF COMMON STOCK .  On the date specified in Exhibit A attached hereto (the "Date of Grant"), but subject to the execution of this Agreement, the Company granted to Participant an Award in the form of the number of shares of Common Stock (the "Shares") as set forth in Exhibit A from the authorized and unissued or treasury Common Stock at and for the purchase price set forth in Exhibit A.

2.    EFFECT OF PLAN .  The Award is in all respects subject to, and shall be governed and determined by, the provisions of the Plan (all of the terms of which are incorporated herein by reference) and to any rules which may be adopted by the Board or the Committee with respect to the Plan to the same extent and with the same effect as if set forth fully herein.  The Participant hereby acknowledges that all decisions and determinations of the Committee shall be final and binding on the Participant, his beneficiaries and any other person having or claiming an interest in the Award.

3.    RESTRICTIONS .  The Shares shall be fully-vested and without restriction as of the Date of Grant.

4.    DELIVERY OF SHARES OF COMMON STOCK .  Shares shall be delivered to the Participant in the manner set forth in Exhibit A.

5.    SECURITIES LAW RESTRICTIONS .  Acceptance of this Agreement shall be deemed to constitute the Participant's acknowledgment that the Participant's sale or other disposition of the Shares shall be subject to compliance with all federal and state laws, rules and regulations (including but not limited to state and federal securities laws and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable.
 
 
 

 
 
6.             MISCELLANEOUS .
 
(a)    The Participant's rights under this Agreement can be modified, suspended or canceled only in accordance with the terms of the Plan.  This Agreement may not be changed orally, but may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
 
(b)    The invalidity or unenforceability of any provision hereof shall in no way affect the validity of enforceability of any other provision of this Agreement.
 
(c)    This Agreement shall bind the parties, their respective heirs, executors, administrators, successors and assigns.  Nothing contained herein shall be construed as an authorization or right of any party to assign their respective rights or obligations hereunder and the Participant shall have no right to assign this Agreement, and any such attempted assignment shall be ineffective.  This Agreement shall be binding upon the Company and its successors or assigns.
 
(d)    This Agreement shall be subject to the applicable provisions, definitions, terms and conditions set forth in the Plan, all of which are incorporated by this reference in this Agreement and the terms of the Plan shall govern in the event of any inconsistency between the Plan and this Agreement.
 
(e)    This Agreement shall be interpreted and construed according to and governed by the laws of the State of Texas.
 
(f)            T his Agreement is intended to comply with Section 409A of the Code.
 
[Signatures appear on the following page.]

 
 

 
 
IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first above written.

 
ATRION CORPORATION
     
     
 
By:
 
 
Name:
 
 
Title:
 
     
     
     
     
   
 
PARTICIPANT


 
 
 

 
 
EXHIBIT A

TO

AWARD AGREEMENT DATED __________________, 201__ BETWEEN ATRION CORPORATION AND ___________________


1.           Date of Award:

2.           Number of Shares of Common Stock:

3.           Purchase Price per Share:

4.           Delivery Instructions (check the appropriate box and complete):

□ Electronic Delivery
Please deliver all Shares to:
Account Number:                                                                                     
Broker Name:                                                                                                
Broker Contact (Phone Number):                                                                                                
Broker Contact (E-mail):                                                                                     
□ Delivery of Certificate
Please deliver a certificate for all Shares to the following address:

___________________________________
___________________________________
___________________________________
___________________________________
 
Exhibit 10.5
 
AMENDED AND RESTATED
ATRION CORPORATION
2006 EQUITY INCENTIVE PLAN

FORM OF AWARD AGREEMENT FOR RESTRICTED STOCK AWARD

THIS AWARD AGREEMENT (the "Agreement') is made and entered into as of _________________, 201__ by and between Atrion Corporation, a Delaware corporation (the "Company"), and __________________ (the "Participant") pursuant to the Amended and Restated Atrion Corporation 2006 Equity Incentive Plan, as it may be further amended and restated from time to time (the "Plan").  Capitalized terms used but not defined herein shall have the same meanings set forth in the Plan.

W I T N E S S E T H :

WHEREAS , pursuant to the Plan and subject to the execution of this Agreement, the Committee has granted, and the Participant desires to receive, an Award.

NOW, THEREFORE, for and in consideration of the premises, the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

1.    AWARD OF RESTRICTED STOCK .  On the date specified on Exhibit A attached hereto (the "Date of Award") but subject to the execution of this Agreement, the Company awarded to the Participant an Award (the "Award") in the form of the number of shares of Restricted Common Stock (the "Shares") as is set forth on Exhibit A from the authorized and unissued or treasury Common Stock at and for the purchase price set forth on Exhibit A.

2.    EFFECT OF PLAN .  The Shares are in all respects subject to, and shall be governed and determined by, the provisions of the Plan (all of the terms of which are incorporated herein by reference) and to any rules which might be adopted by the Board or the Committee with respect to the Plan to the same extent and with the same effect as if set forth fully herein.  The Participant hereby acknowledges that all decisions and determinations of the Committee shall be final and binding on the Participant, his beneficiaries and any other person having or claiming an interest in the Shares.
 
3.    RESTRICTIONS .   The Shares as to which the restrictions shall not have lapsed and which are not vested shall be forfeited upon the Participant's Termination of Employment, unless the Participant's Employment Agreement provides otherwise.  The Shares may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until such restrictions lapse and the Shares vest.

4.    RIGHTS PRIOR TO VESTING .  During the period prior to lapse of the restrictions and the vesting, the Participant (a) may exercise full voting rights with respect to the Shares, (b) shall be entitled to receive cash dividends paid with respect to the Shares and (c) shall be credited with and entitled to receive stock dividends paid with respect to the Shares; provided, however, that any such stock dividends shall be subject to the same restrictions as the Shares.

 
 

 
 
5.    CERTIFICATES FOR SHARES OF RESTRICTED COMMON STOCK .  Certificates respecting the Shares shall be registered in the Participant's name or the Shares shall be issued to the Participant through the book-entry system, as determined by the Company.
 
6.             SECURITIES LAW RESTRICTIONS . Acceptance of this Agreement shall be deemed to constitute the Participant's acknowledgement that the Shares shall be subject to such restrictions and conditions on any resale and on any other disposition as the Company shall deem necessary under any applicable laws or regulations or in light of any stock exchange requirements.

7.            LEGEND .   In order to enforce the restrictions imposed on the Shares, all certificates representing such Shares shall bear the following legend:
 
THESE SHARES ARE HELD SUBJECT TO THE TERMS OF THE AMENDED AND RESTATED ATRION CORPORATION 2006 EQUITY INCENTIVE PLAN (THE "PLAN") AND THE AWARD AGREEMENT FOR RESTRICTED STOCK BETWEEN THE COMPANY AND THE PARTICIPANT AND SUCH SHARES MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS THEREOF.  A COPY OF THE PLAN IS AVAILABLE AT THE OFFICE OF THE COMPANY.

Such legend shall be removed as the restrictions lapse with respect to such Shares and the Shares vest.
 
8.    AUTHORITY OF COMMITTEE .  Notwithstanding any provision of the Plan or of this Award Agreement to the contrary, the Committee, in its sole and exclusive discretion, shall have the power at any time to (a) accelerate the lapse of the restrictions and the vesting of the Shares or (b) waive any restrictions of the Shares.

9.    TAX ELECTION .  In the event the Participant desires to make an election with respect to the Shares under Section 83(b) of the Code, the Participant will timely make such election in accordance with the rules and regulations of the Code and promptly notify the Company thereof.  All such elections shall be irrevocable, made in writing, signed by the Participant, and subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

10.         NO RIGHT TO CONTINUED EMPLOYMENT .  Neither the Plan nor this Agreement shall give the Participant the right to continued employment by the Company or by any Subsidiary or shall adversely affect the right of the Company or any Subsidiary to terminate the Participant's employment with or without cause at any time.
 
11.          MISCELLANEOUS .

(a)    The Participant's rights under this Agreement can be modified, suspended or canceled only in accordance with the terms of the Plan.  This Agreement may not be changed orally, but may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
 
 
 

 
 
(b)    The invalidity or unenforceability of any provision hereof shall in no way affect the validity of enforceability of any other provision of this Agreement.
 
(c)    This Agreement shall bind the parties, their respective heirs, executors, administrators, successors and assigns.  Nothing contained herein shall be construed as an authorization or right of any party to assign their respective rights or obligations hereunder and the Participant shall have no right to assign this Agreement, and any such attempted assignment shall be ineffective.  This Agreement shall be binding upon the Company and its successors or assigns.
 
(d)    This Agreement shall be subject to the applicable provisions, definitions, terms and conditions set forth in the Plan, all of which are incorporated by this reference in this Agreement and the terms of the Plan shall govern in the event of any inconsistency between the Plan and this Agreement.
 
(e)    This Agreement shall be interpreted and construed according to and governed by the laws of the State of Texas.
 
(f)            This Agreement is intended to comply with Section 409A of the Code.
 
[Signatures appear on the following page.]
 
 
 

 
 
IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first above written.
 
 
ATRION CORPORATION
     
     
 
By:
 
 
Name:
 
 
Title:
 
     
     
     
     
   
 
PARTICIPANT

 
 
 

 
 
EXHIBIT A

TO

AWARD AGREEMENT DATED __________________, 201__ BETWEEN ATRION CORPORATION AND ___________________


1.           Date of Award:

2.           Number of Shares of Restricted Common Stock:

3.           Purchase Price per Shares:

4.           Vesting Schedule
 
 
Number of Shares
Date Restrictions Lapse
and Shares Vest
Exhibit 10.6
 
AMENDED AND RESTATED
ATRION CORPORATION
2006 EQUITY INCENTIVE PLAN

FORM OF AWARD AGREEMENT FOR RESTRICTED STOCK UNITS AWARD

THIS AWARD AGREEMENT (the "Agreement") is made and entered into effective as of ________________, 201__, by and between ATRION CORPORATION, a Delaware corporation (together with its subsidiaries, the "Company"), and _____________________ (the "Participant"), pursuant to the Amended and Restated Atrion Corporation 2006 Equity Incentive Plan, as it may be amended and restated from time to time (the "Plan").  Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.
 
W I T N E S S E T H :
 
WHEREAS , the Participant is an employee of the Company; and

WHEREAS , pursuant to the Plan and subject to the execution of this Agreement, the Committee has granted, and the Participant desires to receive, an Award.

NOW, THEREFORE , for and in consideration of the premises, the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

1.    AWARD OF RESTRICTED STOCK UNITS .  On the date specified on Exhibit A attached hereto (the "Date of Grant") but subject to the execution of this Agreement, the Company granted to the Participant an Award in the form of Restricted Stock Units ("RSUs") entitling the Participant to receive from the Company, without payment, one share of Common Stock (a "Share") for each RSU set forth on said Exhibit A.

2.    EFFECT OF PLAN .  The RSUs are in all respects subject to, and shall be governed and determined by, the provisions of the Plan (all of the terms of which are incorporated herein by reference) and to any rules which might be adopted by the Board or the Committee with respect to the Plan to the same extent and with the same effect as if set forth fully herein.  The Participant hereby acknowledges that all decisions and determinations of the Committee shall be final and binding on the Participant, his beneficiaries and any other person having or claiming an interest in the RSUs.

3.    RESTRICTIONS .  The RSUs as to which the restrictions shall not have lapsed and which are not vested shall be forfeited upon the Participant's Termination of Employment.  The RSUs may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until such restrictions lapse and the RSUs vest.

 
 

 
 
4.    RIGHTS PRIOR TO VESTING .  During the period prior to lapse of the restrictions and the vesting, in the event that any dividend is paid by the Company with respect to the Common Stock (whether in the form of cash, Common Stock or other property), then the Committee shall, in the manner it deems equitable or appropriate, adjust the number of RSUs allocated to each Participant's Stock Award Account to reflect such dividend.

5.    SETTLEMENT OF RSUS .  Each RSU will be settled by delivery to the Participant, or in the event of the Participant's death to the Participant's legal representative, promptly following the date or dates set forth on Exhibit A hereto (any such date, the "Settlement Date") of one Share.

6.    SECURITIES LAW RESTRICTIONS . Acceptance of this Agreement shall be deemed to constitute the Participant's acknowledgement that the RSUs shall be subject to such restrictions and conditions on any resale and on any other disposition as the Company shall deem necessary under any applicable laws or regulations or in light of any stock exchange requirements.

7.    NO ASSIGNMENT .  The RSUs are personal to the Participant and may not in any manner or respect be assigned or transferred otherwise than by will or the laws of descent and distribution.

8.    NO RIGHT TO CONTINUED EMPLOYMENT .   Neither the Plan nor this Agreement shall give the Participant the right to continued employment by the Company or shall adversely affect the right of the Company to terminate the Participant's employment with or without cause at any time.

9.    GOVERNING LAW .   This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, applied without giving effect to any conflict-of-law principles.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

10.        BINDING EFFECT .  This Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto and their respective executors, administrators, personal representatives, legal representatives, heirs, and successors in interest.

11.        COUNTERPART EXECUTION .  This Agreement may be executed in any number of counterparts, each of which shall be considered an original, and such counterparts shall, together, constitute and be one and the same instrument.

12.       WITHHOLDING .  The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy federal, state and local taxes required by law to be withheld with respect to any taxable event arising as a result of the grant or settlement of the RSUs.  With respect to withholding required upon the settlement of the RSUs, the Participant may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date as of which the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction.  All such elections shall be irrevocable, made in writing, signed by the Participant, and subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

 
 

 
 
IN WITNESS WHEREOF , the Company and the Participant have executed and delivered this Agreement as of the day and year first written above.
 
 
ATRION CORPORATION
     
     
 
By:
 
 
Name:
 
 
Title:
 
     
     
     
     
   
 
PARTICIPANT

 
 
 
 

 
 
EXHIBIT A

TO

AWARD AGREEMENT, dated as of ____________, 201__, between ATRION CORPORATION   and ______________________.


Date of Grant:
Number of Restricted Stock Units:
Settlement Schedule:

Number of Shares
to be Delivered *
 
Settlement Date
 
 
* Subject to adjustment as provided in Paragraph 4 of the Award Agreement.
 
Exhibit 31.1

Chief Executive Officer Certification
 
I, David A. Battat, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Atrion Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and we have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant’s internal control over the financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 
 

 
 
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 4, 2011
 
 
/s/ David A. Battat
 
David A. Battat
 
President and Chief
  Executive Officer
Exhibit 31.2
 
Chief Financial Officer Certification
 
I, Jeffery Strickland, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Atrion Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and we have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
 
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant’s internal control over the financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
 
 

 
 
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 4, 2011
 
 
/s/ Jeffery Strickland
 
Jeffery Strickland
 
Vice President and
 
Chief Financial Officer
 
Exhibit 32.1
 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES – OXLEY ACT OF 2002


Pursuant to 18 U.S.C. § 1350, the undersigned officer of Atrion Corporation (the “Company”), hereby certifies, to such officer’s knowledge, that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Dated: August 4, 2011
/s/ David A. Battat
 
David A. Battat
 
President and Chief Executive Officer
Exhibit 32.2
 
 
CERTIFICATION PURSUANT TO 18 U.S.C . SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES – OXLEY ACT OF 2002


Pursuant to 18 U.S.C. § 1350, the undersigned officer of Atrion Corporation (the “Company”), hereby certifies, to such officer’s knowledge, that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Dated: August 4, 2011
/s/ Jeffery Strickland
 
Jeffery Strickland
 
Vice President and Chief Financial Officer