Exhibit 10.1
                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT


THIS AMENDED AND RESTATED  EMPLOYMENT  AGREEMENT  (this  "Agreement") is entered
into  as of the 7th day of  August  2006 by and  between Atrion  Corporation,  a
Delaware corporation (the "Company"), and 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 1st day of January, 2002 and amended as of the 3rd day
of December,  2002 (the "Current Employment  Agreement"),  pursuant to which the
Executive  is employed by the Company as the  Chairman of the Board of Directors
of the Company (the "Board") and as its President and Chief  Executive  Officer;
and

WHEREAS,  the  Company and the  Executive  desire to  continue  the  Executive's
employment  by the Company  following the  expiration of the Current  Employment
Agreement on December 31, 2006,  upon the terms and conditions set forth in this
Agreement,  which shall be  effective  as of the 1st day of  January,  2007 (the
"Commencement Date").

NOW,  THEREFORE,  in  consideration  of the  foregoing,  the  mutual  provisions
contained  herein,  and for other good and valuable  consideration,  the parties
hereto agree as follows:

1. EMPLOYMENT.

      (a)Continuation  of  Employment.  The Company hereby agrees to continue to
employ the Executive and the Executive  hereby accepts  continued  employment as
the  Company's  Chairman  of the  Board  ("Chairman")  and  President  and Chief
Executive  Officer  on the terms  and  conditions  hereinafter  set  forth.  The
Executive shall perform such duties, and have such powers, authority, functions,
and  responsibilities  (commensurate  with his  position  and title),  as may be
reasonably  assigned to him from time to time by the Board which are not (except
with the Executive's  prior written consent)  inconsistent with and which do not
interfere  with or  detract  from  those  vested  in or being  performed  by the
Executive for the Company.

      (b)Duties.  During the Employment Term (as defined  below),  the Executive
shall  devote  such time and effort as is  reasonably  necessary  to perform his
duties and  responsibilities  as  Chairman  and  President  and Chief  Executive
Officer of the Company;  provided,  however that the Executive shall be allowed,
to the  extent  that  such  activities  do not  materially  interfere  with  the
performance of his duties and responsibilities hereunder, to manage his personal
financial affairs and to serve on corporate, civic,  not-for-profit,  charitable
industry boards and advisory committees.

2. TERM.  The initial term of the  Executive's  employment  under this Agreement
shall be for period of five (5) years from the  Commencement  Date (the "Initial
Term").  The term of the  Executive's  employment  under this Agreement shall be
automatically  renewed for additional one (1) year terms (each referred to as an
"Additional  Term")  at the  end of the  Initial  Term  and at the  end of  each
Additional Term, as the case may be, unless either party delivers written notice
of  termination  to the other at least  thirty (30) days prior to the end of the
Initial Term or  Additional  Term,  as the case may be. The Initial Term and the
Additional Terms shall be referred to herein as the "Employment Term."


<PAGE>

3. COMPENSATION.  The Company shall pay the Executive the following,  subject to
withholding and other applicable employment taxes:

      (a)Base  Salary and Bonuses.  The Company  shall pay the  Executive a base
salary  (the  "Base  Salary")  of  Five  Hundred  Thousand  and  no/100  Dollars
($500,000.00) for each calendar year in the Employment Term.

In addition to the Base Salary, the Company shall pay the Executive a cash bonus
(the "Annual  Bonus") for each  calendar year in the  Employment  Term (with the
first  Annual  Bonus  hereunder  to be paid in 2008 (within the period set forth
below) for the year  2007)  equal to the amount  that is 8% of the  Increase  in
Operating  Income  for such  calendar  year.  For  purposes  of this  Agreement,
"Increase  in  Operating  Income"  shall be equal to the excess,  if any, of the
Company's  operating  income for the  calendar  year of  determination  over the
Company's  operating  income for the previous  calendar year.  The  Compensation
Committee of the Board shall have discretion to adjust the Increase in Operating
Income  calculated  pursuant to the  previous  sentence to  disregard  one-time,
non-recurring   extraordinary   adjustments   and  shall  make  such   equitable
adjustments  as are required to give effect to  acquisitions,  divestitures,  or
similar corporate transactions by or involving the Company.

The Base Salary  shall be payable in  intervals  consistent  with the  Company's
normal payroll  schedules (but in no event less  frequently  than monthly).  The
Base Salary,  as in effect from time to time,  may be increased  but not reduced
without the written consent of the Executive. The Annual Bonus for each calendar
year in the Employment  Term shall be payable as soon as  practicable  following
the date on which the Annual Bonus can be determined, but in no event later than
March 15 of the year following such calendar year.

In addition to the Base Salary and the Annual  Bonus,  the Company shall pay the
Executive such other incentive compensation as the Company may from time to time
determine.

      (b) Benefits   and  Expenses.  The  Executive  shall  have  the  right  to
participate in the employee benefit plans, equity and incentive plans, insurance
contracts,  policies,  arrangements or agreements  maintained by the Company for
the benefit of its employees and relating to retirement,  health, disability and
other  employee   benefits,   subject  to  the  Executive's   qualification  for
participation  in such benefit plans pursuant to the terms and conditions  under
which  such  benefit  plans  are  offered,  at a  level  commensurate  with  the
Executive's  position.  The Executive's  rights and entitlements with respect to
any such benefits shall be subject to the provisions of the relevant agreements,
contracts,  policies,  arrangements  or plans  providing such benefits.  Nothing
contained  herein  shall be deemed to impose any  obligation  on the  Company to
adopt  or  maintain  any  such  plans,  policies,  arrangements,   contracts  or
agreements.  In accordance with its policies and  procedures,  the Company shall
pay or reimburse the Executive for all reasonable or necessary  travel and other
out-of-pocket  expenses  incurred by the Executive in performing his obligations
under this  Agreement.  The  Executive  shall comply with all such  policies and
procedures  applicable to the Company's senior executive  employees  relating to
the  nature  and  extent of  reimbursable  expenses,  the  manner of  accounting
therefor and the manner or reimbursement of same. The Company shall also furnish
the Executive  with such office and clerical  assistance as shall be suitable to
the character of the Executive's  position with the Company and adequate for the
performance of his duties hereunder.



<PAGE>

      (c) Vacation  and  Holidays.   The  Executive  shall be  entitled  to such
vacation  with pay during each fiscal year of the Company as  determined  by the
Company,  but in no event less than four (4) weeks per year, such vacation to be
taken at such time or times as shall be approved by the Company,  which approval
shall not be unreasonably withheld. In addition, the Executive shall be entitled
to such  holidays  with pay as the Company  makes  available to its other senior
executive employees. Unless otherwise agreed between the parties, unused days of
vacation and unused holidays may not be carried over from one fiscal year of the
Company to another.

4. TERMINATION.

     (a) Termination by the Company. The Company may terminate the employment of
the  Executive  prior to the  expiration  of the  Employment  Term (i) for "just
cause" (as defined  below) by delivering  written  notice of  termination to the
Executive or (ii) without  "just cause" upon thirty (30) days written  notice of
termination to the Executive.

     (b) Termination by Executive.   The Executive may terminate his  employment
under this Agreement  prior to the  expiration of Employment  Term (i) for "good
reason" (as defined below) by giving the Company ninety (90) days written notice
of his intention to terminate  such  employment or (ii) without "good reason" by
giving the Company ninety (90) days written notice of his intention to terminate
such employment.

     (c) Termination  Upon  Death or  Disability.  The   Executive's  employment
shall  terminate  immediately  upon his death.  In the event that the  Executive
becomes subject to a Disability (as defined below),  the Executive's  employment
may be  terminated  upon thirty (30) days written  notice by either party to the
other.

     (d) Definitions.  For purposes of this Agreement, the following terms shall
have the respective meanings indicated below:

                  (i) Just  Cause.  The term  "just  cause"  shall  mean (A) the
Executive's  continuing  willful  failure to  perform  his  material  duties and
obligations  under this  Agreement  (except by reason of his death or incapacity
due to his  Disability)  after  written  notice  thereof  by the  Company to the
Executive,  and the  Executive's  failure or refusal to perform  such duties and
obligations  within  thirty  (30) days after the  receipt of such  notice by the
Executive or (B) the conviction of, or the entering of a plea of nolo contendere
by, the Executive  with respect to a felony (other than as a result of a traffic
violation or as a result of vicarious  liability),  provided  that on or after a
Change in  Control  (as  defined in Exhibit A  hereto),  "just  cause"  shall be
limited to only subsection (B) above. For purposes of this Section  4(d)(i),  no
act, or failure to act, on Executive's part shall be considered "willful" unless
done,  or omitted to be done,  by him not in good faith and  without  reasonable
belief that his action or omission was in the best interests of the Company. The
Company must assert a "just cause"  termination  event no later than ninety (90)
days after discovery of such event.
<PAGE>

The date of  termination  for a  termination  for "just cause" shall be the date
indicated  in the  Notice of  Termination  (as  defined  herein).  A "Notice  of
Termination"  for "just  cause"  shall  mean a notice  that shall  indicate  the
specific  termination  provision  in Section  4(d)(i)  relied upon and shall set
forth in reasonable detail the facts and circumstances which provide for a basis
for  termination for "just cause."  Further,  a Notice for Termination for "just
cause" shall be required to include a copy of a  resolution  duly adopted by the
Board, with at least two-thirds (2/3) of the non-management members of the Board
voting in favor  thereof,  at a meeting  of the Board  which was  called for the
purpose  of  considering   such   termination   and  which   Executive  and  his
representative  had the right to attend and address the Board,  finding that, in
the good faith of the  Board,  Executive  engaged  in  conduct  set forth in the
definition  of "just cause" herein and  specifying  the  particulars  thereof in
reasonable detail.  Any purported  termination for "just cause" which is held by
an arbitrator  not to have been based on the grounds set forth in this Agreement
or not to have  followed the  procedures  set forth in this  Agreement  shall be
deemed a termination by the Company without "just cause."

                  (ii)     Good Reason.  The term "good  reason"  shall mean any
                           one  or  more  of  the  following:

                           (A) Without the Executive's  express written consent,
any diminution in the Executive's titles,  authorities,  responsibilities or the
assignment  of the  Executive  to any  duties  inconsistent  with his  position,
duties,  responsibilities and status with the Company as its Chairman, President
and Chief  Executive  Officer or the  removal by the  Board,  or the  failure or
refusal of the Board to re-elect,  the Executive as the Chairman,  President and
Chief  Executive  Officer  of the  Company  at any time  during the term of this
Agreement.  For  purposes  hereof,  a  "diminution  in the  Executive's  titles,
authorities or responsibilities" shall be deemed to have occurred if the Company
is no longer required to file reports pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended.

                           (B) The  Company's  breach of any  provision  of this
Agreement  or any other  agreement  between the Company  and the  Executive  and
failure,  within the ten (10) day period following its receipt of written notice
from the  Executive  describing  such breach in reasonable  detail,  to promptly
commence in good faith to cure such breach (if curable); provided that such cure
must be  effected  no later than  thirty  (30) days  following  such  notice and
provided  further  that such cure right shall not be  available on more than one
occasion  in any twelve  (12) month  period.

                           (C) Adoption  by a  majority  of  the  Board  of  any
resolution or series of related resolutions that,  individually or collectively,
has or could  reasonably be expected to have a material  effect on the strategic
direction,  operations,  financial  condition  or results of  operations  of the
Company and that is voted against by the  Executive in a good faith  exercise of
his fiduciary duty or the failure or refusal of a majority of the Board to adopt
a proposed  resolution or series of related  resolutions  that,  individually or
collectively,  has or could  reasonably  have been  expected  to have a material
effect on the strategic direction, operations, financial condition or results of
operations of the Company and that the Executive proposed, by a motion or series
of motions  (whether or not  seconded),  be adopted by the Board in a good faith
exercise  of his  fiduciary  duty.

                           (D) Failure  of the Company  to obtain the assumption
in writing (a copy of which is  delivered  to the  Executive)  of the  Company's
obligations  hereunder to the Executive by any successor to the Company prior to
or  at  the  time  of  a  merger,  acquisition,  consolidation,  disposition  of
substantially all of the assets of the Company or similar transaction.

<PAGE>

The Executive must assert a "good reason" termination event no later than ninety
(90) days after the Executive discovers such event.
                  (iii)  Disability.  The  Executive  shall be  considered to be
subject to a  "Disability"  if, as a result of  physical  or mental  sickness or
incapacity or accident,  the Executive is unable to perform the normal duties of
his  employment  with the  Company  for a period of ninety  (90) days in any one
hundred  twenty  (120) day  period.  If there is any  disagreement  between  the
Company and the  Executive as to whether the Executive was unable to perform the
normal duties of his employment due to Disability,  the same shall be determined
after examination of the Executive by a physician selected by the Executive (or,
if the  Executive  is  unable to make  such  selection,  it shall be made by the
Executive's  spouse  or, if the  Executive  is not  married  or if his spouse is
unable or  unwilling  to make the  selection,  by any other adult  member of the
Executive's  immediate  family)  and  approved  by the  Company.  The  costs and
expenses of such examination shall be borne by the Company. The determination of
such  physician  shall be  conclusive  evidence as to whether the  Executive was
unable to perform the normal duties of his employment due to Disability.  If the
Executive does not permit such examination by such physician, then, for purposes
hereof,  the determination as to whether the Executive was unable to perform the
normal duties of his  employment  due to Disability  shall be made by the Board.
Nothing herein shall have any effect upon the Executive's eligibility to receive
any disability benefits from the Company pursuant to the terms and conditions of
any disability  plan or other  arrangement  which the Company may have in effect
from time to time.

     (e) Termination Payment.

                  (i)  Termination  for Just  Cause.  In the event  the  Company
terminates  the  Executive's  employment  pursuant  to  Section  4(a)(i) of this
Agreement,  the Company shall have no further  obligation under Sections 3 and 4
of this Agreement  except to pay the Executive any  compensation  earned but not
yet paid, including without limitation, the Base Salary and Annual Bonus for the
calendar year in which the date of termination  falls, in each case prorated for
the  number  of days of the  calendar  year  that  elapsed  prior to the date of
termination,  any  accrued  vacation  pay  payable  pursuant  to  the  Company's
policies,  and any unreimbursed  business  expenses  (collectively  the "Accrued
Amounts").

                  (ii) Termination  Without Just Cause. In the event the Company
terminates   Executive's   employment  pursuant  to  Section  4(a)(ii)  of  this
Agreement,  the Executive's  employment  under this Agreement shall terminate at
the  expiration  of said thirty (30) day period,  and the Company  shall have no
further obligation under Sections 3 and 4 of this Agreement except to pay to the
Executive a cash lump sum amount equal to the sum of:
                           (A)      the Accrued Amounts; and

                           (B) the  Executive's  Base  Salary and the average of
the annual  bonuses  received by the  Executive for the three years prior to the
year in which such termination occurs  (collectively,  the "Severance Payment");
which  sum  shall  be paid by the  Company  as soon  as  practicable  after  the
termination date, but in no event later than ten (10) days after the termination
of the  Executive's  employment;  provided,  however,  that in the  event of any
termination  without  just cause that occurs in  contemplation  of or within two
years  following  a Change in  Control,  the  Company  shall  instead pay to the
Executive a cash lump sum amount equal to the sum of the Accrued Amounts and two
times the  Severance  Payment.  Any such payment shall be subject to a six-month
delay to the extent  necessary for the avoidance of adverse tax  consequences to
the  Executive  under  Section  409A of the Internal  Revenue  Code of 1986,  as
amended (the "Code").  Notwithstanding  the foregoing,  in the event the Company
terminates Executive's employment pursuant to Section 4(a)(ii), the Company may,
at its option,  require the Executive to cease providing  services hereunder and
serving as an  employee  of the  Company at any time during said thirty (30) day
period.  In addition,  all stock options  and/or equity granted to the Executive
shall fully vest and become  exercisable upon the termination  date. The Company
shall  continue to provide the Executive  (and his spouse and  dependents)  with
group health plan benefits (or substantially  similar substitute  arrangements),
at its sole expense, for one year (the "One Year Medical Benefits").
<PAGE>

                  (iii)  Termination for Good Reason. In the event the Executive
terminates  the  Executive's  employment  pursuant  to  Section  4(b)(i) of this
Agreement,  the Company shall have no further  obligation under Sections 3 and 4
of this  Agreement  except to pay to the  Executive a cash lump sum equal to the
Accrued Amounts and the Severance Payment, which shall be paid by the Company as
soon as practicable  after the termination  date, but in no event later than ten
(10)  days  after  the  termination  of the  Executive's  employment;  provided,
however,  that in the event of any  termination  for good  reason that occurs in
contemplation of or within two years following a Change in Control,  the Company
shall  instead pay to the  Executive a cash lump sum amount  equal to the sum of
the Accrued Amounts and two times the Severance Payment.  Any such payment shall
be subject to a six-month  delay to the extent  necessary  for the  avoidance of
adverse tax  consequences  to the  Executive  under Section 409A of the Code. In
addition,  all stock options and/or equity granted to the Executive  shall fully
vest and become  exercisable  upon the termination  date. The Company shall also
provide the Executive (and his spouse and dependents)  with the One Year Medical
Benefits.

                  (iv)   Termination Without  Good  Reason.  In  the  event  the
Executive terminates the Executive's  employment pursuant to Section 4(b)(ii) of
this Agreement,  the Executive's employment under this Agreement shall terminate
at the expiration of said thirty (30) day period,  and the Company shall have no
further  obligation  under Sections 3 and 4 of this Agreement  except to pay the
Executive  a cash lump sum equal to the Accrued  Amounts as soon as  practicable
after the  termination  date, but in no event later than ten (10) days after the
termination of Executive's  employment.  Notwithstanding  the foregoing,  in the
event the Executive terminates his employment pursuant to Section 4(b)(ii),  the
Company may, at its option,  require the Executive to cease  providing  services
hereunder  and  serving as an  employee  of the  Company at any time during said
thirty (30) day period;  provided that the  Executive  shall be entitled to such
payments  as  would  have  otherwise  been  due to him had he  continued  in the
employment  of the Company for such thirty (30) day period,  including,  without
limitation,  payments  of the  Accrued  Amounts and amounts to be paid under any
other  plan,  agreement  or  policy  which  survives  the  termination  of  this
Agreement.

                  (v)  Termination  upon Death or  Disability.  In the event the
Executive's  employment  is  terminated  pursuant to Section  4(c)  hereof,  the
Company  shall  have  no  further  obligation  under  Sections  3 and 4 of  this
Agreement  except to pay to the  Executive  (or his personal  representative  or
guardian) a cash lump sum amount equal to the Accrued  Amounts and the Severance
Payment,  which  shall be paid by the Company as soon as  practicable  after the
termination date, but in no event later than ten (10) days after the termination
of the  Executive's  employment.  In addition,  all stock options  and/or equity
granted  to the  Executive  shall  fully vest and  become  exercisable  upon the
termination  date.  The Company  shall also  provide the  Executive  (and/or his
spouse and dependents as applicable) with the One Year Medical Benefits.
<PAGE>

     (f) COBRA.  In  the  event  that  the  Company's group health plan does not
permit the Company to provide  continuation  coverage for the  Executive for the
one (1) year period in which the One Year  Medical  Benefits  are to be provided
and does not permit the Executive to elect COBRA coverage within sixty (60) days
after the expiration of said one (1) year period and for COBRA coverage to begin
on the first day  following  the  expiration  of said one (1) year  period,  the
Company shall use  reasonable  good faith efforts  within ninety (90) days after
the  Commencement  Date to amend its group  health plan to permit the Company to
provide continuation coverage for the Executive for said one (1) year period and
to permit the Executive to make such election and, if made,  for COBRA  coverage
to begin on the first day following the  expiration of said one (1) year period;
provided,  however,  that the Company  shall not be  required  to change  health
insurance  companies  or to pay  additional  premiums for any employee or former
employee  other than the  Executive in order to effect,  or as a result of, such
amendment. Nothing herein shall be construed as limiting the COBRA rights of the
Executive (or his spouse and dependents).

5.  WITHHOLDING.  The Company  shall be entitled to withhold  from amounts to be
paid to the Executive  hereunder any federal,  state,  or local  withholding  or
other  taxes or  charges  which it is from time to time  required  to  withhold;
provided,  that the  amount so  withheld  shall not exceed  the  minimum  amount
required to be withheld by law in light of the circumstances.  The Company shall
be  entitled  to rely on an opinion of tax  counsel  if any  question  as to the
amount or requirement of any such withholding shall arise.

6. NOTICES.  All notices  provided for by this Agreement shall be in writing and
shall  be (a)  personally  delivered  to the  party  thereunto  entitled  or (b)
deposited in the United States mail, postage prepaid,  addressed to the party to
be notified at the address  listed  below (or at such other  address as may have
been designated by written notice), certified or registered mail, return receipt
requested.  The  notice  shall  be  deemed  to be  received  (a) if by  personal
delivery, on the date of its actual receipt by the party entitled thereto or (b)
if by mail,  two (2) days  following  the date of deposit  in the United  States
mail.
              To the Company:  Atrion Corporation
                               One Allentown Parkway
                               Allen, TX 75002
                               Attention: Chief Financial Officer

              To 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,  Executive,  and their
respective heirs, personal  representatives,  successors and assigns;  provided,
however,  that  Executive  may not assign any  rights or  obligations  hereunder
without the express written  consent of Company.  This Agreement shall also bind
and  inure  to the  benefit  of  any  successor  of the  Company  by  merger  or
consolidation,  or any  assignee of all or  substantially  all of the  Company's
properties.

8. INVALID PROVISIONS. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term
hereof,  such  provision  shall  be fully  severable;  this  Agreement  shall be
construed and enforced as if such illegal,  invalid, or unenforceable  provision
had never  comprised a part hereof;  and the remaining  provisions  hereof shall
remain in full  force and  effect  and shall  not be  affected  by the  illegal,
invalid, or unenforceable provision or by its severance herefrom.
<PAGE>

9. EXCISE TAX GROSS-UP.

         (a) Payment of Excise Tax Amount.  In the event any of the  payments or
benefits provided to the Executive hereunder or under any other plan,  agreement
or arrangement (the "Company  Payments") will be subject to the tax (the "Excise
Tax")  imposed  by  Section  4999 of the  Code (or any  similar  tax that may be
imposed by any taxing authority),  the Company shall pay to the Executive at the
time specified below an additional amount (the "Gross-up Payment") such that the
net amount  retained by the Executive,  after the deduction of any Excise Tax on
the Company Payments and any U.S. federal, state and local income or payroll tax
on the  Gross-Up  Payment  provided  for  herein but  before  deduction  for any
federal, state or local income or payroll tax on the Company Payments,  shall be
equal to the Company Payments.

         (b)  Applicability  of Excise Tax. For purposes of determining  whether
any of the Company  Payments  and  Gross-up  Payments  (collectively  the "Total
Payments")  will be subject to the Excise Tax and the amount of such Excise Tax,
(x) the Total  Payments  shall be treated  as  "parachute  payments"  within the
meaning of Section  280G(b)(2)  of the Code,  and all  "parachute  payments"  in
excess of the "base amount" (as defined  under  Section  280G(b)(3) of the Code)
shall be  treated  as subject to the  Excise  Tax,  to the extent  that,  in the
opinion of a national independent accounting firm designated by the Executive or
tax counsel with a  nationally-recognized  law firm selected by such accountants
(the  "Accountants"),  such  Total  Payments  (in  whole or in part)  constitute
"parachute  payments," do not  represent  reasonable  compensation  for services
actually rendered within the meaning of Section 280G(b)(4) of the Code in excess
of the "base  amount" or are  otherwise  subject to the Excise Tax,  and (y) the
value of any  non-cash  benefits  or any  deferred  payment or benefit  shall be
determined by the  Accountants in accordance with the principles of Section 280G
of the Code.

         (c)  Amount of Gross-Up Payment. For purposes of determining the amount
of the  Gross-up  Payment,  the  Executive  shall be deemed to pay U.S.  federal
income taxes at the highest marginal rate of U.S. federal income taxation in the
calendar  year in which the  Gross-up  Payment is to be made and state and local
income taxes at the highest  marginal rate of taxation in the state and locality
of the Executive's  residence for the calendar year in which the Company Payment
is to be made, net of the maximum  reduction in U.S.  federal income taxes which
could be obtained  from  deduction of such state and local taxes if paid in such
year.  In the  event  that the  Excise  Tax is  subsequently  determined  by the
Accountants to be less than the amount taken into account  hereunder at the time
the Gross-up  Payment is made, the Executive shall repay to the Company,  at the
time that the amount of such reduction in Excise Tax is finally determined,  the
portion of the prior Gross-up  Payment  attributable to such reduction (plus the
portion of the Gross-up Payment attributable to the Excise Tax and U.S. federal,
state and local income tax imposed on the portion of the Gross-up  Payment being
repaid by the Executive if such  repayment  results in a reduction in Excise Tax
or a U.S. federal,  state and local income tax deduction),  plus interest on the
amount of such  repayment at the rate provided in Section  1274(b)(2)(B)  of the
Code;  provided,  however,  that if it is reasonably  likely that such repayment
could  constitute a violation of Section 402 of the  Sarbanes-Oxley  Act of 2002
(or other  applicable  law), no such payment shall be required.  Notwithstanding
the foregoing,  in the event any portion of the Gross-up  Payment to be refunded
to the Company has been paid to any U.S. federal, state and local tax authority,
repayment  thereof  (and  related  amounts)  shall not be required  until actual
refund or credit of such  portion has been made to the  Executive,  and interest
payable to the Company shall not exceed the interest received or credited to the
Executive  by such tax  authority  for the  period  it held  such  portion.  The
Executive and the Company shall  mutually  agree upon the course of action to be
pursued (and the method of allocating  the expense  thereof) if the  Executive's
claim for refund or credit is denied.
<PAGE>

In the event that the Excise Tax is later  determined by the  Accountants or the
Internal  Revenue  Service to exceed the amount taken into account  hereunder at
the time the Gross-up  Payment is made  (including  by reason of any payment the
existence  or amount of which cannot be  determined  at the time of the Gross-up
Payment),  the Company shall make an additional  Gross-up  Payment in respect of
such excess (plus any interest or penalties payable with respect to such excess)
at the time that the amount of such excess is finally determined.

         (d) Time of Payment.  The Gross-up  Payment or portion thereof provided
for in subsection  (c) above shall be paid not later than the  thirtieth  (30th)
day following an event occurring which subjects the Executive to the Excise Tax;
provided,  however,  that if the  amount of such  Gross-up  Payment  or  portion
thereof  cannot be finally  determined  on or before such day, the Company shall
pay to the Executive on such day an estimate, as determined in good faith by the
Accountants,  of the minimum amount of such payments and shall pay the remainder
of such  payments  (together  with  interest  at the rate  provided  in  Section
1274(b)(2)(B) of the Code),  subject to further payments  pursuant to subsection
(c) hereof,  as soon as the amount thereof can reasonably be determined,  but in
no event  later  than the  ninetieth  day  after  the  occurrence  of the  event
subjecting  the Executive to the Excise Tax. In the event that the amount of the
estimated payments exceeds the amount subsequently  determined to have been due,
such excess shall constitute a loan by the Company to the Executive,  payable on
the fifth day after demand by the Company  (together  with  interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
<PAGE>

         (e)  Procedures.  In the  event of any  controversy  with the  Internal
Revenue  Service (or other taxing  authority) with regard to the Excise Tax, the
Executive  shall permit the Company to control  issues related to the Excise Tax
(at its  expense),  provided  that  such  issues do not  potentially  materially
adversely  affect the  Executive,  but the  Executive  shall  control  any other
issues. In the event the issues are interrelated,  the Executive and the Company
shall in good  faith  cooperate  so as not to  jeopardize  resolution  of either
issue,  but if the  parties  cannot  agree the  Executive  shall  make the final
determination with regard to the issues. In the event of any conference with any
taxing authority as to the Excise Tax or associated  income taxes, the Executive
shall permit the  representative  of the Company to accompany the Employee,  and
the  Executive  and the  Executive's  representative  shall  cooperate  with the
Company and its representative.

         (f) Costs.  The  Company  shall be  responsible  for all charges of the
Accountant.

         (g) Notices.  The Company and the Executive  shall promptly  deliver to
each other  copies of any written  communications,  and  summaries of any verbal
communications, with any taxing authority regarding the Excise Tax.

10. NO MITIGATION; NO SET-OFF.

         (a) No Duty to Mitigate.  In the event of any termination of employment
hereunder,  Executive shall be under no obligation to seek other  employment and
there shall be no offset against any amounts due Executive  under this Agreement
on account of any  remuneration  attributable to any subsequent  employment that
Executive may obtain.

         (b) Other  Payments.  Any amounts or benefits  payable to the Executive
under this  Agreement  are,  in  addition  to,  and are not in lieu of,  amounts
payable to the Executive  under any other salary  continuation or cash severance
arrangement  of the Company or any other type of agreement  entered into between
the parties, and to the extent paid or provided under any other such arrangement
or  agreement  shall not be offset from the amounts or benefits  due  hereunder,
except to the extent expressly provided in such other arrangement or agreement.

11.  ATTORNEYS' FEES AND COSTS.  In the event that it becomes  necessary for the
Executive to seek legal  counsel with regard to a dispute,  claim or issue under
this  Agreement or the Executive  deems it necessary to initiate  arbitration in
order to enforce his rights  hereunder,  then the Company  shall bear and,  upon
notification  to  the  Company  by the  Executive,  immediately  advance  to the
Executive all expenses of such dispute,  claim, issue or arbitration,  including
the  reasonable  fees and expenses of the counsel of the  Executive  incurred in
connection with such dispute, claim, issue or arbitration,  unless an arbitrator
determines that the Executive's position was frivolous or otherwise taken in bad
faith,  in which case an arbitrator may determine that Executive  shall bear his
own  legal  fees.   Notwithstanding   any  existing  or  prior   attorney-client
relationship between the Company and the counsel selected by the Executive,  the
Company irrevocably consents to the Executive's entering into an attorney-client
relationship  with such  counsel,  and in that  connection  the  Company and the
Executive  agree  that a  confidential  relationship  shall  exist  between  the
Executive and such counsel.
<PAGE>

12. ARBITRATION.  All disputes and controversies  arising under or in connection
with this Agreement,  shall be settled by arbitration  conducted  before one (1)
arbitrator  sitting in New York, New York, or such other location  agreed by the
parties  hereto,  in accordance  with the National  Rules for the  Resolution of
Employment Disputes of the American Arbitration  Association then in effect. The
determination  of the  arbitrator  shall be final and  binding  on the  parties.
Judgment  may be  entered  on the award of the  arbitrator  in any court  having
proper  jurisdiction.  All expenses of such arbitration,  including the fees and
expenses of the counsel of the  Executive,  shall be borne by the Company unless
the arbitrator  determines that Executive's  position was frivolous or otherwise
taken in bad faith,  in which case the  arbitrator  may determine that Executive
shall bear his own legal fees.

13. LEGAL FEES. The Company shall pay the Executive's  reasonable legal fees and
costs associated with entering into this Agreement.

14. INDEMNIFICATION.  The Company shall indemnify and hold harmless Executive to
the fullest extent permitted under the Company's Bylaws as in effect on the date
hereof or the date of  termination  of  employment,  if on such date the  Bylaws
provide the Executive with greater rights to indemnification, and to the fullest
extent permitted by law for any action or inaction of Executive while serving as
an officer or  director  of the  Company  or, at the  Company's  request,  as an
officer or director of any other entity or as a fiduciary  of any benefit  plan.
The Company shall cover the  Executive  under  directors and officers  liability
insurance  both  during  and,  while  potential  liability  exists,   after  the
Employment  Term (but in no event for a period  which is less than six (6) years
after  termination)  in the same  amount and to the same  extent as the  Company
covers its other officers and directors as of the Commencement  Date or the date
of termination of employment, if on such date the Executive will receive greater
coverage under such insurance.

15.  WAIVERS AND  CONSENTS.  One or more waivers of any breach of any  covenant,
term or  provision  of this  Agreement  by any party shall not be construed as a
waiver of a subsequent breach of the same covenant, term or provision, nor shall
it be considered a waiver of any other then  existing or subsequent  breach of a
different covenant,  term or provision.  The consent or approval of either party
to or of any act by the other party requiring such consent or approval shall not
be  deemed  to  waive  or  render  unnecessary  consent  to or  approval  or any
subsequent  similar act. No custom or practice of the parties shall constitute a
waiver of either party's rights to insist upon strict  compliance with the terms
hereof.

16. SECTION HEADINGS. The headings contained in this Agreement are for reference
purposes only and do not affect in any way the meaning or interpretation of this
Agreement.

17. MULTIPLE COUNTERPARTS.  This Agreement may be executed in counterparts, each
of  which  for all  purposes  is to be  deemed  an  original,  and both of which
constitute,  collectively, one agreement; but in making proof of this Agreement,
it  shall  not be  necessary  to  produce  or  account  for  more  than one such
counterpart.
<PAGE>

18.  GOVERNING  LAW.  This  Agreement  shall be  governed  by and  construed  in
accordance  with  the  laws  of  the  State  of  Texas,  without  regard  to its
conflict-of-law rules.

19. SECTION 409A. The intent of the parties is that,  effective as of January 1,
2005, this Agreement and, while  effective,  the Current  Employment  Agreement,
will be in full  compliance with Section 409A of the Code, and in the event that
any provision of this  Agreement and, while  effective,  the Current  Employment
Agreement,  or any payment of  compensation  or benefits  paid  pursuant to this
Agreement is determined to be inconsistent with the requirements of Section 409A
of the Code, the Company shall reform this Agreement and, while  effective,  the
Current Employment Agreement, to the extent necessary to comply therewith and to
avoid the  imposition of any penalties or taxes  pursuant to Section 409A of the
Code,  provided that any such  reformation  shall to the maximum extent possible
retain the  originally  intended  economic and tax benefits to the Executive and
the  original  purpose  of  this  Agreement  and,  if  applicable,  the  Current
Employment Agreement, without violating Section 409A of the Code or creating any
unintended  or adverse  consequences  to the  Executive.  Such  reformation  may
include  imposition  of a six month delay in the payment of certain  benefits if
the  Executive is a "specified  employee"  under Section 409A of the Code at the
relevant time.

20.  ENTIRE  AGREEMENT.  The  Current  Agreement,  the  provisions  of which (as
supplemented  by Section 19 hereof)  shall remain in full force and effect until
January 1, 2007, and this Agreement  contain the entire agreement of the parties
hereto, and supersede all prior agreements and understandings,  oral or written,
if any,  between the parties hereto,  with respect to the subject matter hereof.
No  modification  or amendment of any of the terms,  conditions,  or  provisions
herein may be made  otherwise  than by written  agreement  signed by the parties
hereto.

IN WITNESS  WHEREOF,  the parties have caused this Agreement to be duly executed
and delivered as of the date first above written.

                          ATRION CORPORATION


                          By: /s/ Jeffery Strickland
                             ------------------------------------------
                          Vice President and Chief Financial Officer,
                          Secretary and Treasurer

                          /s/ Emile A. Battat
                          ---------------------------------------------
                          EMILE A. BATTAT


<PAGE>



                                    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.