Exhibit 10.3
 
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
 
THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Agreement"), dated as
of September 1, 2005 is between and among ATRION CORPORATION, a Delaware
corporation ("Atrion"), ATRION MEDICAL PRODUCTS, INC., an Alabama corporation
("AMI"), HALKEY-ROBERTS CORPORATION, a Florida corporation ("Halkey-Roberts"),
QUEST MEDICAL, INC., a Texas corporation ("Quest"), ALATENN PIPELINE COMPANY,
LLC, an Alabama limited liability company (successor by conversion to AlaTenn
Pipeline Company, Inc. an Alabama corporation) ("AlaTenn"), and ATRION LEASING
COMPANY, LLC, an Alabama limited liability company (successor by conversion to
Atrion Leasing Company, Inc. an Alabama corporation) ("ALI") (individually, a
"Borrower," and collectively, the "Borrowers") and WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, successor by merger to SouthTrust
Bank, an Alabama banking corporation, successor by conversion to SouthTrust
Bank, National Association, a national banking association(the "Lender").
 
RECITALS:
 
Borrowers, Atrion International, Inc., a U.S. Virgin Islands corporation ("AII"
and collectively with Borrowers, the "Prior Borrowers"), and Lender are parties
to that certain Loan and Security Agreement dated November 12, 1999, as amended
by that certain Amendment to Loan and Security Agreement dated as of December
26, 2001 and by that certain Second Amendment to Loan and Security Agreement
dated November 7, 2003 (as amended, the "Loan Agreement"), pursuant to which the
Lender established a Credit Facility for the Prior Borrowers' benefit in the
maximum principal amount of Twenty-Five Million Dollars ($25,000,000). All
defined terms used in this Agreement without definition shall have the meanings
ascribed to them in the Loan Agreement. In order to further evidence the Credit
Facility, the Prior Borrowers executed and delivered to Lender the Line of
Credit Promissory Note dated November 12, 1999 in the original stated principal
amount of $18,500,000, as amended by that certain Note Extension Agreement dated
August 31, 2001, by that certain Second Amendment to Line of Credit Promissory
Note dated December 26, 2001 (which such Second Amendment, among other things,
increased the principal balance of the Line of Credit Note to $25,000,000), and
by that certain Third Amendment to Line of Credit Promissory Note dated November
7, 2003 (the "Line of Credit Note"), evidencing the Line of Credit Loan portion
of the Credit Facility. To date, no Term Loans or Letters of Credit exist under
the Credit Facility.
 
AII terminated its corporate existence effective September 27, 2004 pursuant to
the "Certificate of Amendment to the Articles of Incorporation of Atrion
International, Inc." which was filed September 22, 2004, and certified by the
Lieutenant Governor of the Virgin Islands on September 30, 2004.
 
Borrowers have requested that the Termination Date be extended from November 12,
2006 until November 12, 2009. Lender has agreed to such extension.
 
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:

 
 

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1.            Termination Date. Pursuant to that certain Fourth Amendment to
Line of Credit Promissory Note dated of even date herewith, the Termination Date
has been extended from November 12, 2006 until November 12, 2009. Accordingly,
the definition "Termination Date" as the same appears in Section 1.1 of the Loan
Agreement is modified and amended by deleting the date of November 12, 2006 and
inserting in lieu thereof November 12, 2009.
 
2.            Line of Credit Note. Contemporaneously herewith, Borrowers and
Lender have entered into the Fourth Amendment to Line of Credit Promissory Note.
All references in the Loan Agreement to the Line of Credit Note shall refer to
the Line of Credit Note, as so amended.
 
3.            Borrowing Entities. AII, one of the Prior Borrowers, is dissolved
and no longer in existence. The Loan Agreement, Line of Credit Note, and other
Loan Documents are hereby amended retroactively such that, effective September
27, 2004, any references in the Loan Agreement, Line of Credit Note, or other
Loan Documents to "Borrowers" shall be deemed to collectively refer to Atrion,
AMI, Halkey-Roberts, Quest, AlaTenn and ALI.
 
4.            Confirmation of Obligations. Except as herein modified, the Loan
Agreement shall remain in full force and effect, and the Loan Agreement is
hereby ratified and affirmed in all respects.
 
5.            No Novation and No Release of Collateral. The execution and
delivery of this Agreement shall not be interpreted or construed as, and in fact
does not constitute, a novation, payment, or satisfaction of all or any portion
of the Loan Agreement; rather, this Agreement is strictly amendatory in nature.
The execution, delivery, and performance of this Agreement shall not operate to
release any Collateral securing the Credit Facility nor modify or otherwise
affect the lien and security interest held by Lender in and to such Collateral.
 
6.            Counterparts. This Agreement may be executed in multiple
counterparts and using multiple signature pages and shall be binding and
enforceable at such time as each party has executed a counterpart of this
Agreement. The signature of any party to a counterpart of this Agreement shall
bind such party to the same extent as if all parties executed a single original
hereof.
 
7.           Interpretation. No provision of this Agreement shall be construed
against or interpreted to the disadvantage of any party to this Agreement by any
court or other governmental or judicial authority by reason of such party's
having or being deemed to have structured or dictated such provision.
 
8.           Integration. Borrowers acknowledge and agree that no promises,
agreements, understandings, or commitments of any nature whatsoever have been
made by or on behalf of Lender in respect to the Credit Facility and the Loan
Agreement, except as set forth herein. Specifically, Borrowers acknowledge and
agree that Lender has made no agreement, and is in no way obligated, to grant
any extension, indulgence, forbearance, or consent with respect to the Credit
Facility or any matter relating to the Credit Facility, except as specifically
set forth herein.
 
 
 

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9.           Severability. If any provisions of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.

10.           Controlling Law. THE VALIDITY, INTERPRETATION, ENFORCEMENT AND
EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF ALABAMA. ONE OF THE LENDER'S PLACES OF BUSINESS IS
LOCATED IN JEFFERSON COUNTY IN THE STATE OF ALABAMA, AND THE BORROWERS AGREE
THAT THE CREDIT FACILITY SHALL BE FUNDED FROM AND THIS AGREEMENT SHALL BE HELD
BY LENDER AT SUCH PRINCIPAL PLACE OF BUSINESS, AND THE HOLDING OF THIS AGREEMENT
BY LENDER THEREAT SHALL CONSTITUTE SUFFICIENT MINIMUM CONTACTS OF BORROWERS WITH
JEFFERSON COUNTY AND THE STATE OF ALABAMA FOR THE PURPOSE OF CONFERRING
JURISDICTION UPON THE FEDERAL AND STATE COURTS PRESIDING IN SUCH COUNTY AND
STATE.

11.            Waiver of Jury Trial. BORROWERS HEREBY WAIVE ANY RIGHT TO TRIAL
BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION
ARISING OUT OF OR IN ANY WAY PERTAINING OR RELATED TO LOAN OBLIGATION, THIS
AGREEMENT, OR ANY OTHER LOAN DOCUMENT, OR IN ANY WAY CONNECTED WITH OR
PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF LENDER AND BORROWERS
WITH RESPECT TO THE LOAN OBLIGATIONS, THIS AGREEMENT, AND ANY OTHER LOAN
DOCUMENT, OR IN CONNECTION WITH THE TRANSACTIONS RELATED HERETO OR CONTEMPLATED
HEREBY OR THE EXERCISE OF ANY PARTY'S RIGHTS AND REMEDIES WITH RESPECT TO THE
LOAN OBLIGATIONS, THIS AGREEMENT, OR OTHERWISE, OR THE CONDUCT OF THE
RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. BORROWERS ACKNOWLEDGE THAT LENDER MAY FILE A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED
AGREEMENT OF THE BORROWERS IRREVOCABLY TO WAIVE THEIR RIGHTS TO TRIAL BY JURY,
AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY
WHATSOEVER BETWEEN BORROWERS AND LENDER SHALL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
 
 
[Signatures on Following Pages]

 
 

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IN WITNESS WHEREOF, Borrowers and Lender have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
 
 
BORROWERS:
   
 
ATRION CORPORATION,   
a Delaware corporation
     
By:  /s/ Jeffery Strickland
 
Jeffery Strickland
 
Its Vice President
         
ATRION MEDICAL PRODUCTS, INC.,
 
an Alabama corporation
     
By:  /s/ Jeffery Strickland
 
Jeffery Strickland
 
Its Vice President

 
 

 
HALKEY-ROBERTS CORPORATION,
a Florida corporation
         
By:  /s/ Jeffery Strickland
 
Jeffery Strickland
 
Its Vice President
   

 
QUEST MEDICAL, INC., a Texas corporation
         
By: /s/ Jeffery Strickland
 
Jeffery Strickland
 
Its Vice President

 

 
ALATENN PIPELINE COMPANY, LLC,
an Alabama limited liability company
         
By:  /s/ Jeffery Strickland
 
Jeffery Strickland
 
Its Vice President

 
 
 

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ATRION LEASING COMPANY, LLC,
an Alabama limited liability company
         
By:  /s/ Jeffery Strickland
 
Jeffery Strickland
 
Its Vice President

 

 
LENDER:
     
WACHOVIA BANK, NATIONAL ASSOCIATION,
a national banking association
         
By:    /s/ Clint Bryant                                
 
Print: Clint Bryant
 
Its:     Vice President