Exhibit 10.1
SECOND
AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
THIS
SECOND AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (the
“Agreement”) is entered into as of the 11th day of
March, 2019 (the “Effective Date”) by and between
ATRION CORPORATION, a Delaware corporation (the
“Company”) and DAVID A. BATTAT (the
“Executive”).
W I T N
E S S E T H:
WHEREAS,
the Executive is currently employed as the President and Chief
Executive Officer of the Company; and
WHEREAS,
the Company and the Executive are parties to an Amended and
Restated Change in Control Agreement dated as of the 3rd day of
September, 2014 (the “Current Agreement”) providing for
certain benefits to the Executive in the event the
Executive’s employment with the Company is terminated in
connection with a change in control of the Company;
and
WHEREAS,
the Company and the Executive desire to amend and restate the
Current Agreement as set forth in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing, the mutual provisions
contained herein, and for other good and valuable considerations,
the parties hereto agree as follows:
(a)
The term of this
Agreement shall commence on the Effective Date and shall terminate
on the second anniversary of the Effective Date, provided, however,
that commencing on the day after the Effective Date and continuing
on each day thereafter (each such day being hereinafter referred to
as a “Renewal Date”), the term of this Agreement shall
be automatically extended so as to terminate on the second
anniversary of such Renewal Date unless the Company shall give
written notice to the Executive that the term of this Agreement
shall not be so extended as of a specified Renewal Date, in which
event this Agreement shall automatically terminate on the second
anniversary of such specified Renewal Date.
(b)
Notwithstanding
subsection (a) hereof, this Agreement shall continue in effect (i)
until the date two years beyond the initial or any extended date of
termination in the event of a Change in Control (as defined in
Exhibit A hereto) prior to such date of termination, and (ii)
thereafter until the date that all obligations of the Company
hereunder have been paid in full.
2. Termination of
Employment.
(a)
As set forth in
detail in this Section 2, if the Executive’s employment by
the Company is terminated in contemplation of or within two years
following a Change in Control, the Executive shall be entitled to
the compensation provided in Section 3 of this Agreement unless
such termination is as a result of (i) the Executive’s death,
(ii) the Executive’s Disability (as defined below), (iii)
termination of the Executive for Just Cause (as defined below), or
(iv) termination of employment by the Executive other than for Good
Reason (as defined below).
(b)
The Executive shall
be considered to be subject to a "Disability" if, as a result of
physical or mental sickness or incapacity or accident, the
Executive is unable to perform the normal duties of his employment
with the Company for a period of ninety (90) days in any one
hundred twenty (120) day period. If there is any disagreement
between the Company and the Executive as to whether the Executive
was unable to perform the normal duties of his employment due to
Disability, the same shall be determined after examination of the
Executive by a physician selected by the Executive (or, if the
Executive is unable to make such selection, it shall be made by the
Executive's spouse or, if the Executive is not married or if his
spouse is unable or unwilling to make the selection, by any other
adult member of the Executive's immediate family) and approved by
the Company. The costs and expenses of such examination shall be
borne by the Company. The determination of such physician shall be
conclusive evidence as to whether the Executive was unable to
perform the normal duties of his employment due to Disability. If
the Executive does not permit such examination by such physician,
then, for purposes hereof, the determination as to whether the
Executive was unable to perform the normal duties of his employment
due to Disability shall be made by the Board of Directors of the
Company (the “Board”). Nothing herein shall have any
effect upon the Executive's eligibility to receive any disability
benefits from the Company pursuant to the terms and conditions of
any disability plan or other arrangement which the Company may have
in effect from time to time.
(c)
In the event the
Executive’s employment with the Company is terminated by the
Company, whether or not in contemplation of or within two years
following a Change in Control, (i) for Just Cause, (ii) by the
Executive for other than Good Reason (as defined below), or (iii)
due to the Executive’s death of Disability, then the
Executive shall not be entitled to the compensation provided in
Section 3 below or other compensation or benefits hereunder. The
term “Just Cause” shall mean (A) the Executive's
continuing willful failure to perform his material duties and
obligations as President and Chief Executive Officer of the Company
(except by reason of his death or incapacity due to his Disability)
after written notice thereof by the Company to the Executive, and
the Executive's failure or refusal to perform such duties and
obligations within thirty (30) days after the receipt of such
notice by the Executive or (B) the conviction of, or the entering
of a plea of nolo contendere by, the Executive with respect to a
felony (other than as a result of a traffic violation or as a
result of vicarious liability), provided that on or after a Change
in Control, Just Cause shall be limited to only clause (B) above.
For purposes of this Section 2(c), no act, or failure to act, on
Executive's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interests of the
Company. The Company must assert a Just Cause termination event no
later than ninety (90) days after discovery of such
event.
(d)
In the event the
Executive’s employment with the Company is terminated in
contemplation of or within two years following a Change in Control
(i) by the Company without Just Cause or (ii) by the Executive for
Good Reason, the Executive shall be entitled to the compensation
and other benefits provided in Section 3 below. The term
“Good Reason” shall mean any one or more of the
following: (A) without the Executive's express written consent, any
diminution in the Executive's titles, authorities, responsibilities
or the assignment of the Executive to any duties inconsistent with
his position, duties, responsibilities and status with the Company
as its President and Chief Executive Officer or the removal by the
Board, or the failure or refusal of the Board to re-elect, the
Executive as the President and Chief Executive Officer of the
Company at any time during the term of this Agreement; (B) the
Company's breach of any provision of this Agreement or any other
breach by the Company of any provision of any agreement between the
Company and the Executive and failure, within the ten (10) day
period following its receipt of written notice from the Executive
describing such breach in reasonable detail, to promptly commence
in good faith to cure such breach (if curable); provided that such
cure must be effected no later than thirty (30) days following such
notice and provided further that such cure right shall not be
available on more than one occasion in any twelve (12) month
period; (C) failure of the Company to obtain the assumption in
writing (a copy of which is delivered to the Executive) of the
Company's obligations hereunder to the Executive by any successor
to the Company prior to or at the time of a merger, acquisition,
consolidation, disposition of substantially all of the assets of
the Company or similar transaction. For purposes of clause (A)
above, a "diminution in the Executive's titles, authorities or
responsibilities" shall be deemed to have occurred if the Company
is no longer required to file reports pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as
amended.
The
Executive must assert a "Good Reason" termination event no later
than ninety (90) days after the Executive discovers such
event.
(e)
Any termination of
the Executive’s employment by the Company as set forth in
Section 2(c)(i) or 2(d)(i) or by the Executive as set forth in
Section 2(c)(ii) or 2(d)(ii) shall be communicated to the other
party by a Notice of Termination. For purposes of this Agreement, a
“Notice of Termination” shall mean a written notice
which shall state the specific termination provision in this
Agreement pursuant to which such termination allegedly falls and
which sets forth in reasonable detail the facts and circumstances
which form the basis for such termination.
(a) In
the event the Executive’s employment is terminated pursuant
to Section 2(d), the Executive shall be entitled to receive the
following payments from the Company, such payments to be made as
soon as practicable following the termination date but in any event
within ten (10) days after the date the Executive's employment
terminates:
the
Executive’s base salary and annual bonus for the calendar
year in which the date of termination falls, in each case prorated
for the number of days of the calendar year that elapsed prior to
the date of termination, accrued vacation pay and unreimbursed
business expenses,; and
two
times the sum of (A) the Executive’s base salary for the
twelve (12) months immediately preceding the month in which the
Executive’s employment is terminated and (B) the sum of the
(i) average of the annual bonuses paid, or that would have been
paid had the Executive’s employment with the Company not been
terminated, to the Executive under the Atrion Corporation
Short-Term Incentive Compensation Plan for the three calendar years
prior to the calendar year in which such termination occurs and
(ii) average of the annual bonuses received by the Executive under
any other bonus or incentive plan of the Company for the three
calendar years prior to the calendar year in which such termination
occurs.
(b) In
addition to the payments provided for in Section 3(a), in the event
the Executive’s employment is terminated as set forth in
Section 2(d), (i) all stock options and/or equity granted to the
Executive shall fully vest and become exercisable on the
termination date; (ii) the Company shall pay one-hundred percent
(100%) of the premiums for twelve (12) months of continuation
coverage for health benefits under the Consolidated Omnibus Budget
Reconciliation Act of 1985 for the Executive and his eligible
dependents; (iii) any amounts or benefits due to the Executive
pursuant to the Company’s Nonqualified Deferred Compensation
Plan (the “NQDC Plan”) shall be paid to the Executive
in accordance with the terms of the NQDC Plan; and (iv) the Company
shall direct that payment be made to the Executive of amounts due
to him pursuant to, and in accordance with the terms of, the
Company’s Section 401(k) Savings Plan.
4. Withholding. The Company shall
be entitled to withhold from amounts to be paid to the Executive
hereunder any federal, state, or local withholding or other taxes
or charges which it is from time to time required to withhold;
provided, that the amount so withheld shall not exceed the minimum
amount required to be withheld by law in light of the
circumstances. The Company shall be entitled to rely on an opinion
of tax counsel if any question as to the amount or requirement of
any such withholding shall arise.
5. Notices. All notices provided
for by this Agreement shall be in writing and shall be (a)
personally delivered to the party thereunto entitled or (b)
deposited in the United States mail, postage prepaid, addressed to
the party to be notified at the address listed below (or at such
other address as may have been designated by written notice),
certified or registered mail, return receipt requested. The notice
shall be deemed to be received (a) if by personal delivery, on the
date of its actual receipt by the party entitled thereto or (b) if
by mail, two (2) days following the date of deposit in the United
States mail.
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To
the Company:
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Atrion
Corporation
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One Allentown
Parkway
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Allen, Texas
75002
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Attention: Chief
Financial Officer
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To
Executive:
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David A.
Battat
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To
the most recent address
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on file with the
Company.
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6. Parties Bound. This Agreement
and the rights and obligations hereunder shall be binding upon and
inure to the benefit of the Company, Executive, and their
respective heirs, personal representatives, successors and assigns;
provided, however, that Executive may not assign any rights or
obligations hereunder without the express written consent of
Company. This Agreement shall also bind and inure to the benefit of
any successor of the Company by merger or consolidation, or any
assignee of all or substantially all of the Company's
properties.
7. Invalid Provisions. If any
provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part
hereof; and the remaining provisions hereof shall remain in full
force and effect and shall not be affected by the illegal, invalid,
or unenforceable provision or by its severance
herefrom.
8. No Mitigation; No
Set-Off.
(a) In the event of any
termination of employment hereunder, the Executive shall be under
no obligation to seek other employment and there shall be no offset
against any amounts due the Executive under this Agreement on
account of any remuneration attributable to any subsequent
employment that the Executive may obtain.
(b) Any amounts or
benefits payable to the Executive under this Agreement are in
addition to, and are not in lieu of, amounts payable to the
Executive under any other salary continuation or cash severance
arrangement of the Company or any other type of agreement entered
into between the parties, and to the extent paid or provided under
any other such arrangement or agreement shall not be offset from
the amounts or benefits due hereunder, except to the extent
expressly provided in such other arrangement or
agreement.
9. Attorneys' Fees And Costs. In
the event that it becomes necessary for the Executive to seek legal
counsel with regard to a dispute, claim or issue under this
Agreement or the Executive deems it necessary to initiate
arbitration in order to enforce his rights hereunder, then the
Company shall bear and, upon notification to the Company by the
Executive, immediately advance to the Executive all expenses of
such dispute, claim, issue or arbitration, including the reasonable
fees and expenses of the counsel of the Executive incurred in
connection with such dispute, claim, issue or arbitration, unless
an arbitrator determines that the Executive's position was
frivolous or otherwise taken in bad faith, in which case an
arbitrator may determine that the Executive shall bear his own
legal fees. Notwithstanding any existing or prior attorney-client
relationship between the Company and the counsel selected by the
Executive, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel,
and in that connection the Company and the Executive agree that a
confidential relationship shall exist between the Executive and
such counsel.
10. Arbitration. All disputes and
controversies arising under or in connection with this Agreement,
shall be settled by arbitration conducted before one (1) arbitrator
sitting in New York, New York, or such other location agreed to by
the parties hereto, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration
Association then in effect. The determination of the arbitrator
shall be final and binding on the parties. Judgment may be entered
on the award of the arbitrator in any court having proper
jurisdiction. All expenses of such arbitration, including the fees
and expenses of the counsel for the Executive, shall be borne by
the Company unless the arbitrator determines that the Executive's
position was frivolous or otherwise taken in bad faith, in which
case the arbitrator may determine that the Executive shall bear his
own legal fees.
11. Section Headings. The headings
contained in this Agreement are for reference purposes only and do
not affect in any way the meaning or interpretation of this
Agreement.
12. Multiple Counterparts. This
Agreement may be executed in counterparts, each of which for all
purposes is to be deemed an original, and both of which constitute,
collectively, one agreement; but in making proof of this Agreement,
it shall not be necessary to produce or account for more than one
such counterpart.
13. Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of
the State of Texas, without regard to its conflict-of-law
rules.
14. Section 409A. The intent of the
parties is that this Agreement will be in full compliance with
Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), and in the event that any provision of this
Agreement, or any payment of compensation or benefits paid pursuant
to this Agreement, is determined to be inconsistent with the
requirements of Section 409A of the Code, the Company shall reform
this Agreement to the extent necessary to comply therewith and to
avoid the imposition of any penalties or taxes pursuant to Section
409A of the Code, provided that any such reformation shall to the
maximum extent possible retain the originally intended economic and
tax benefits to the Executive and the original purpose of this
Agreement without violating Section 409A of the Code or creating
any unintended or adverse consequences to the Executive.
Notwithstanding any other provision of this Agreement to the
contrary, if the Executive is a “specified employee”
within the meaning of Section 409A of the Code and the regulations
thereunder at the relevant time, then, solely to the extent
required to comply with applicable provisions Section 409A of the
Code with respect to any amounts or benefits not exempt under
Section 409A of the Code, payments provided for herein on account
of the termination of the Executive’s employment shall not
commence until the date that is first day of the seventh month
following the Executive’s “separation from
service” as determined in accordance with Section 409A of the
Code.
15. Entire Agreement. This
Agreement contains the entire agreement of the parties hereto, and
supersedes all prior agreements , including the Current Agreement,
and understandings, oral or written, if any, between the parties
hereto, with respect to the subject matter hereof. No modification
or amendment of any of the terms, conditions, or provisions herein
may be made otherwise than by written agreement signed by the
parties hereto.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above
written.
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ATRION
CORPORATION
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By:
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/s/ Emile A
Battat
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Name: Emile A
Battat
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Title:
Chairman
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/s/
David
A. Battat
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DAVID A.
BATTAT
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Exhibit
A
(a) For
purposes of the Agreement, the term “Change in Control”
shall mean the occurrence of any one of the following
events:
(i) any
person (as the term “person” is used in Section 13(d)
(3) or Section 14(d) (2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (other than the Company,
any of its subsidiaries, or any trustee or other fiduciary holding
securities of the Company under an employee benefit plan of the
Company or any of its subsidiaries) becomes the beneficial owner
(as the term “beneficial owner” is defined under Rule
13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of securities of the Company representing 25% or more
of the combined voting power of the then-outstanding voting
securities of the Company
(ii) the
Company is merged, consolidated or reorganized into or with another
corporation or other person and as a result of such merger,
consolidation or reorganization less than 50% of the combined
voting power of the then-outstanding securities of such corporation
or person immediately after such transaction are held in the
aggregate by the holders of voting securities of the Company
immediately prior to such transaction;
(iii) the
stockholders of the Company approve a plan of complete liquidation
of the Company or the Company sells all or substantially all of its
assets to any other corporation or other person and as a result of
such sale less than 50% of the combined voting power of the
then-outstanding voting securities of such corporation or person
immediately after such transaction are held in the aggregate by the
holders of voting securities of the Company immediately prior to
such sale; or
(iv) during
any period of two consecutive years, individuals who, at the
beginning of any such period, constitute the directors of the
Company cease for any reason to constitute at least a majority
thereof unless the election or the nomination for election by the
Company's stockholders of each director of the Company first
elected during such period was approved by a vote of at least
two-thirds of the directors of the Company then still in office who
were directors of the Company at the beginning of any such
period.
Exhibit 10.2
SECOND
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
“Agreement”) is entered into as of the 11th day of
March, 2019 by and between Atrion Corporation, a Delaware
corporation (the “Company”), and Emile A Battat (the
“Executive”).
W I T N
E S S E T H:
WHEREAS, the
Executive and the Company are currently parties to an employment
agreement dated as of the 7th day of August, 2006, as amended (the
“Current Employment Agreement”), pursuant to which the
Executive is employed by the Company as the Chairman of the Board
of Directors of the Company (the “Board”);
and
WHEREAS, the
Company and the Executive desire to amend and restate the Current
Employment Agreement as set forth in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing, the mutual provisions
contained herein, and for other good and valuable consideration,
the parties hereto agree as follows:
1. EMPLOYMENT.
(a) Continuation
of Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby accepts continued employment by
the Company until expiration of the Employment Term (as defined
below). The Executive is and will continue to be a senior executive
officer of the Company and, subject to his election as a director
by the stockholders and his election by the Board as its Chairman
of the Board ("Chairman"), the Executive shall serve as Chairman on
the terms and conditions hereinafter set forth. The Executive shall
perform such duties, and have such powers, authority, functions and
responsibilities (commensurate with his position and title) as may
be reasonably assigned to him from time to time by the Board which
are not (except with the Executive's prior written consent)
inconsistent with, and which do not interfere with or detract from,
those vested in or being performed by the Executive for the
Company.
(b) Duties.
During the remainder of the Employment Term, the Executive shall be
a full time employee of the Company; provided, however that the
Executive shall be allowed, to the extent that such activities do
not materially interfere with the performance of his duties and
responsibilities hereunder, to manage his personal financial
affairs and to serve on corporate, civic, not-for-profit,
charitable and industry boards and advisory committees. In addition
to such duties as may be assigned to him by the Board, consistent
with the provisions of Section 1(a) above, the Executive shall
provide guidance to the Company's Chief Executive Officer, consult
and advise on, and assist with the evaluation, planning and
implementation of, corporate strategy and operational matters as
requested by the Chief Executive Officer, provide leadership to the
Board and preside over meetings of the Company's stockholders and
Board.
2. TERM.
The current term of the Executive's employment began on January 1,
2017 and shall continue until December 31, 2021(the "Current
Term"). The term of the Executive's employment under this Agreement
shall be automatically renewed for additional one (1) year terms
(each referred to as an “Additional Term”) at the end
of the Current Term and at the end of each Additional Term, as the
case may be, unless either party delivers written notice of
termination to the other at least six (6) months prior to the end
of the Current Term or Additional Term, as the case may be. The
Current Term and the Additional Terms together constitute the
“Employment Term.”
3. COMPENSATION.
The Company shall pay the Executive the following, subject to
withholding and other applicable employment taxes:
(a) Base
Salary. The Company shall pay the Executive a base salary (the
"Base Salary") of Six Hundred Thousand and No/100 Dollars
($600,000.00) for each calendar year in the Current
Term.
(b) Bonuses.
In addition to the Base Salary, the Company shall pay the Executive
a cash bonus (the “Annual Bonus”) for each calendar
year in the Employment Term equal to the amount that is 8% of the
Increase in Operating Income for such calendar year. For purposes
of this Agreement, “Increase in Operating Income” shall
be equal to the excess, if any, of the Company’s operating
income for the calendar year of determination over the
Company’s operating income for the previous calendar year.
The Compensation Committee of the Board shall have discretion to
adjust the Increase in Operating Income calculated pursuant to the
previous sentence to disregard one-time, non-recurring
extraordinary adjustments and shall make such equitable adjustments
as are required to give effect to acquisitions, divestitures, or
similar corporate transactions by or involving the
Company.
The
Base Salary shall be payable in intervals consistent with the
Company's normal payroll schedules (but in no event less frequently
than monthly). The Base Salary, as in effect from time to time, may
be increased but not reduced without the written consent of the
Executive. The Annual Bonus for each calendar year in the
Employment Term shall be payable as soon as practicable following
the date on which the Annual Bonus can be determined, but in no
event later than March 15 of the year following such calendar
year.
In
addition to the Base Salary and the Annual Bonus, the Company shall
pay the Executive such other incentive compensation as the Company
may from time to time determine.
(c) Benefits
and Expenses. The Executive shall have the right to participate in
the employee benefit plans, equity and incentive plans, insurance
contracts, policies, arrangements or agreements maintained by the
Company for the benefit of its employees and relating to
retirement, health, disability and other employee benefits, subject
to the Executive's qualification for participation in such benefit
plans pursuant to the terms and conditions under which such benefit
plans are offered, at a level commensurate with the Executive's
position. The Executive's rights and entitlements with respect to
any such benefits shall be subject to the provisions of the
relevant agreements, contracts, policies, arrangements or plans
providing such benefits. Nothing contained herein shall be deemed
to impose any obligation on the Company to adopt or maintain any
such plans, policies, arrangements, contracts or agreements. In
accordance with its policies and procedures, the Company shall pay
or reimburse the Executive for all reasonable or necessary travel
and other out-of-pocket expenses incurred by the Executive in
performing his obligations under this Agreement. The Executive
shall comply with all such policies and procedures applicable to
the Company's senior executive employees relating to the nature and
extent of reimbursable expenses, the manner of accounting therefor
and the manner or reimbursement of same. The Company shall also
furnish the Executive with such office and clerical assistance as
shall be suitable to the character of the Executive's position with
the Company and adequate for the performance of his duties
hereunder.
(d) Vacation
and Holidays. The Executive shall be entitled to such vacation and
holidays with pay during each fiscal year of the Company as the
Company makes available to its other salaried employees, such
vacation to be taken at such time or times as shall be approved by
the Company, which approval shall not be unreasonably withheld.
Unless otherwise agreed between the parties, unused days of
vacation and unused holidays may not be carried over from one
fiscal year of the Company to another.
4. TERMINATION.
(a) Termination
by the Company. The Company may terminate the employment of the
Executive prior to the expiration of the Employment Term (i) for
“just cause” (as defined below) by delivering written
notice of termination to the Executive or (ii) without “just
cause” upon thirty (30) days written notice of termination to
the Executive.
(b) Termination
by Executive. The Executive may terminate his employment under this
Agreement prior to the expiration of the Employment Term (i) for
“good reason” (as defined below) by giving the Company
ninety (90) days written notice of his intention to terminate such
employment or (ii) without “good reason” by giving the
Company ninety (90) days written notice of his intention to
terminate such employment.
(c) Termination
Upon Retirement, Death, or Disability. The Executive's employment
shall terminate immediately upon his Retirement (as defined below)
or his death. In the event that the Executive becomes subject to a
Disability (as defined below), the Executive's employment may be
terminated upon thirty (30) days written notice by either party to
the other.
(d) Definitions.
For purposes of this Agreement, the following terms shall have the
respective meanings indicated below:
(i) Just
Cause. The term “just cause” shall mean (A) the
Executive's continuing willful failure to perform his material
duties and obligations under this Agreement (except by reason of
his death or incapacity due to his Disability) after written notice
thereof by the Company to the Executive, and the Executive's
failure or refusal to perform such duties and obligations within
thirty (30) days after the receipt of such notice by the Executive
or (B) the conviction of, or the entering of a plea of nolo
contendere by, the Executive with respect to a felony (other than
as a result of a traffic violation or as a result of vicarious
liability), provided that on or after a Change in Control (as
defined in Exhibit A hereto), “just cause” shall be
limited to only subsection (B) above. For purposes of this Section
4(d)(i), no act, or failure to act, on the Executive's part shall
be considered “willful” unless done, or omitted to be
done, by him not in good faith and without reasonable belief that
his action or omission was in the best interests of the Company.
The Company must assert a “just cause” termination
event no later than ninety (90) days after discovery of such
event.
The
date of termination for a termination for “just cause”
shall be the date indicated in the Notice of Termination (as
defined herein). A “Notice of Termination” for
“just cause” shall mean a notice that shall indicate
the specific termination provision in Section 4(d)(i) relied upon
and shall set forth in reasonable detail the facts and
circumstances which provide for a basis for termination for
“just cause.” Further, a Notice for Termination for
“just cause” shall be required to include a copy of a
resolution duly adopted by the Board, with at least two-thirds
(2/3) of the non-management members of the Board voting in favor
thereof, at a meeting of the Board which was called for the purpose
of considering such termination and which the Executive and his
representative had the right to attend and address the Board,
finding that, in the good faith of the Board, the Executive engaged
in conduct set forth in the definition of “just cause”
herein and specifying the particulars thereof in reasonable detail.
Any purported termination for “just cause” which is
held by an arbitrator not to have been based on the grounds set
forth in this Agreement or not to have followed the procedures set
forth in this Agreement shall be deemed a termination by the
Company without “just cause.”
(ii) Good
Reason. The term “good reason” shall mean any one or
more of the following:
(A) Without
the Executive's express written consent, any diminution in the
Executive's titles, authorities, responsibilities or the assignment
of the Executive to any duties inconsistent with his position,
duties, responsibilities and status with the Company as its
Chairman, or the removal by the Board, or the failure or refusal of
the Board to re-elect, the Executive as the Chairman of the Company
at any time during the term of this Agreement. For purposes hereof,
a “diminution in the Executive's titles, authorities or
responsibilities” shall be deemed to have occurred if the
Company is no longer required to file reports pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended.
(B) The
Company's breach of any provision of this Agreement or any other
agreement between the Company and the Executive and failure, within
the ten (10) day period following its receipt of written notice
from the Executive describing such breach in reasonable detail, to
promptly commence in good faith to cure such breach (if curable);
provided that such cure must be effected no later than thirty (30)
days following such notice and provided further that such cure
right shall not be available on more than one occasion in any
twelve (12) month period.
(C) Adoption
by a majority of the Board of any resolution or series of related
resolutions that, individually or collectively, has or could
reasonably be expected to have a material effect on the strategic
direction, operations, financial condition or results of operations
of the Company and that is voted against by the Executive in a good
faith exercise of his fiduciary duty or the failure or refusal of a
majority of the Board to adopt a proposed resolution or series of
related resolutions that, individually or collectively, has or
could reasonably have been expected to have a material effect on
the strategic direction, operations, financial condition or results
of operations of the Company and that the Executive proposed, by a
motion or series of motions (whether or not seconded), be adopted
by the Board in a good faith exercise of his fiduciary
duty.
(D) Failure
of the Company to obtain the assumption in writing (a copy of which
is delivered to the Executive) of the Company's obligations
hereunder to the Executive by any successor to the Company prior to
or at the time of a merger, acquisition, consolidation, disposition
of substantially all of the assets of the Company or similar
transaction.
The
Executive must assert a “good reason” termination event
no later than ninety (90) days after the Executive discovers such
event.
(iii) Disability.
The Executive shall be considered to be subject to a
“Disability” if, as a result of physical or mental
sickness or incapacity or accident, the Executive is unable to
perform the normal duties of his employment with the Company for a
period of ninety (90) days in any one hundred twenty (120) day
period. If there is any disagreement between the Company and the
Executive as to whether the Executive was unable to perform the
normal duties of his employment due to Disability, the same shall
be determined after examination of the Executive by a physician
selected by the Executive (or, if the Executive is unable to make
such selection, it shall be made by the Executive's spouse or, if
the Executive is not married or if his spouse is unable or
unwilling to make the selection, by any other adult member of the
Executive's immediate family) and approved by the Company. The
costs and expenses of such examination shall be borne by the
Company. The determination of such physician shall be conclusive
evidence as to whether the Executive was unable to perform the
normal duties of his employment due to Disability. If the Executive
does not permit such examination by such physician, then, for
purposes hereof, the determination as to whether the Executive was
unable to perform the normal duties of his employment due to
Disability shall be made by the Board. Nothing herein shall have
any effect upon the Executive's eligibility to receive any
disability benefits from the Company pursuant to the terms and
conditions of any disability plan or other arrangement which the
Company may have in effect from time to time.
(iv)
Retirement. The term “Retirement” shall mean voluntary
termination of employment with the Company and its Subsidiaries
after attaining the age of 65.
(e) Termination
Payment. In the event of the termination of the Executive’s
employment as hereinabove set forth, the Executive shall be
entitled to receive the following payments from the Company, such
payments to be made within ten (10) days following the date on
which the Executive’s employment terminates, subject to the
provisions of Section 18 of this Agreement and the Company’s
Nonqualified Deferred Compensation Plan (the “NQDC
Plan”):
(i) Termination
for Just Cause. In the event the Company terminates the Executive's
employment pursuant to Section 4(a)(i) of this Agreement, the
Company shall have no further obligation under Sections 3 and 4 of
this Agreement except to pay the Executive any compensation earned
but not yet paid, including without limitation, the Base Salary and
Annual Bonus for the calendar year in which the date of termination
falls, in each case prorated for the number of days of the calendar
year that elapsed prior to the date of termination, any accrued
vacation pay payable pursuant to the Company's policies, any
unreimbursed business expenses, and any amounts or benefits due to
him pursuant to the NQDC Plan (collectively the “Accrued
Amounts”).
(ii) Termination
Without Just Cause. In the event the Company terminates the
Executive's employment pursuant to Section 4(a)(ii) of this
Agreement, the Executive's employment under this Agreement shall
terminate at the expiration of said thirty (30) day period, and the
Company shall have no further obligation under Sections 3 and 4 of
this Agreement except to pay to the Executive a cash lump sum
amount (except as otherwise provided in the NQDC Plan) equal to the
sum of:
(A) the
Accrued Amounts; and
(B) the
Executive's Base Salary and the average of the annual bonuses
received by the Executive for the three years prior to the year in
which such termination occurs (collectively, the “Severance
Payment”); which sum shall be paid by the Company as soon as
practicable after the termination date, but in no event later than
ten (10) days after the termination of the Executive's employment;
provided, however, that in the event of any termination without
just cause that occurs in contemplation of or within two years
following a Change in Control, the Company shall instead pay to the
Executive a cash lump sum amount equal to the sum of the Accrued
Amounts and two times the Severance Payment. Notwithstanding the
foregoing, in the event the Company terminates the Executive's
employment pursuant to Section 4(a)(ii), the Company may, at its
option, require the Executive to cease providing services hereunder
and serving as an employee of the Company at any time during said
thirty (30) day period. In addition, all stock options and/or
equity granted to the Executive shall fully vest and become
exercisable upon the termination date. The Company shall continue
to provide the Executive (and his spouse and dependents) with group
health plan benefits (or substantially similar substitute
arrangements), at its sole expense, for one year (the “One
Year Medical Benefits”).
(iii) Termination
for Good Reason. In the event the Executive terminates the
Executive's employment pursuant to Section 4(b)(i) of this
Agreement, the Company shall have no further obligation under
Sections 3 and 4 of this Agreement except to pay to the Executive a
cash lump sum equal to the Accrued Amounts and the Severance
Payment, which shall be paid by the Company as soon as practicable
after the termination date, but in no event later than ten (10)
days after the termination of the Executive's employment; provided,
however, that in the event of any termination for good reason that
occurs in contemplation of or within two years following a Change
in Control, the Company shall instead pay to the Executive a cash
lump sum amount equal to the sum of the Accrued Amounts and two
times the Severance Payment. In addition, all stock options and/or
equity granted to the Executive shall fully vest and become
exercisable upon the termination date. The Company shall also
provide the Executive (and his spouse and dependents) with the One
Year Medical Benefits.
(iv) Termination
Without Good Reason. In the event the Executive terminates the
Executive's employment pursuant to Section 4(b)(ii) of this
Agreement, the Executive's employment under this Agreement shall
terminate at the expiration of said thirty (30) day period, and the
Company shall have no further obligation under Sections 3 and 4 of
this Agreement except to pay the Executive a cash lump sum equal to
the Accrued Amounts. Notwithstanding the foregoing, in the event
the Executive terminates his employment pursuant to Section
4(b)(ii), the Company may, at its option, require the Executive to
cease providing services hereunder and serving as an employee of
the Company at any time during said thirty (30) day period;
provided that the Executive shall be entitled to such payments as
would have otherwise been due to him had he continued in the
employment of the Company for such thirty (30) day period,
including, without limitation, payments of the Accrued Amounts and
amounts to be paid under any other plan, agreement or policy which
survives the termination of this Agreement.
(v) Termination
upon Retirement, Death, or Disability. In the event the Executive's
employment is terminated pursuant to Section 4(c) hereof, the
Company shall have no further obligation under Sections 3 and 4 of
this Agreement except to pay to the Executive (or his personal
representative or guardian) a cash lump sum amount equal to the
Accrued Amounts and the Severance Payment In addition, all stock
options and/or equity granted to the Executive shall fully vest and
become exercisable upon the termination date. The Company shall
also provide the Executive (and/or his spouse and dependents as
applicable) with the One Year Medical Benefits.
(f)
Section 401(k) Savings Plan. Notwithstanding any other provision of
this Agreement to the contrary, in the event of the termination of
the Executive’s employment for any reason or no reason, the
Company shall direct that payment be made to the Executive of
amounts due him pursuant to the Company’s Section 401(k)
Savings Plan.
(g)
COBRA. In the event that the Company’s group health plan does
not permit the Company to provide continuation coverage for the
Executive for the one (1) year period in which the One Year Medical
Benefits are to be provided and does not permit the Executive to
elect COBRA coverage within sixty (60) days after the expiration of
said one (1) year period and for COBRA coverage to begin on the
first day following the expiration of said one (1) year period, the
Company shall use reasonable good faith efforts within ninety (90)
days after the Commencement Date to amend its group health plan to
permit the Company to provide continuation coverage for the
Executive for said one (1) year period and to permit the Executive
to make such election and, if made, for COBRA coverage to begin on
the first day following the expiration of said one (1) year period;
provided, however, that the Company shall not be required to change
health insurance companies or to pay additional premiums for any
employee or former employee other than the Executive in order to
effect, or as a result of, such amendment. Nothing herein shall be
construed as limiting the COBRA rights of the Executive (or his
spouse and dependents).
(h) Health
Benefits. Notwithstanding any other provision of this Agreement to
the contrary, if the provision of any health benefit hereunder
would cause any group health plan of the Company to be deemed
"discriminatory" under applicable law, and would thereby cause the
Company to incur penalties thereunder, then the Company shall have
the right unilaterally to amend this Agreement to prevent the group
health plan from being discriminatory by eliminating any continued
health benefits hereunder or subsidy thereof, other than such
continuation coverage as the Executive shall be entitled to under
COBRA.
5. WITHHOLDING.
The Company shall be entitled to withhold from amounts to be paid
to the Executive hereunder any federal, state, or local withholding
or other taxes or charges which it is from time to time required to
withhold; provided, that the amount so withheld shall not exceed
the minimum amount required to be withheld by law in light of the
circumstances. The Company shall be entitled to rely on an opinion
of tax counsel if any question as to the amount or requirement of
any such withholding shall arise.
6. NOTICES.
All notices provided for by this Agreement shall be in writing and
shall be (a) personally delivered to the party thereunto entitled
or (b) deposited in the United States mail, postage prepaid,
addressed to the party to be notified at the address listed below
(or at such other address as may have been designated by written
notice), certified or registered mail, return receipt requested.
The notice shall be deemed to be received (a) if by personal
delivery, on the date of its actual receipt by the party entitled
thereto or (b) if by mail, two (2) days following the date of
deposit in the United States mail.
To the
Company: Atrion Corporation
One
Allentown Parkway
Allen,
TX 75002
Attention: Chief
Financial Officer
To the
Executive: Emile A Battat
To the
most recent address on file with the Company.
7. PARTIES
BOUND. This Agreement and the rights and obligations hereunder
shall be binding upon and inure to the benefit of the Company, the
Executive, and their respective heirs, personal representatives,
successors and assigns; provided, however, that the Executive may
not assign any rights or obligations hereunder without the express
written consent of Company. This Agreement shall also bind and
inure to the benefit of any successor of the Company by merger or
consolidation, or any assignee of all or substantially all of the
Company's properties.
8. INVALID
PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully
severable; this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance
herefrom.
9. NO
MITIGATION; NO SET-OFF.
(a) No
Duty to Mitigate. In the event of any termination of employment
hereunder, the Executive shall be under no obligation to seek other
employment and there shall be no offset against any amounts due the
Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that the Executive may
obtain.
(b) Other
Payments. Any amounts or benefits payable to the Executive under
this Agreement are, in addition to, and are not in lieu of, amounts
payable to the Executive under any other salary continuation or
cash severance arrangement of the Company or any other type of
agreement entered into between the parties, and to the extent paid
or provided under any other such arrangement or agreement shall not
be offset from the amounts or benefits due hereunder, except to the
extent expressly provided in such other arrangement or
agreement.
10. ATTORNEYS'
FEES AND COSTS. In the event that it becomes necessary for the
Executive to seek legal counsel with regard to a dispute, claim or
issue under this Agreement or the Executive deems it necessary to
initiate arbitration in order to enforce his rights hereunder, then
the Company shall bear and, upon notification to the Company by the
Executive, immediately advance to the Executive all expenses of
such dispute, claim, issue or arbitration, including the reasonable
fees and expenses of the counsel of the Executive incurred in
connection with such dispute, claim, issue or arbitration, unless
an arbitrator determines that the Executive's position was
frivolous or otherwise taken in bad faith, in which case an
arbitrator may determine that the Executive shall bear his own
legal fees. Notwithstanding any existing or prior attorney-client
relationship between the Company and the counsel selected by the
Executive, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel,
and in that connection the Company and the Executive agree that a
confidential relationship shall exist between the Executive and
such counsel.
11. ARBITRATION.
All disputes and controversies arising under or in connection with
this Agreement, shall be settled by arbitration conducted before
one (1) arbitrator sitting in New York, New York, or such other
location agreed by the parties hereto, in accordance with the
National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The determination
of the arbitrator shall be final and binding on the parties.
Judgment may be entered on the award of the arbitrator in any court
having proper jurisdiction. All expenses of such arbitration,
including the fees and expenses of the counsel of the Executive,
shall be borne by the Company unless the arbitrator determines that
the Executive's position was frivolous or otherwise taken in bad
faith, in which case the arbitrator may determine that the
Executive shall bear his own legal fees.
12. LEGAL
FEES. The Company shall pay the Executive's reasonable legal fees
and costs associated with entering into this
Agreement.
13. INDEMNIFICATION.
The Company shall indemnify and hold harmless the Executive to the
fullest extent permitted under the Company's Bylaws as in effect on
the date hereof or the date of termination of employment, if on
such date the Bylaws provide the Executive with greater rights to
indemnification, and to the fullest extent permitted by law for any
action or inaction of the Executive while serving as an officer or
director of the Company or, at the Company's request, as an officer
or director of any other entity or as a fiduciary of any benefit
plan. The Company shall cover the Executive under directors and
officers liability insurance both during and, while potential
liability exists, after the Employment Term (but in no event for a
period which is less than six (6) years after termination) in the
same amount and to the same extent as the Company covers its other
officers and directors as of the Commencement Date or the date of
termination of employment, if on such date the Executive will
receive greater coverage under such insurance.
14. WAIVERS
AND CONSENTS. One or more waivers of any breach of any covenant,
term or provision of this Agreement by any party shall not be
construed as a waiver of a subsequent breach of the same covenant,
term or provision, nor shall it be considered a waiver of any other
then existing or subsequent breach of a different covenant, term or
provision. The consent or approval of either party to or of any act
by the other party requiring such consent or approval shall not be
deemed to waive or render unnecessary consent to or approval or any
subsequent similar act. No custom or practice of the parties shall
constitute a waiver of either party's rights to insist upon strict
compliance with the terms hereof.
15. SECTION
HEADINGS. The headings contained in this Agreement are for
reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement.
16. MULTIPLE
COUNTERPARTS. This Agreement may be executed in counterparts, each
of which for all purposes is to be deemed an original, and both of
which constitute, collectively, one agreement; but in making proof
of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
17. GOVERNING
LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to
its conflict-of-law rules.
18. SECTION
409A. The intent of the parties is that this Agreement will be in
full compliance with Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and in the event that
any provision of this Agreement, or any payment of compensation or
benefits paid pursuant to this Agreement is determined to be
inconsistent with the requirements of Section 409A of the Code, the
Company shall reform this Agreement and to the extent necessary to
comply therewith and to avoid the imposition of any penalties or
taxes pursuant to Section 409A of the Code, provided that any such
reformation shall to the maximum extent possible retain the
originally intended economic and tax benefits to the Executive and
the original purpose of this Agreement without violating Section
409A of the Code or creating any unintended or adverse consequences
to the Executive. Notwithstanding any other provision of this
Agreement to the contrary, if the Executive is a “specified
employee” within the meaning of Section 409A of the Code and
the regulations thereunder at the relevant time, then, solely to
the extent required to comply with applicable provisions Section
409A of the Code with respect to any amounts or benefits not exempt
under Section 409A of the Code, payments made hereunder on account
of the termination of the Executive’s employment shall not
commence until the date that is first day of the seventh month
following the Executive’s “separation from
service” as determined in accordance with Section 409A of the
Code.
19. ENTIRE
AGREEMENT. This Agreement contains the entire agreement of the
parties hereto, and supersedes all prior agreements, including the
Current Employment Agreement, and understandings, oral or written,
if any, between the parties hereto, with respect to the subject
matter hereof. No modification or amendment of any of the terms,
conditions, or provisions herein may be made otherwise than by
written agreement signed by the parties hereto.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above
written.
ATRION
CORPORATION
By:
/s/ David A.
Battat
Name:
David A. Battat
Title:
President and Chief Executive Officer
/s/ Emile A
Battat
EMILE A
BATTAT
Exhibit
A
(a) For
purposes of the Agreement, the term “Change in Control”
shall mean the occurrence of any one of the following
events:
(i) any
person (as the term “person” is used in Section 13(d)
(3) or Section 14(d) (2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (other than the Company,
any of its subsidiaries, or any trustee or other fiduciary holding
securities of the Company under an employee benefit plan of the
Company or any of its subsidiaries) becomes the beneficial owner
(as the term “beneficial owner” is defined under Rule
13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of securities of the Company representing 25% or more
of the combined voting power of the then-outstanding voting
securities of the Company
(ii) the
Company is merged, consolidated or reorganized into or with another
corporation or other person and as a result of such merger,
consolidation or reorganization less than 50% of the combined
voting power of the then-outstanding securities of such corporation
or person immediately after such transaction are held in the
aggregate by the holders of voting securities of the Company
immediately prior to such transaction;
(iii) the
stockholders of the Company approve a plan of complete liquidation
of the Company or the Company sells all or substantially all of its
assets to any other corporation or other person and as a result of
such sale less than 50% of the combined voting power of the
then-outstanding voting securities of such corporation or person
immediately after such transaction are held in the aggregate by the
holders of voting securities of the Company immediately prior to
such sale; or
(iv) during
any period of two consecutive years, individuals who, at the
beginning of any such period, constitute the directors of the
Company cease for any reason to constitute at least a majority
thereof unless the election or the nomination for election by the
Company's stockholders of each director of the Company first
elected during such period was approved by a vote of at least
two-thirds of the directors of the Company then still in office who
were directors of the Company at the beginning of any such
period.