Exhibit 10.8
 
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND LOAN INCREASE AGREEMENT
 
THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND LOAN INCREASE AGREEMENT
(this "Agreement"), dated as of the _1st__ day of October, 2011 (the "Effective
Date") is between and among ATRION CORPORATION, a Delaware corporation, ATRION
MEDICAL PRODUCTS, INC., a Delaware corporation, HALKEY-ROBERTS CORPORATION, a
Delaware corporation,  QUEST MEDICAL, INC., a Texas corporation, ALATENN
PIPELINE COMPANY, LLC, an Alabama limited liability company, and ATRION LEASING
COMPANY, LLC, an Alabama limited liability company (collectively, the
"Borrowers"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, successor by merger to Wachovia Bank, National Association (the
"Lender").
 
R E C I T A L S:

A.           Lender has heretofore established a Credit Facility for the
Borrowers' benefit in the maximum principal sum of Twenty-Five Million Dollars
($25,000,000), which is evidenced and secured by the following:
 
 
·
Loan and Security Agreement dated November 12, 1999, as amended by Amendment to
Loan and Security Agreement dated as of December 26, 2001, by  Second Amendment
to Loan and Security Agreement dated November 7, 2003, by Third Amendment to
Loan and Security Agreement dated September 1, 2005, by Fourth Amendment to Loan
and Security Agreement dated July 1, 2008; and by Fifth Amendment to Loan and
Security Agreement dated September 30, 2008 (as amended, the "Loan Agreement");
and

 
 
·
Line of Credit Promissory Note dated November 12, 1999 in the original stated
principal amount of $18,500,000, as amended by Note Extension Agreement dated
August 31, 2001, by 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), by Third
Amendment to Line of Credit Promissory Note dated November 7, 2003, by Fourth
Amendment to Line of Credit Promissory Note dated September 1, 2005, and by
Fifth Amendment to Line of Credit Promissory Note dated July 1, 2008 (as
amended, the "Line of Credit Note"), evidencing the Line of Credit Loan portion
of the Credit Facility.

 
B.           The Credit Facility terminates on the Termination Date of November
12, 2012, and the outstanding principal balance of all Advances, together with
accrued and unpaid interest thereon, is due and payable in full on the
Termination Date of November 12, 2012.
 
C.           Borrowers have requested (1) that the principal amount of the Line
of Credit Loan be increased from $25,000,000 to $40,000,000, (2) that the
Termination Date be extended until October 1, 2016, and (3) that the minimum
Consolidated Tangible Net Worth Requirement be eliminated and Lender has so
agreed on the terms set forth below.
 
 
 

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NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
 
Defined Terms.  Capitalized terms used in this Agreement without definition
shall have the meanings ascribed to them in the Loan Agreement.
 
Line of Credit Loan Increased.  The Loan Agreement is hereby further modified
and amended to increase the maximum principal amount of the Line of Credit Loan
from $25,000,000 to $40,000,000.  Accordingly, all references in the Loan
Agreement to  the "Credit Facility," or the "Line of Credit Loan" shall
henceforth refer to a Credit Facility and a Line of Credit Loan in the maximum
principal amount of $40,000,000.  Accordingly, the words and figures
"Twenty-Five Million Dollars ($25,000,000)" or "$25,000,000" are hereby deleted
in their entirety wherever the same appear and replaced with the words and
figures "Forty Million Dollars ($40,000,000)" or "$40,000,000" (as applicable).
 
Termination Date Extended. The Loan Agreement is hereby modified and amended to
extend the Termination Date from November 12, 2012 until October 1, 2016 by
deleting in its entirety the Defined Term "Termination Date" as the same appears
in Section 1.1 of the Loan Agreement, and by inserting in lieu thereof the
following:
 
"Termination Date" means October 1, 2016, or such earlier date on which the
obligations of the Lender to make Advances hereunder are terminated pursuant to
the terms of this Agreement.
 
Pricing Matrix.  The Pricing Matrix attached as Exhibit A is hereby deleted in
its entirety, and the Revised Exhibit A which is attached hereto is inserted in
lieu thereof.
 
Changes in Financial Covenants.  Section 5.17 is hereby modified and amended to
delete subsection 5.17 (b), which required the Group to achieve and maintain a
minimum Consolidated Tangible Net Worth requirement as set forth in the Loan
Agreement.  A form of Revised Compliance Certificate is attached hereto as
Exhibit G which shall replace the form Compliance Certificate attached as
Exhibit G to the Loan Agreement.
 
Acquisitions.  In consideration of this Agreement, Borrowers hereby covenant and
agree that at no time prior to the Termination Date shall Borrowers (or any of
them) purchase all or substantially all of the assets of any entity or any
division of any entity or any operating line of business of any entity or the
equity interest of any entity unless at such time there is no Event of Default
and, after giving effect to such transaction, no Event of Default would exist on
pro forma basis under the terms of the Loan Agreement.
 
Additional Indebtedness. In consideration of this Agreement, Borrowers hereby
covenant and agree that at no time prior to the Termination Date shall Borrowers
(or any of them) incur or permit to exist any Indebtedness (as hereafter
defined) unless at such time there is no Event of Default or, after giving
effect to such Indebtedness, no Event of Default would exist on pro forma basis
under the terms of the Loan Agreement.  Indebtedness” shall mean all liabilities
of a Person as determined under GAAP and all obligations which such Person has
guaranteed or endorsed or is otherwise secondarily or jointly liable for, and
shall include, without limitation, (a) all obligations for borrowed money or
purchased assets; (b) obligations secured by assets whether or not any personal
liability exists; (c) the capitalized amount of any capital or finance lease
obligations; (d) the unfunded portion of pension or benefit plans or other
similar liabilities; (e) obligations as a general partner; (f) contingent
obligations pursuant to guaranties, endorsements, letters of credit and other
secondary liabilities; (g) obligations for deposits; and (h) obligations under
Financial Contracts
 
 
 

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Sanctioned Persons; Sanctioned Countries.  Borrowers hereby represent and
warrant that none of the Borrowers, their Subsidiaries or Affiliates or any
guarantor (a) is a Sanctioned Person or (b) does business in a Sanctioned
Country or with a Sanctioned Person in violation of the economic sanctions of
the United States administered by OFAC.  Borrowers will not use the proceeds of
any extension of credit under the Loan Agreement to fund any operation in,
finance any investments or activities in, or make any payments to, a Sanctioned
Person or a Sanctioned Country.  As used herein, the term “Sanctioned Country”
means a country subject to the sanctions program identified on the list
maintained by OFAC and available at the following website or as otherwise
published from time to
time:  http://www.treas.gov/offices/enforcement/ofac/programs/; the term
“Sanctioned Person” means a) any Person named on the list of Specially
Designated Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html or as otherwise
published from time to time, (b) any agency, authority, or subdivision of the
government of a Sanctioned Country, (c) any Person or organization controlled by
a Sanctioned Country, or (d) any Person resident in a Sanctioned Country, to the
extent subject to a sanctions program administered by OFAC; and the term “OFAC””
means the United States Department of the Treasury’s Office of Foreign Assets
Control or any successor thereto.
 
Notices. Section 8.6 is hereby modified and amended to change the address of
Lender as follows:
 
Wells Fargo Bank, National Association
4975 Preston Park Blvd.
Suite 280
Plano, Texas  75093

Amendment to Line of Credit Note.  Contemporaneously herewith, Borrowers and
Lender have entered into that certain Sixth Amendment to Line of Credit
Promissory Note and Loan Increase pursuant to which the principal amount of the
Line of Credit Note has been increased to $40,000,000 and the Termination Date
set forth in the Line of Credit Note has been extended to October 1, 2016.  All
references in the Loan Agreement to the "Line of Credit Note" shall henceforth
refer to the Line of Credit Note, as amended by the Sixth Amendment to Line of
Credit Promissory Note.
 
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.
 
 
 

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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.
 
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.
 
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.
 
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.
 
Release of Lender.  In consideration of Lender's execution of this Agreement,
and without any contingency, precondition, or condition subsequent, the
Borrowers, for and on behalf of themselves and all those claiming by, through or
under them, including, without limitation, their respective heirs,
administrators, executors, beneficiaries, parents, subsidiaries, affiliates,
owners, successors and assigns, do hereby fully and forever remise, release,
relinquish, discharge, settle and compromise any and all claims, cross-claims,
counterclaims, causes, damages and actions of every kind and character, and all
suits, costs, damages, expenses, compensation and liabilities of every kind,
character and description, whether direct or indirect, known or unknown, in law
or in equity, which any of them now have or will have against Lender, and/or any
of its affiliates, agents, representatives, officers, employees, attorneys,
advisors, consultants or contractors on account of, arising  out of, or
resulting from, or in any manner incidental or related to the Loan Documents,
the Collateral, Lender’s administration of the Loan Documents or the Collateral,
this Agreement, or any other transaction contemplated by this Agreement that
occurred or failed to occur at any time in the past up to and including the
Effective Date.
 
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.
 
 
 

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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.,
 
a Delaware corporation
     
By:  /s/ Jeffery Strickland
 
Jeffery Strickland
 
Its Vice President

 
 

 
HALKEY-ROBERTS CORPORATION,
a Delaware 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/ W. R. Birdwell
 
Title: S.V.P.

 
 
 

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REVISED EXHIBIT A
PRICING MATRIX
(Effective October __1__, 2011)
 
If the ratio of Consolidated
The Line of Credit
The Unused Line
The Term Loan
Total Liabilities/Consolidated
Loan Margin
Fee Will Be:
Margin Will Be:
Tangible Net Worth is:
Will Be:
   
Greater than 2.00
200 bps (2.00%)
6.5 bps (.065%)
225 bps (2.25%)
1.51 to 2.00
150 bps (1.50%)
6.5 bps (.065%)
175 bps (1.75%)
1.15 to 1.50
125 bps (1.25%)
6.5 bps (.065%)
150 bps (1.50%)
Less than 1.15
100 bps (1.00%)
6.5 bps (.065%)
125 bps (1.25%)

 
*NOTE: The changes reflected in the above-Pricing Matrix also apply to the
Pricing Matrix attached as Exhibit A to the Line of the Credit Note which is
attached as Exhibit B to the Loan Agreement, and to the Pricing Matrix attached
as Exhibit A to the Term Note which is attached as Exhibit D to the Loan
Agreement.