Document:

ex10_1.htm

    
      

    

    Exhibit
10.1

    

    

    ATRION
CORPORATION

    

    DEFERRED
COMPENSATION PLAN FOR

    NON-EMPLOYEE
DIRECTORS

    (As
amended and restated as of March 5, 2008)

    

    

    1. 
Purpose; Effective Date.  Atrion Corporation (the "Company") has
established this Deferred Compensation Plan for Non-Employee Directors (the
"Plan") for the purpose of providing an unfunded nonqualified deferred
compensation plan for the non-employee directors of the Company (the
"Directors"). The Plan shall be effective as of the date it is approved by the
Board of Directors of the Company (the "Board").

    

    2.  
Eligibility. Persons eligible to defer compensation under the Plan shall consist
of the Directors.  Any Director who has submitted a Deferred Fee
Election Form, as defined below, is hereinafter referred to as a
"Participant."

    

    3. 
 Deferred Fees.  A Director may elect to defer receipt of all or
a portion of the cash fees payable for services as a director and for services
as a member of a Committee of the Board (the "Fees") by submitting to the
Company an election form with respect to such Fees (the "Deferred Fee Election
Form").  The Deferred Fee Election Form must be submitted to the
Company no later than the applicable Deferral Deadline, as defined
below.  A Deferred Fee Election Form submitted by a Participant shall
automatically continue from year to year and shall be irrevocable once the
Deferral Deadline for those Fees has passed, but the Participant may modify or
terminate a Deferred Fee Election Form with respect to Fees payable in any year
by submitting a revised Deferred Fee Election Form or otherwise giving written
notice to the Company at any time on or prior to the Deferral Deadline for those
Fees.  The Deferral Deadline for an election to defer Fees for
services performed in any calendar year shall be the last day of the prior
calendar year; provided, however, that the Deferral Deadline for a Director's
first year of eligibility in this Plan shall be the 30th day following the date
the Director becomes eligible to participate in this Plan with respect to Fees
payable for services performed after the election is made.  Directors
at the effective date of the Plan will become eligible to participate in this
Plan as of that date.  Directors elected after the date on which the
Plan becomes effective will be eligible to participate in the Plan upon election
to the Board.

    

    4.  
Deferred Stock Unit Accounts.

    

    (a) Accounts.
The Company shall establish on its books a Deferred Stock Unit Account ("DSU
Account") for each Participant that elects to defer Fees, which shall be
denominated in Deferred Stock Units ("DSUs"), including fractional
DSUs.  The DSU Account shall be credited with a number of DSUs equal
to the Fees deferred by the Director (the "Deferred Fees") divided by the
closing market price of the common stock of the Company (the "Common Stock") on
the day the Deferred Fees would have been paid if not for the deferral. On the
first business day of each calendar year, each DSU Account shall be credited
with an additional number of DSUs (including fractional DSUs) equal to the total
amount of dividends that would have been paid during the prior year on the
number of DSUs recorded as the balance of that DSU Account on each date such
dividends were paid divided by the closing market price for the Common Stock on
such dividend payment dates.  A Participant shall be one hundred
percent (100%) vested in the number of DSUs held in his or her DSU Account at
all times.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
10.1

    

    

    (b) Statement
of Account. At least annually, a report shall be issued by the Company to each
Participant setting forth the balance of the Participant's DSU Account under the
Plan.

    

    (c) Effect
of Change in Control on DSU Accounts. At the time of consummation of a Change in
Control (as defined below), if any, the amount credited to a Participant's DSU
Account shall be converted into a credit for cash or common stock of the
acquiring company ("Acquiror Stock") based on the consideration received by
stockholders of the Company ("Stockholders") in the Change in Control, as
follows:

    

    (i) Stock
Transaction. If Stockholders receive Acquiror Stock in the Change in Control,
then (1) the amount credited to each Participant's DSU Account shall be
converted into a credit for the number of shares of Acquiror Stock that the
Participant would have received as a result of the Change in Control if the
Participant had actually held the Common Stock credited to his or her DSU
Account immediately prior to the consummation of the Change in Control, and (2)
DSU Accounts will thereafter be denominated in shares of Acquiror Stock and
ongoing deferral of Fees shall continue to be made into the DSU Accounts as so
denominated in accordance with the terms of outstanding deferral
elections.

    

    (ii) Cash
or Other Property Transaction. If Stockholders receive cash or other property in
the Change in Control, then (1) the amount credited to a Participant's DSU
Account shall be converted into a cash credit for the amount of cash or the
value of the property that the Participant would have received as a result of
the Change in Control if the Participant had actually held the Common Stock
credited to his or her DSU Account immediately prior to the consummation of the
Change in Control, and the cash so credited to the Participant shall be
distributed in a lump sum to the Participant in January of the year following
the Change of Control, and (2) DSU Accounts shall no longer exist under the
Plan, and there shall be no ongoing deferrals.

    

    (iii) Combination
Transaction. If Stockholders receive Acquiror Stock and cash or other property
in the Change in Control, then (1) the amount credited to each Participant's DSU
Account shall be converted in part into a credit for Acquiror Stock under
Section 4(c)(i) and in part into a credit for cash under Section 4(c)(ii) in the
same proportion as such consideration is received by the Stockholders, and (2)
ongoing deferral and crediting of Fees shall continue to be made into the DSU
Accounts as provided in Section 4(c)(i) in accordance with the terms of
outstanding deferral elections.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
10.1

    

    

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

    

    5.  
Distributions.

    

    (a) Timing
of Distributions.  Each Deferred Fee Election Form shall include an
election by the Participant as to the timing of distributions with respect to
Deferred Fees.  Except as otherwise provided in this Section 5, such
elections shall be irrevocable with respect to Deferred Fees once the Deferral
Deadline for such Deferred Fees has passed.  All distributions from
the Plan shall be made in shares of Common Stock with one share of Common Stock
to be distributed for each DSU in the Director’s DSU Account plus cash for any
fractional DSU.

    

    (b) Distribution
Timing and Valuation. Distributions shall be made in January of the year
following the year in which service as a Director of the Company ceases for any
reason or in January of the year the Participant elects in the Deferred Fee
Election Form.  All distributions   due under the Plan
in any year shall be made on a date in January determined by the Compensation
Committee of the Board (the "Committee").  All distributions shall be
based on DSU Account balances as of the close of business on the last trading
day of the immediately preceding year plus any additional DSUs credited to the
DSU Account pursuant to the third sentence of Section 4(a) above. 

    

    (e) Designation
of Beneficiaries; Death.

    

    (i) Each
Participant shall have the right, at any time, to designate any person or
persons as the Participant's beneficiary or beneficiaries (both primary as well
as secondary) to whom distributions under this Plan shall be made in the event
of the Participant's death prior to completion of distribution due under the
Plan. If greater than fifty percent (50%) of the distribution is designated to a
beneficiary other than the Participant's spouse, such beneficiary designation
shall be consented to by the Participant's spouse. Each beneficiary designation
shall be in written form prescribed by the Company and will be effective only if
filed with the Company during the Participant's lifetime. Such designation may
be changed by the Participant at any time without the consent of a beneficiary,
subject to the spousal consent requirement above. If no designated beneficiary
survives the Participant, the Participant's distributions shall be made to the
Participant's surviving spouse or, if no spouse survives, to the Participant's
estate.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
10.1

    

    

    (ii) Upon
the death of a Participant, all distributions shall be made in January of the
year following death.

    

    (f) Distribution
to Guardian. If a distribution under the Plan is due to a minor or a person
declared incompetent or to a person incapable of handling the disposition of his
property, the Committee may direct such distribution to the guardian, legal
representative or person responsible for the care and custody of such minor,
incompetent or person. The Committee may require proof of incompetence,
minority, incapacity or guardianship as it may deem appropriate prior to such
distribution. Such distribution shall completely discharge the Committee and the
Company from all liability with respect to such distribution.

    

    (g) Withholding;
Payroll Taxes. The Company shall withhold from distributions made hereunder any
taxes required to be withheld from such distributions under federal, state or
local law.

    

    6.  
Administration.

    

    (a) Committee
Duties. This Plan shall be administered by the Committee. The Committee shall
have responsibility for the general administration of the Plan and for carrying
out its intent and provisions. The Committee shall interpret the Plan and have
such powers and duties as may be necessary to discharge its responsibilities.
The Committee may, from time to time, employ other agents and delegate to them
such administrative duties as it sees fit, and may from time to time consult
with counsel who may be counsel to the Company.

    

    (b) Binding
Effect of Decisions. The decision or action of the Committee in respect of any
question arising out of or in connection with the administration, interpretation
and application of the Plan and the rules and regulations promulgated hereunder
shall be final, conclusive and binding upon all persons having any interest in
the Plan.

    

    7.  
Amendment and Termination of the Plan.

    

    (a) Amendment.
The Board may at any time amend the Plan in whole or in part; provided, however,
that no amendment shall affect the terms of any previously deferred amounts or
the terms of any irrevocable Deferred Fee Election Form of any
Participant.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
10.1

    

    

    (b) Termination.
The Board may at any time partially or completely terminate the Plan if, in its
judgment, the tax, accounting, or other effects of the continuance of the Plan,
or potential distributions thereunder, would not be in the best interests of the
Company.

    

    (i) Partial
Termination. The Board may partially terminate the Plan by instructing the
Committee not to accept any additional Deferred Fee Election Forms and
terminating all existing Deferred Fee Election Forms to the extent such Deferred
Fee Election Forms have not yet become irrevocable. In the event of such a
partial termination, the Plan shall continue to operate and be effective with
regard to all elections regarding Deferred Fees made prior to the effective date
of such partial termination.

    

    (ii) Complete
Termination. The Board may completely terminate the Plan as provided in this
Section 7(b)(ii). In connection with any complete termination, the Company shall
take all actions necessary so that Participants do not incur any taxes under
Section 409A of the Internal Revenue Code.

    

    (1) In
the event the Board causes a complete termination of the Plan (other than in
connection with a Change in Control Event as provided in Section 8(b)(ii)(2)),
the Plan shall continue to operate as in a partial termination except as
provided in this Section 8(b)(ii)(1). For a period selected by the Board of at
least 12 months from the date the Board takes action to terminate the Plan, the
Plan shall continue to make distributions otherwise due under the terms of the
Plan absent termination of the Plan. On a date selected by the Board that is
more than 12 months from the date the Board took action to terminate the Plan,
the Plan shall cease to operate, the Company shall determine the balance of each
Participant's DSU Account as of the close of business on such date and the
Company shall distribute such DSU Account balances to the Participants in a
single lump sum distribution as soon as practicable after such date, but in no
event shall such distribution be made later than 24 months after the date the
Board took action to terminate the Plan.

    

    (2) The
Board may completely terminate the Plan at any time during the 30 days preceding
or the 12 months following a Change in Control Event (as defined in the proposed
regulations under Section 409A of the Internal Revenue Code in effect as of the
effective date of the Plan or in any revised or final regulations adopted after
the effective date of the Plan). In that event, on the effective date of the
complete termination, the Plan shall cease to operate, the Company shall
determine the balance of each Participant's DSU Account as of the close of
business on such effective date, and the Company shall distribute such DSU
Account balance to the Participants in a single lump sum distribution as soon as
practicable after such effective date and in no event later than 12 months after
such effective date.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
10.1

    

    

    8.  
Miscellaneous.

    

    (a) No
Funding.  The obligations of the Company to make distributions under
this Plan shall be interpreted solely as an unfunded, contractual obligation to
distribute only those amounts credited to the Participant's DSU
Account.  Any assets set aside, including any assets transferred to a
grantor trust or purchased by the Company with respect to amounts payable under
the Plan, shall be subject to the claims of the Company's general creditors, and
no person other than the Company shall, by virtue of the provisions of the Plan,
have any interest in such assets.

    

    (b) Non-assignability.
Neither a Participant nor any other person shall have the right to commute,
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to which
are, expressly declared to be non-assignable and nontransferable. No part of the
distributions to be made hereunder shall, prior to actual distribution, be
subject to seizure or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or any other person, nor
be transferable by operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.

    

    (c)  Compliance
with Laws.  This Plan and the issuance and delivery of shares of
Common Stock under this Plan are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan shall be
deemed amended to the extent necessary to conform to such laws, rules and
regulations.

    

    (d) Governing
Law. The provisions of this Plan shall be construed and interpreted according to
the laws of the State of Texas, except as preempted by federal law.

    

    (e) Validity.
In case any provision of this Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provisions had never been inserted herein.

    

    (f) Notice.
Any notice or filing required or permitted to be given to the Company or the
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to the Secretary of the Company. Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
10.1

    

    

    (g) Successors.
The provisions of this Plan shall bind and inure to the benefit of the Company
and its successors and assigns. The term successors as used herein shall include
any corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise acquire all or substantially all of the
business and assets of the Company, and successors of any such corporation or
other business entity.ANNEX

    
      	
              Purchaser

            	
               

            	
              Subscription
                Amount

            	
               

            	
              Principal
                Amount

            	
               

            	
              5
                Yr. Warrant Shares @ 0.92 prior to adjustment

            	
               

            	
              2
                Yr. Warrant Shares @ $0.90 prior to adjustment

            	
               

            	
              2
                Yr. Warrant Shares @ $1.60 prior to adjustment

            	
               

            	
              5
                Yr. Warrant Shares @ 0.60 following adjustment

            	
               

            	
              2
                Yr. Warrant Shares @ $0.60 following adjustment

            	
               

            	
              2
                Yr. Warrant Shares @ $0.60 following adjustment (formerly 1.60
                shares)

            	
               

            
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Enable
                Growth Partners LP

            	 	
              $

            	
              2,082,501.04

            	 	
              $

            	
              2,450,000

            	 	 	
              2,916,667
                

            	 	 	
              729,167
                

            	 	 	
              729,167
                

            	 	 	
              4,472,223

            	 	 	
              1,093,751

            	 	 	
              1,944,445

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Enable
                Opportunity Partners LP

            	 	
              $

            	
              368,050.18

            	 	
              $

            	
              433,000

            	 	 	
              515,476
                

            	 	 	
              128,869
                

            	 	 	
              128,869
                

            	 	 	
              790,397

            	 	 	
              193,304

            	 	 	
              343,651

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Pierce
                Diversified Strategy Master Fund LLC, Ena

            	 	
              $

            	
              51,000.13

            	 	
              $

            	
              60,000

            	 	 	
              71,429
                

            	 	 	
              17,857
                

            	 	 	
              17,857
                

            	 	 	
              109,524

            	 	 	
              26,786

            	 	 	
              47,619

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              BridgePointe
                Master Fund Ltd.

            	 	
              $

            	
              1,500,000

            	 	
              $

            	
              1,764,705

            	 	 	
              2,100,839
                

            	 	 	
              525,210
                

            	 	 	
              525,210
                

            	 	 	
              3,221,286

            	 	 	
              787,815

            	 	 	
              1,400,560

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Total

            	 	
              $

            	
              4,001,551.35

            	 	
              $

            	
              4,707,705

            	 	 	
              5,604,411
                

            	 	 	
              1,401,103
                

            	 	 	
              1,401,103
                

            	 	 	
              8,593,430

            	 	 	
              2,101,655

            	 	 	
              3,736,275

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