Exhibit
10.3


 


AMENDED AND
RESTATED EMPLOYMENT AGREEMENT


 


THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is
made and entered into by and between Merit Medical Systems, Inc., a Utah
corporation (the “Company”) and Martin R. Stephens (the “Executive”), as of the
31st day of December, 2008.


 


RECITALS:


 


WHEREAS, the Executive currently serves as an executive employee of the
Company and may have had a previous Employment Agreement (the “Prior
Agreement”); and


 


WHEREAS, the Board of Directors of the Company (the “Board”) has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control
(as defined below) of the Company; and


 


WHEREAS, the Company and the Executive desire to amend and restate the
Executive’s Employment Agreement to read as follows:


 


A G R E E M E N T :


 


NOW, THEREFORE, any Prior Agreement is hereby amended and restated to
read in its entirety as follows:


 


1.                                                                                       Certain Definitions.  For
purposes of this Agreement, the following terms shall have the following
meanings:


 


(a)                                  “Affiliated Companies” shall mean any
corporation, partnership, limited liability company or other business entity
controlled by, controlling or under common control with the Company.  One entity shall be presumed to control
another if it owns directly, or indirectly through other Affiliated Companies,
a majority of the outstanding voting equity interests of the other entity.


 


(b)                                 “Change in Control” shall mean:


 


(i)                                     The acquisition in one or more integrated
transactions by any individual, entity or group (within the meaning of Section 13(d) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) (a “Person”) of beneficial ownership (within the meaning of Rule 13d—3
promulgated under the Exchange Act) of 20% or more of either:


 


(A)                              the then outstanding shares of common stock
of the Company (the “Outstanding Company Common Stock”); or


 


(B)                                the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”);


 


provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control


 


(C)                                any acquisition by the Company;


 


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(D)                               any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or


 


(E)                                 any acquisition by any corporation or other
entity pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this Section 1(a); or


 


(ii)                                  Individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or


 


(iii)                               Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination,


 


(A)                              all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be;


 


(B)                                no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination; and


 


(C)                                at least a majority of the members of the
Board of Directors of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board providing for such Business
Combination; or


 


(iv)                              Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company.


 


(c)                                  “Code” means the Internal Revenue Code
of 1986, as amended.


 


(d)                                 “Company” shall mean Merit Medical
Systems, Inc.


 


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(e)                                  “Employment Period” shall mean the
period commencing on the date hereof and continuing through the effective date
of termination of Executive’s employment as provided below.


 


(f)                                    “Executive” shall mean Martin R.
Stephens.


 


(g)                                 “Separation from Service” means a
“separation from service” (as defined in Treasury Regulation Section 1.409A-1(h) or
any successor provision thereto) from the Company.


 


(h)                                 “Specified Employee” means a
“specified employee” within the meaning of Code Section 409A(2)(B).  The Executive will be a Specified Employee
if, as of the Executive’s date of Separation from Service, the Executive is a
“key employee” of the Company or any Affiliated Companies.  The Executive shall be treated as a “key
employee” for the entire 12-month period beginning on each April 1 (a
“Specified Employee Effective Date”) if the Executive meets the requirements of
Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance
with applicable regulations thereunder and without regard to Code Section 416(i)(5))
at any time during the 12-month period ending on the December 31
immediately preceding that Specified Employee Effective Date.  In the event of corporate transactions
described in Treasury Regulation Section 1.409A-1(i)6), the identification
of Specified Employees shall be determined in accordance with the default rules described
therein, unless the Employer elects to utilize the available alternative
methodology through designations made within the timeframes specified therein.


 


2.                                                                                       Employment.  Subject to termination as
provided below, the Company hereby agrees to continue the Executive in its
employ “at will”, and the Executive hereby agrees to remain in the employ of
the Company “at will”, subject to the terms and conditions of this
Agreement.  As an “at will” employee, the
Company may terminate the Executive’s employment, and the Executive may resign
his employment with the Company, at any time and for any or no reason.


 


3.                                                                                       Terms of Employment.


 


(a)                                  Position and Duties.


 


(i)                                     During the Employment Period, the Executive’s
duties and position shall be Executive Vice President Sales. Notwithstanding
the foregoing, upon a Change in Control: (A) the Executive’s position
(including offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120—day period immediately preceding the effective date of a Change in
Control; and (B) the Executive’s services shall be performed at the
location where the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from such location.


 


(ii)                                  During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully and efficiently
such responsibilities.  During the
Employment Period it shall not be a violation of this Agreement for the
Executive to: (A) serve on corporate, civic or charitable boards or
committees, provided that the Executive obtains the Company’s prior, written
consent, which will not be unreasonably withheld; (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions; and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive’s responsibilities as an employee of the
Company in 


 


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accordance with this Agreement. 
It is expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the effective date of
a Change in Control, the continued conduct of such activities (or the conduct
of activities similar in nature and scope thereto) subsequent to the effective
date shall not thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.


 


(b)                                 Compensation.


 


(i)                                     Base Salary.  During the Employment Period
the Executive shall receive an annual base salary (“Annual Base Salary”),
which shall be paid in equal monthly installments, at least equal to $350,000
per year or such other amount as is authorized by the Compensation Committee of
the Board of Directors of the Company; provided, however that following a
Change in Control, the Executive’s rate of Annual Base Salary for any fiscal
year of the Company following the Change in Control shall not be less than
twelve times the highest monthly base salary paid or payable (including any
base salary which has been earned but deferred) to the Executive by the Company
and its Affiliated Companies in respect of the twelve—month period immediately
preceding the month in which the Change in Control occurs.  During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary increase
or decrease applicable to the Executive and thereafter at least annually.  Any increase or decrease in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement.


 


(ii)                                  Annual Bonus.  In
addition to Annual Base Salary, for each fiscal year of the Company that ends
during the Employment Period (a “Bonus Award Year”) the Executive shall be
awarded an annual bonus (the “Annual Bonus”) in cash in such amount as
the Company’s Board of Directors determines in its sole discretion; provided
that (A) no Annual Bonus shall be payable for a particular Bonus Award
Year unless the Executive is still employed by the Company on the last day of
the Bonus Award Year in question; and (B) for any Company fiscal year
ending on or after the effective date of a Change in Control, the Annual Bonus
shall be at least equal to the Executive’s average annual cash bonus for the
last three full 12-month fiscal years ending prior to the Change in Control
(annualized in the event that the Executive was not employed by the Company for
the whole of any such full 12-month Company fiscal year) (the “Average
Annual Bonus”).  Each such Annual
Bonus shall be paid to the Executive not later than the 15th day of
the third month following the calendar year in which the Annual Bonus is
earned, unless the Executive shall elect to defer the receipt of such Annual
Bonus pursuant to a non-qualified deferred compensation plan maintained by the
Company that complies with the requirements of Code Section 409A.  The Executive shall not be entitled to any
Annual Bonus for a Bonus Award Year unless the Executive remains employed by
the Company through the last day of the Bonus Award Year in question.


 


(iii)                               Stock Incentive and Retirement Plans. 
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the Company and
its Affiliated Companies.  In no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in
each case, materially less favorable, in the aggregate following the effective
date of a Change in Control, than the those provided by the Company and its
Affiliated Companies for the Executive under such plans, practices, policies
and programs as in effect at any time during the 120—day period immediately
preceding the Change in Control or if more favorable to the Executive, those
provided generally at any time after the Change in Control to other peer
executives of the Company and its Affiliated Companies.


 


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(iv)                              Welfare Benefit Plans. 
During the Employment Period, the Executive shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its Affiliated
Companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs for the Executive, the Executive’s spouse and the
Executive’s qualifying dependent children ) to the extent applicable generally
to other peer executives of the Company and its Affiliated Companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits following a Change in Control which are materially less
favorable, in the aggregate, than the plans, practices, policies and programs
in effect for the Executive at any time during the 120—day period immediately
preceding the Change in Control or, if more favorable to the Executive, those
provided generally at any time after the Change in Control to other peer
executives of the Company and its Affiliated Companies.


 


(v)                                 Expenses.  During the Employment Period,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its Affiliated
Companies.  In no event shall such
policies, practices and procedures be materially less favorable, in the
aggregate, following a Change in Control than the policies, practices and
procedures in effect for the Executive at any time during the 120—day period
immediately preceding the Change in Control or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its Affiliated Companies.


 


(vi)                              Fringe Benefits. 
During the Employment Period, the Executive shall be entitled to fringe
benefits, including, without limitation, tax and financial planning services,
payment of club dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the generally applicable plans, practices
and programs of the Company for its executive employees.  In no event shall such policies and programs
be materially less favorable following a Change in control than the most
favorable plans, practices, programs and policies of the Company and its
Affiliated Companies in effect for the Executive at any time during the 120—day
period immediately preceding the Change in Control or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its Affiliated Companies.


 


(vii)                           Office and Support Staff. 
During the Employment Period, the Executive shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, generally provided to
other executive officers of the Company and its Affiliated Companies.


 


(viii)                        Vacation.  During the Employment Period,
the Executive shall be entitled to paid vacation in accordance with the
generally applicable plans, practices and programs of the Company for its
executive employees.  In no event shall
such policies and programs be materially less favorable following a Change in
Control than the most favorable plans, policies, programs and practices of the
Company and its Affiliated Companies as in effect for the Executive at any time
during the 120—day period immediately preceding the Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its Affiliated
Companies.


 


4.                                                                                       Termination of Employment.


 


(a)                                  Death or Disability.  The
Executive’s employment shall terminate automatically upon the Executive’s death
during the Employment Period.  If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the 


 


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Executive written notice in accordance with Section 10(b) of
this Agreement of its intention to terminate the Executive’s employment.  In such event, the Executive’s employment
with the Company shall terminate effective on the 30th day after receipt of
such notice by the Executive (the “Disability Effective Date”), provided that,
within the 30 days after such receipt, the Executive shall not have returned to
full—time performance of the Executive’s duties.  For purposes of this Agreement, “Disability”
shall mean the absence of the Executive from the Executive’s duties with the
Company on a full—time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive’s legal representative.


 


(b)                                 By the Company for Cause.  The
Company may terminate the Executive’s employment at any time during the
Employment Period for Cause.  For
purposes of this Agreement, “Cause” shall mean:


 


(i)                                     the willful and continued failure of the Executive
to perform substantially all of the Executive’s duties with the Company or one
of its Affiliates (other than any such failure results form incapacity due to
physical mental illness), after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Executive has not substantially performed
the Executive’s duties,


 


(ii)                                  the willful engaging by the Executive in
illegal conduct, intentional misconduct or gross negligence which is materially
and demonstrably injurious to the Company, or


 


(iii)                               violation of written Company policies
prohibiting workplace discrimination, sexual harassment and alcohol or
substance abuse.


 


For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered “willful” unless it is done, or omitted
to be done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of the Company
or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company. 
Following a Change in Control, the cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three—quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying
the particulars thereof in detail.


 


(c)                                  By the Company without Cause. The Company, acting through its Board of
Directors, may terminate the Executive’s employment with the Company at any
time “at will” for any or no reason upon written notice of termination to the
Executive.


 


(d)                                 By the Executive for Good Reason.  The Executive may terminate and resign the
Executive’s employment for Good Reason effective on or after the date of a
Change in Control upon not less than ten (10) days advance written notice
of termination to the Company.  For
purposes of this Agreement, “Good Reason” shall mean:


 


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(i)                                     the Company’s assignment to the Executive
upon or within two (2) years after a Change in Control of any duties
inconsistent in any respect with the Executive’s position (including offices,
titles and reporting requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or any other action
by the Company upon or within two (2) years after a Change in Control
which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;


 


(ii)                                  the Company’s failure upon or within two (2) years
following a Change in Control to comply with any of the provisions of Section 4(b) of
this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;


 


(iii)                               upon or within two (2) years following a
Change in Control, the Company’s requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof
or the Company’s requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date; and


 


(iv)                              any failure by the Company to comply with and
satisfy Section 9(c) of this Agreement.


 


Additionally, if the Executive resigns and terminates the Executive’s
employment with the Company on or within 30 days after the date of a Change in
Control for any other reason (as determined in the Executive’s sole
discretion), the Executive shall be deemed to have resigned and terminated the
Executive’s employment for Good Reason notwithstanding any other provision in
this Agreement.


 


(e)                                  By Executive without Good Reason.  The
Executive may resign and terminate the Executive’s employment with the Company
without Good Reason at any time “at will” upon written notice of termination to
the Company.


 


(f)                                    Notice of Termination.  Any
termination by the Company for Cause, by the Executive for Good Reason, or by
either party without Cause or Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10(b) of
this Agreement.  For purposes of this
Agreement, a “Notice of Termination” means a written notice which


 


(i)                                     indicates the specific termination provision
in this Agreement relied upon,


 


(ii)                                  to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated, and


 


(iii)                               if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination
date (which date shall not be more than 30 days after the giving of such
notice).  The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.


 


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(e)                                  Date of Termination.  For
purposes of this Agreement the term “Date of Termination” means:


 


(i)                                     if the Executive’s employment is terminated
by the Company for Cause, or upon or following a Change in Control by the
Executive for Good Reason, the date of the receipt of the Notice of
Termination;


 


(ii)                                  if the Executive’s employment is terminated
by the Company other than for Cause, death or Disability; the Date of
Termination shall be the tenth (10th) day after the Company notifies
the Executive of such termination, provided that the Notice of Termination may
specify a later effective Date of Termination (which date shall not be more
than 30 days after the giving of such notice);


 


(iii)                               if the Executive voluntarily resigns his
employment (other than for Good Reason upon or following a Change in Control),
the Date of Termination shall be the tenth (10th) day after the
Executive notifies the Company of such resignation, provided that the Notice of
Termination may specify a later Date of Termination (which date shall not be
more than 30 days after the giving of such notice); and


 


(iv)                              if the Executive’s employment is terminated
by reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be.


 


5.                                                                                       Obligations of the Company upon Termination
of Executive’s Employment.


 


(a)                                  General.  Upon termination of the
Executive’s employment with the Company the Company shall provide the Executive
with the payments and benefits set forth in the applicable subsection of this Section 5.  The amounts payable under this Section 5
are in addition to the Company’s obligations to the Executive under the
Company’s various retirement, deferred compensation, stock option and long-term
incentive, employee stock purchase and welfare benefit plans.  The Company’s obligations under this Section 5
vary depending upon whether or not the Executive’s termination of employment is
in “Connection with a Change in Control.”  
For purposes of this Agreement, termination of the Executive’s
employment shall be deemed to be in “Connection with a Change in Control”
if and only if:


 


(i)                                     the Executive’s Date of Termination is on or
within two (2) years after the effective date of a Change in Control; or


 


(ii)                                  the Company terminates the Executive’s
employment without Cause within six (6) months prior to the date on which
a Change in Control occurs and the Executive reasonably demonstrates that such
termination of employment (A) was at the request of a third party who has
taken steps reasonably calculated to effect a Change in Control; or (B) otherwise
arose in connection with or anticipation of a Change in Control.


 


(b)                                 Termination Other Than in Connection with a
Change in Control.  If the Executive’s employment shall terminate
for any reason, voluntarily or involuntarily with or without Cause, other than
in Connection with a Change in Control, the Company shall pay to the Executive
(or if deceased to the Executive’s estate) the following amounts:


 


(i)                                     a lump sum cash payment equal to the
Executive’s Annual Base Salary earned through the Date of Termination to the
extent not theretofore paid and any accrued vacation pay through the Date of
Termination, which lump sum shall be paid ten (10) days after the Date of
Termination;


 


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(ii)                                  a
lump sum cash payment equal to the Executive’s accrued Annual Bonus earned for
the last Company fiscal year ending immediately prior to the Date of
Termination to the extent not theretofore paid, which lump sum shall be paid
within the time period set forth in Section 3(b)(ii); and


 


(iii)                               such additional severance benefits, if any,
as the Board of Directors approves in its sole and absolute discretion without
reference to the amount of severance benefits, if any, paid to any other
executive officer or employee of the Company; provided, however, that no such
discretionary severance benefits shall be paid in a manner or amount that
renders such payments non-qualified deferred compensation subject to additional
tax or interest under Section 409A(a)(1)(B) of the Code.


 


(c)                                  Resignation for Good Reason or Termination
without Cause in Connection with a Change in Control.  If
the Executive resigns for Good Reason in Connection with a Change in Control
(i.e., on or within two (2) years after the date of a Change in Control)
or the Company terminates the Executive without Cause in Connection with a
Change in Control, the Company shall:


 


(i)                                     Pay to the Executive the following amounts:


 


(A)                              a lump sum cash payment equal to the
Executive’s Annual Base Salary through the Date of Termination to the extent
not theretofore paid and any accrued vacation pay through the Date of
Termination, which lump sum shall be paid ten (10) days after the Date of
Termination (on a date within that 10 day period designated by the Company);
and


 


(B)                                a lump sum cash payment equal to the
Executive’s accrued Annual Bonus, if any, for the last Company fiscal year
ending immediately prior to the Date of Termination to the extent not
theretofore paid, which lump sum shall be paid within the time period set forth
in Section 3(b)(ii).  The sum of the
amounts described in clauses (A) and (B) shall be hereinafter
referred to as the “Accrued Obligations;” and


 


(ii)                                  Pay to the Executive a cash severance benefit
(the “Severance Benefit”) in an amount equal to two (2) times the
sum of: (A) the Executive’s Annual Base Salary (computed at the highest
rate in effect at any time during the 12-month period immediately preceding the
Change in Control); and (B) the Executive’s Average Annual Bonus as
defined in Section 3(b)(ii).  The Severance Benefit payable
under this Section 5(c)(ii) shall be paid:


 


(A) in a lump sum within 30 days after the date of the Executive’s
Separation from Service with the Company to the limited extent the amount so
paid (x) constitutes “separation pay” due to an “involuntary separation
from service” within the meaning and dollar limitations of Treasury Regulation Section 1.409A-1(b)(9)(iii),
or any successor regulation, and (y) as a result is excluded from the
definition of nonqualified deferred compensation subject to Code Section 409A;
and


 


(B) the balance of the Severance Benefit, in a lump sum, on the
second day of the sixth (6th) calendar month after the month of the
Executive’s Separation from Service with the Company.  The balance of the Severance Benefit payable
to Executive under this clause (B) shall bear interest from the Date of
Termination at an annual rate equal to the “prime rate” of Zions Bank, NA in
effect on the Date of Termination plus four (4) percentage points, which
interest the Company shall pay to the Executive contemporaneously with payment
of the Severance Benefit.


 


Section 5(c)(ii)(A) shall be interpreted and applied to
permit the payment of Severance Benefits prior to the second day of the sixth
(6th) month after the Executive’s Separation from Service 


 


9

















 


with the Company only to the extent such payments would not thereby
constitute a deferral of compensation subject to Code Section 409A.


 


(iii)                               To the extent permitted by law and the
Company’s applicable insurance policies, for two (2) years after the
Executive’s Date of Termination, continue benefits to the Executive and/or the
Executive’s eligible spouse and dependent children at least equal to those
which would have been provided to them in accordance with the welfare plans,
programs, practices and policies described in Section 3 of this Agreement
if the Executive’s employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its Affiliated Companies and their
families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility.


 


(iv)                              Provide at the Company’s sole expense the
Executive with outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion; and


 


(v)                                 To the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or contract or
agreement of the Company and its Affiliated Companies (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”) in
accordance with the terms of such other plans, programs, policies or practices.


 


(d)                                 Death on or after Change in Control.  If
the Executive’s employment is terminated by reason of the Executive’s death on
or after the date of a Change in Control, this Agreement shall terminate without
further obligations to the Executive’s legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits.  Accrued
Obligations shall be paid to the Executive’s estate or beneficiary, as
applicable, in cash in the manner and within the time frames set forth in Section 5(b)(i) and
(ii), as applicable.  With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section 5(d) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and Affiliated Companies to the estates and
beneficiaries of peer executives of the Company and such Affiliated Companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120—day period immediately preceding the
Effective Date of a Change in Control, or, if more favorable to the Executive’s
estate and/or the Executive’s beneficiaries, as in effect on the date of the
Executive’s death with respect to other peer executives of the Company and its
Affiliated Companies and their beneficiaries.


 


(e)                                  Disability on or after Change in Control.  If
the Executive’s employment is terminated by reason of the Executive’s
Disability on or after the date of a Change in Control, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other
Benefits.  Accrued Obligations shall be
paid to the Executive in cash in the manner and within the time frames set
forth in Section 5(b)(i) and (ii), as applicable. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section 5(e) shall
include, and the Executive shall be entitled after the Disability Effective
Date to receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its Affiliated
Companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer 


 


10

















 


executives and their families at any time during the 120—day period
immediately preceding the Effective Date of a Change in Control, or, if more favorable
to the Executive and/or the Executive’s family, as in effect at any time
thereafter generally with respect to other peer executives of the Company and
its Affiliated Companies and their families.


 


(f)                                    Termination for Cause or Resignation Other than
for Good Reason on or after a Change in Control.  If
the Company terminates the Executive’s for Cause on or after the date of a
Change in Control, this Agreement shall terminate without further obligations
to the Executive hereunder other than the obligation to pay to the Executive (i) his
Annual Base Salary and accrued vacation through the Date of Termination, and (ii) Other
Benefits, in each case to the extent theretofore unpaid.  If the Executive voluntarily terminates
employment upon or following a Change in Control (excluding a resignation for
Good Reason in Connection with a Change in Control) this Agreement shall
terminate without further obligations to the Executive under, other than for
Accrued Obligations and timely payment or provision of Other Benefits.  In such case, all Accrued Obligations shall
be paid to the Executive in cash in the manner and within the time frames set
forth in Section 5(b)(i) and (ii), as applicable.


 


(g)                                 Golden Parachute Payments.  Any
provision of this Agreement to the contrary notwithstanding, if any amount
otherwise payable to the Executive under this Agreement would, when added to
all other “parachute payments” to the Executive within the meaning of Section 280G
of the Code, as amended (the “Code”), result in the payment of an “excess
parachute payment” to the Executive within the meaning of Section 280G and
4999 of the Code, then:


 


(i)                                     the cash payments otherwise owed to the
Executive hereunder shall be reduced by the minimum amount necessary to avoid
imposition of an excise or penalty tax on the Executive under Code Section 4999
(or any successor provision thereto) provided the amount of such reduction in
payments does not exceed one thousand dollars ($1,000.00); or


 


(ii)                                  in all other cases, the Company shall pay to
the Executive an additional amount (on a fully-grossed-up, after-tax basis)
sufficient to place the Executive in the same after-tax position that the
Executive would have been in had the payments under this Agreement not been
subject to the excise tax under Code Section 4999 (or any successor
provision thereto).  Such additional
payment to the Executive shall include the amount of the excise tax payable
under Code Section 4999 and all income, employment and additional excise
taxes on the amount payable under this paragraph (ii).


 


Unless the Company and the Executive otherwise agree in writing, the
determination of the amount of reduction required under Section 5(g)(i) or
the additional amount required to be paid under Section 5(g)(ii), as
applicable, shall be made in writing by the Company’s independent auditors who
are primarily used by the Company immediately prior to the Change in Control
(the “Accountants”).  For purposes of
making the calculations required by this Section, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on good faith interpretations concerning the application of Sections 280G
and 4999 of the Code.  The Company and
the Executive shall furnish to the Accountants such information and documents
as the Accountants may reasonably request in order to make a determination
under this Section 5(g).  Company
shall bear all reasonable costs and expenses incurred in connection with the
performance of the calculations contemplated by this Section 5(g).  The Company shall pay any amount due under
this Section 5(g)(ii) to the Executive as soon as reasonably
practicable after the calculation of the amount of tax gross-up payment due and
in no event later than the close of the calendar year following the calendar
year in which the Executive remits the underlying Code Section 4999 excise
tax to the Internal Revenue Service.


 


6.                                                                                       Non—exclusivity of Rights. 
Nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any plan, program, policy or practice
provided 


 


11

















 


by the Company or any of its Affiliated Companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its Affiliated Companies. 
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its Affiliated Companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.


 


7.                                                                                       Full Settlement.  In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.


 


8.                                                                                       Confidential Information. 
Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its Affiliated Companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive’s employment by the company or any of its Affiliated Companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this
Agreement).  After termination of the
Executive’s employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it.  In no event shall an asserted violation of
the provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.


 


9.                                                                                       Successors.


 


(a)                                  This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution.  This Agreement shall inure
to the benefit of and be enforceable by the Executive’s legal representatives.


 


(b)                                 This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.


 


(c)                                  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
success had taken place.  As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumed and
agrees to perform this Agreement by operation of law, or otherwise.


 


10.                                                                                 Miscellaneous.


 


(a)                                  This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah, without reference
to principles of conflict of laws.  The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.  This Agreement may
not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal
representatives.  No waiver of any party’s
rights or benefits under this Agreement shall be effective unless such party
signs a written waiver of its rights or benefits.


 


12

















 


(b)                                 All notices and other communications
hereunder shall be writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:


 


If to the Executive:


 


 


 


If to the Company:


 


Merit Medical Systems, Inc.


1600 West Merit Parkway


South Jordan, Utah 84095


Attention:  General Counsel


 


or to such other address as either party shall have furnished to the
other in writing in accordance herewith. 
Notice and communications shall be effective when actually received by
the addressee.


 


(c)                                  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.


 


(d)                                 The Company may withhold from any amounts
payable under this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.  The Company makes no
representation or warranty to the Executive regarding the tax consequences of
any payment or benefit under this Agreement, including any representation as to
the application of Code Section 409A to such payments.


 


(e)                                  The Executive’s or the Company’s failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a waiver of such
provision or right of this Agreement.


 


(f)                                    This Agreement constitutes the entire
agreement between the parties with respect to the Executive’s employment by the
Company and supersedes and replaces all other agreements, oral or written,
between the parties with respect to the subject matter hereof including without
limitation any Prior Agreement between the Company and the Executive.


 


(g)                                 The Company and the Executive irrevocably: (i) agree
that any claim, law suit, cause of action or dispute arising under or with
respect to this Agreement or the Executive’s employment hereunder (a “Claim”)
shall be adjudicated solely in the United States Federal District Court or Utah
State Courts situated in Salt Lake City, Utah (collectively the “Utah Courts”);
(ii) consent and submit to the personal jurisdiction of the Utah Courts
with respect to any Claim; (iii) agree that the Utah Courts shall have
exclusive subject matter jurisdiction over any such Claims and that venue with
respect to any such Claims is proper and most convenient in the Utah Courts;
and (iv) agree and covenant not to assert any objection to personal
jurisdiction, subject matter jurisdiction or venue in the Utah Courts with
respect to any Claim. TO THE FULLEST EXTENT PERMITTED BY LAW, THE COMPANY AND
THE EXECUTIVE IRREVOCABLY WAIVE AND RELEASE ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT OR THE
EXECUTIVE’S EMPLOYMENT BY THE COMPANY.


 


13

















 


(h)                                 If the Executive or the Company retains legal
counsel and/or incurs other costs and expenses in connection with the
enforcement of any or all of the provisions of this Agreement, the prevailing
party shall be entitled to recover from the other party reasonable attorneys’
fees, costs, and expenses incurred by the prevailing party in connection with
the enforcement of this Agreement. 
Notwithstanding the foregoing, in the event that following a Change in
Control the Executive engages legal counsel to enforce the Executive’s rights
or seek a determination under this Agreement, the Company shall pay the
expenses of such legal counsel regardless of the outcome of any legal
proceeding resulting therefrom; provided that such claim is not determined by a
trier of fact to be frivolous or in bad faith.


 


[Remainder of Page Intentionally Left Blank—Signature Page Follows]


 

















 


IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s
hand, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in it name on its behalf, all as of
the date and year first above written.


 


 


	
  EXECUTIVE:

  	
  /s/
  Martin R. Stephens

  
	
   

  	
   

  	
   

  
	
  COMPANY:

  	
  MERIT
  MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Fred P. Lampropoulos

  
	
   

  	
  Its

  	
   President and CEO