Exhibit
10.4


 


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 Arlin D. Nelson (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 Arlin D.
Nelson.


 


(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 Chief Operating Officer. 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 $200,000 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 


 


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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/
  Arlin D. Nelson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPANY:

  	
   

  	
  MERIT
  MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   /s/
  Fred P. Lampropoulos

  
	
   

  	
   

  	
  Its

  	
   President
  and CEO