CHANGE IN CONTROL AGREEMENT
Exhibit
10.1
THIS
CHANGE IN CONTROL AGREEMENT (the “Agreement”) is entered into as of the 31st day
of March, 2009 (the “Effective Date”) by and between ATRION CORPORATION, a
Delaware Corporation (the “Company”) and XXXXX X. XXXXXX (the
“Executive”).
W I T N E
S S E T H:
WHEREAS,
the Executive is currently employed as the President and Chief Operating Officer
of the Company and as President of Xxxxxx-Xxxxxxx Corporation
(“Xxxxxx-Xxxxxxx”), a Company subsidiary; and
WHEREAS,
the Company and the Executive desire to provide certain benefits to the
Executive in the event the Executive’s employment with the Company or
Xxxxxx-Xxxxxxx is terminated in connection with a change in control of the
Company.
NOW,
THEREFORE, in consideration of the foregoing, the mutual provisions contained
herein, and for other good and valuable considerations, the parties hereto agree
as follows:
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1.
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Term of
Agreement.
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(a) The term
of this Agreement shall commence on the Effective Date and shall terminate on
the second anniversary of the Effective Date, provided, however, that commencing
on the day after the Effective Date and continuing on each day thereafter (each
such day being hereinafter referred to as a “Renewal Date”), the term of this
Agreement shall be automatically extended so as to terminate on the second
anniversary of such Renewal Date unless the Company shall give written notice to
the Executive that the term of this Agreement shall not be so extended as of a
specified Renewal Date, in which event this Agreement shall automatically
terminate on the second anniversary of such specified Renewal Date.
(b) Notwithstanding
subsection (a) hereof, this Agreement shall continue in effect
(i) until the date two years beyond the initial or any extended date
of termination in the event of a Change in Control (as defined in Exhibit A
hereto) prior to such date of termination, and (ii) thereafter until the date
that all obligations of the Company hereunder have been paid in
full.
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2.
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Termination of
Employment.
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(a) As set
forth in detail in this Section 2, if the Executive’s employment by the Company
or Xxxxxx-Xxxxxxx is terminated in contemplation of or within two years
following a Change in Control, the Executive shall be entitled to the
compensation provided in Section 3 of this Agreement unless such termination is
as a result of (i) the Executive’s death, (ii) the Executive’s Disability (as
defined below), (iii) the Executive’s termination for Just Cause (as defined
below), or (iv) termination of employment by the Executive other than for Good
Reason (as defined below).
(b) The
Executive shall be considered to be subject to a "Disability" if, as a result of
physical or mental sickness or incapacity or accident, the Executive is unable
to perform the normal duties of his employment with the Company or
Xxxxxx-Xxxxxxx for a period of ninety (90) days in any one hundred twenty (120)
day period. If there is any disagreement between the Company and the
Executive as to whether the Executive was unable to perform the normal duties of
his employment due to Disability, the same shall be determined after examination
of the Executive by a physician selected by the Executive (or, if the Executive
is unable to make such selection, it shall be made by the Executive's
spouse or, if the Executive is not married or if his spouse is unable
or unwilling to make the selection, by any other adult member of the
Executive's immediate family) and approved by the Company. The costs
and expenses of such examination shall be borne by the Company. The
determination of such physician shall be conclusive evidence as to whether the
Executive was unable to perform the normal duties of his employment due to
Disability. If the Executive does not permit such examination by such
physician, then, for purposes hereof, the determination as to whether the
Executive was unable to perform the normal duties of his employment due to
Disability shall be made by the Board of Directors of the Company (the
“Board”). Nothing herein shall have any effect upon the Executive's
eligibility to receive any disability benefits from the Company or
Xxxxxx-Xxxxxxx pursuant to the terms and conditions of any disability plan or
other arrangement which the Company or Xxxxxx-Xxxxxxx may have in effect from
time to time.
(c) In the
event the Executive’s employment with the Company or Xxxxxx-Xxxxxxx is
terminated by the Company or Xxxxxx-Xxxxxxx, whether or not in contemplation of
or within two years following a Change in Control, (i) for Just Cause, (ii) by
the Executive for other than Good Reason (as defined below), or (iii) due to the
Executive’s death of Disability, then the Executive shall not be entitled to the
compensation provided in Section 3 below or other compensation or benefits
hereunder. The term “Just Cause” shall mean (A) the Executive's
continuing willful failure to perform his material duties and obligations as
President and Chief Operating Officer of the Company or as President of
Xxxxxx-Xxxxxxx (except by reason of his death or incapacity due to his
Disability) after written notice thereof by the Company to the Executive, and
the Executive's failure or refusal to perform such duties and obligations within
thirty (30) days after the receipt of such notice by the Executive or (B) the
conviction of, or the entering of a plea of nolo contendere by, the Executive
with respect to a felony (other than as a result of a traffic violation or as a
result of vicarious liability), provided that on or after a Change in Control,
Just Cause shall be limited to only clause (B) above. For purposes of
this Section 2(c), no act, or failure to act, on Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interests of the Company or Xxxxxx-Xxxxxxx. The Company must assert a
Just Cause termination event no later than ninety (90) days after discovery of
such event.
(d) In the
event the Executive’s employment with the Company or Xxxxxx-Xxxxxxx is
terminated in contemplation of or within two years following a Change in Control
(i) by the Company or Xxxxxx-Xxxxxxx without Just Cause or (ii) by the Executive
for Good Reason, the Executive shall be entitled to the compensation and other
benefits provided in Section 3 below. The term “Good Reason” shall
mean any one or more of the following: (A) without the Executive's express
written consent, any diminution in the Executive's titles, authorities,
responsibilities or the assignment of the Executive to any duties inconsistent
with his position, duties, responsibilities and status with the Company as its
President and Chief Operating Officer and President of Xxxxxx-Xxxxxxx or the
removal by the Board, or the failure or refusal of the Board to re-elect, the
Executive as the President and Chief Operating Officer of the Company and
President of Xxxxxx-Xxxxxxx at any time during the term of this Agreement; (B)
the Company's breach of any provision of this Agreement or any other breach by
the Company or Xxxxxx-Xxxxxxx of any provision of any agreement between the
Company or Xxxxxx-Xxxxxxx and the Executive and failure, within the ten (10) day
period following its receipt of written notice from the Executive describing
such breach in reasonable detail, to promptly commence in good faith to cure
such breach (if curable); provided that such cure must be effected no later than
thirty (30) days following such notice and provided further that such cure right
shall not be available on more than one occasion in any twelve (12) month
period; (C) failure of the Company to obtain the assumption in writing (a copy
of which is delivered to the Executive) of the Company's obligations hereunder
to the Executive by any successor to the Company prior to or at the time of a
merger, acquisition, consolidation, disposition of substantially all of the
assets of the Company or similar transaction. For purposes of clause
(A) above, a "diminution in the Executive's titles, authorities or
responsibilities" shall be deemed to have occurred if the Company is no longer
required to file reports pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended.
The
Executive must assert a "Good Reason" termination event no later than ninety
(90) days after the Executive discovers such event.
(e) Any
termination of the Executive’s employment by the Company or Xxxxxx-Xxxxxxx as
set forth in Section 2(c)(i) or 2(d)(i) or by the Executive as set forth in
Section 2(c)(ii) or 2(d)(ii) shall be communicated to the other party by a
Notice of Termination. For purposes of this Agreement, a “Notice of
Termination” shall mean a written notice which shall state the specific
termination provision in this Agreement pursuant to which such termination
allegedly falls and which sets forth in reasonable detail the facts and
circumstances which form the basis for such termination.
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3.
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Termination
Payment.
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(a) In the
event the Executive’s employment is terminated pursuant to Section 2(d), the
Executive shall be entitled to receive the following payments:
the
Executive’s base salary and annual bonus for the calendar year in which the date
of termination falls, in each case prorated for the number of days of the
calendar year that elapsed prior to the date of termination, accrued vacation
pay and unreimbursed business expenses, such payment to be made as soon as
practicable following the termination date but in any event within two and
one-half (2½) months after the end of the calendar year in which the Executive's
employment is terminated; and
two times
the sum of (A) the Executive’s base salary for the twelve (12) months
immediately preceding the month in which the Executive’s employment is
terminated and (B) the sum of the (i) average of the annual bonuses paid, or
that would have been paid had the Executive’s employment with Xxxxxx-Xxxxxxx not
been terminated, to the Executive under the Xxxxxx-Xxxxxxx Incentive
Compensation Plan for the three calendar years prior to the calendar year in
which such termination occurs and (ii) average of the annual bonuses received by
the Executive under any other bonus or incentive plan of the Company or
Xxxxxx-Xxxxxxx for the three calendar years prior to the calendar year in which
such termination occurs, such payment to be made as soon as practicable
following the termination date but in no event later than ten (10) days after
the termination date.
(b) In
addition to the payments provided for in Section 3(a), in the event the
Executive’s employment is terminated as set forth in Section 2(d), all stock
options and/or equity granted to the Executive shall fully vest and become
exercisable on the termination date and upon the Executive's termination of
employment the Company or Xxxxxx-Xxxxxxx shall pay one-hundred percent (100%) of
the premiums for twelve (12) months of continuation coverage for health benefits
under the Consolidated Omnibus Budget Reconciliation Act of 1985 for the
Executive and his eligible dependents.
4. Withholding. The
Company shall be entitled to withhold from amounts to be paid to the Executive
hereunder any federal, state, or local withholding or other taxes or charges
which it is from time to time required to withhold; provided, that the amount so
withheld shall not exceed the minimum amount required to be withheld by law in
light of the circumstances. The Company shall be entitled to rely on
an opinion of tax counsel if any question as to the amount or requirement of any
such withholding shall arise.
5. Notices. All
notices provided for by this Agreement shall be in writing and shall be (a)
personally delivered to the party thereunto entitled or (b) deposited in the
United States mail, postage prepaid, addressed to the party to be notified at
the address listed below (or at such other address as may have been designated
by written notice), certified or registered mail, return receipt
requested. The notice shall be deemed to be received (a) if by
personal delivery, on the date of its actual receipt by the party entitled
thereto or (b) if by mail, two (2) days following the date of deposit in the
United States mail.
To the
Company: Atrion
Corporation
Xxx Xxxxxxxxx Xxxxxxx
Xxxxx,
Xxxxx 00000
Attention: Chief Financial
Officer
To
Executive: Xxxxx
X. Xxxxxx
To the most recent
address
on file with the Company.
6. Parties
Bound. This Agreement and the rights and obligations hereunder
shall be binding upon and inure to the benefit of the Company, Executive, and
their respective heirs, personal representatives, successors and assigns;
provided, however, that Executive may not assign any rights or obligations
hereunder without the express written consent of Company. This
Agreement shall also bind and inure to the benefit of any successor of the
Company by merger or consolidation, or any assignee of all or substantially all
of the Company's properties.
7. Invalid
Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom.
8. No Mitigation; No
Set-Off.
(a) 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.
9. Attorneys' Fees And
Costs. In the event that it becomes necessary for the
Executive to seek legal counsel with regard to a dispute, claim or issue under
this Agreement or the Executive deems it necessary to initiate arbitration in
order to enforce his rights hereunder, then the Company shall bear and, upon
notification to the Company by the Executive, immediately advance to the
Executive all expenses of such dispute, claim, issue or arbitration, including
the reasonable fees and expenses of the counsel of the Executive incurred in
connection with such dispute, claim, issue or arbitration, unless an arbitrator
determines that the Executive's position was frivolous or otherwise taken in bad
faith, in which case an arbitrator may determine that Executive shall bear his
own legal fees. Notwithstanding any existing or prior attorney-client
relationship between the Company and the counsel selected by the Executive, the
Company irrevocably consents to the Executive's entering into an attorney-client
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel.
10. Arbitration. All
disputes and controversies arising under or in connection with this Agreement,
shall be settled by arbitration conducted before one (1) arbitrator sitting in
New York, New York, or such other location agreed to by the parties hereto, in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association then in effect. The determination of the
arbitrator shall be final and binding on the parties. Judgment may be entered on
the award of the arbitrator in any court having proper jurisdiction. All
expenses of such arbitration, including the fees and expenses of the counsel for
the Executive, shall be borne by the Company unless the arbitrator determines
that 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.
11. Section
Headings. The headings contained in this Agreement are for
reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement.
12. Multiple
Counterparts. This Agreement may be executed in counterparts,
each of which for all purposes is to be deemed an original, and both of which
constitute, collectively, one agreement; but in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.
13. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to its
conflict-of-law rules.
14. Section
409A. This Agreement is not intended to provide for the
deferral of compensation within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended, but, rather, is intended to satisfy the
short-term deferral exemption under Treasury Regulation
§ 1.409A-1(b)(4). To that end, all payments provided for under
Section 3(a) of this Agreement shall be made no later than two and one-half (2½)
months after the end of the calendar year in which the Executive's employment is
terminated.
15. Entire
Agreement. This Agreement contains the entire agreement of the
parties hereto, and supersedes 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/ Xxxxxxx Xxxxxxxxxx | |
| Its: Vice President and Chief Financial Officer | |
| /s/ Xxxxx X. Xxxxxx | |
| XXXXX X. XXXXXX | |
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.
