EXHIBIT 10B
SEVERANCE PLAN
1. PURPOSE OF PLAN
While Atrion Corporation (the "Company") is of the view that its business
provides an optimistic outlook for the Company's future profitability and growth
and while the Company has no present plans for any Extraordinary Event (as
defined below), the Company wishes to provide certain assurances to Jeffery
Strickland (the "Executive"), who is currently serving as Vice President and
Chief Financial Officer, Secretary and Treasurer of the Company, by adopting
this Severance Plan in the event one of these Extraordinary Events should occur.
The purpose of this Severance Plan (the "Plan") is to ensure that the Executive,
who the Company recognizes has made and is expected to continue making a
significant contribution to the growth and financial success of the Company,
will be able to evaluate objectively any proposed Extraordinary Event without
being distracted by the potential economic impact of such Extraordinary Event
upon the Executive's personal circumstances.
2. DEFINITIONS.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the Compensation Committee of the Board of Directors
of the Company.
(c) "Extraordinary Event" shall mean any of the following events:
(i) 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;
(ii) 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;
(iii) Individuals who, as of the date hereof, 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 after the date
hereof 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 as of
the date hereof; or
(iv) Dissolution of the Company under Delaware law.
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(d) "Post Event Period" shall mean the period commencing on the date of the
occurrence of the first event which constitutes an Extraordinary Event and
ending upon the earliest to occur of the following:
(i) The Executive's death;
(ii) The Executive's attainment of age 65; or
(iii) The expiration of two (2) years after the occurrence of an Extraordinary
Event.
3. ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the provisions
hereof, the Committee shall have the power and authority to direct the payment
by the Company of severance pay hereunder and shall have the authority, in its
sole discretion, in accordance with the provisions hereof, to make any and all
determinations deemed necessary or desirable for the administration of the Plan.
4. TERMINATION BY COMPANY FOLLOWING AN EXTRAORDINARY EVENT
In the event of the occurrence of an Extraordinary Event, the Company may
terminate the Executive's employment by the Company during the Post Event Period
without incurring the obligation to make the payments set forth in Paragraph 5
below only for Cause. For purposes of this Plan, "Cause" shall mean (i) an act
of dishonesty by the Executive resulting in gain or personal enrichment of the
Executive, or (ii) failure by the Executive to substantially perform his duties
with the Company (other than any such failure resulting from the Executive's
incapacity due to mental or physical illness).
5. SEVERANCE PAYMENT
In the event of an Extraordinary Event as defined in Paragraph 2(c)(iv)
above during the term of this Plan or if, during the Post Event Period, the
Executive's employment by the Company is terminated by the Company other than
pursuant to Paragraph 4 above (for Cause) or is terminated by the Executive for
Good Reason (as defined in Paragraph 6 below), the Company shall pay to the
Executive in a lump sum within ten (10) business days of the effective date of
the Extraordinary Event as defined in Paragraph 2(c)(iv) above or the date of
termination of the Executive's employment with the Company during the Post Event
Period (the "Termination Date"), in lieu of any further payments of salary to
the Executive for periods subsequent to such Extraordinary Event or Termination
Date, as the case may be, an amount which is equal to the annual base salary
paid by the Company to the Executive in the twelve (12) month period preceding
such Extraordinary Event or the Termination Date, as the case may be.
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6. GOOD REASON
For purposes of this Plan, "Good Reason" shall mean any one or more of the
following:
(a) A reduction by the Company in the Executive's annual base salary during the
Post Event Period from the annual base salary in effect for Executive
immediately preceding the Post Event Period.
(b) The relocation of the Executive's principal office to a location outside of
the Dallas, Texas metropolitan area unless such relocation is effected as a
result of a request for such relocation by the Executive or a request for such
relocation that is made by the Company and agreed to by the Executive.
(c) The failure by any successor as contemplated in Paragraph 10(c) hereof to
assume this Plan and agree to perform the Company's obligations hereunder.
(d) Termination of this Plan except as permitted in Paragraph 9(a) below.
7. EMPLOYMENT RIGHTS
Nothing expressed or implied in this Plan shall create any right or duty
on the part of the Company or the Executive to have the Executive remain in the
employment of the Company prior to any Extraordinary Event.
8. WITHHOLDING OF TAXES
The Company may withhold from any amounts payable under this Plan all
federal, state, city or other taxes as shall be required pursuant to any law or
government regulation or ruling.
9. TERM
(a) This Plan shall terminate upon the earliest to occur of the following:
(i) The termination of the Executive's employment by the Company prior
to any Extraordinary Event; provided, however, that any termination
of employment of the Executive following the commencement of any
discussions with a third party authorized by the Board that is
followed by an Extraordinary Event in which such third party (or an
associate or affiliate thereof) is a party within six (6) months of
the commencement of such discussions shall be deemed to be a
termination of the Executive's employment after an Extraordinary
Event for purposes of this Plan; provided further, however, that any
termination of the Executive's employment without Cause (as defined
in Paragraph 4 above) within six (6) months preceding the earlier of
(A) an Extraordinary Event defined in Paragraph 2(c)(iv) hereof or
(B) the adoption by the Board of a resolution to dissolve the
Company that is followed by an Extraordinary Event defined in
Paragraph 2(c)(iv) hereof shall be deemed to have occurred after the
Extraordinary Event defined in Paragraph 2(c)(iv) hereof;
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(ii) The termination of the Post Event Period; and
(iii) The termination of the Executive's employment by the Company after
an Extraordinary Event pursuant to the provisions of Paragraph 4
herein (for Cause).
(b) Notwithstanding the foregoing, the Company may give written notice of
termination of this Plan to the Executive at any time after April 25, 2001, and
in such event this Plan shall terminate on the last day of the twelfth (12th)
month following the date such written notice is given.
10. MISCELLANEOUS
(a) The validity, interpretation, construction and performance of this Plan
shall be governed by the laws of the State of Texas.
(b) No member of the Board or the Committee nor any officer or employee of the
Company acting on behalf of the Board or the Committee shall be personally
liable for any action, determination or interpretation taken or made in good
faith with respect to the Plan; and all members of the Board and the Committee
and each officer and employee acting on their behalf shall, to the extent
permitted by law, be indemnified and held harmless by the Company in respect of
any such action, determination or interpretation.
(c) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company to assume this Plan
and the Company's obligations hereunder in the same manner and to the same
extent the Company would be required to perform hereunder if no such succession
had taken place.
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