AMENDMENT #3 TO EMPLOYMENT AGREEMENT
EXHIBIT 10.1
THIS AMENDMENT #3 TO EMPLOYMENT AGREEMENT (this “Amendment #3”) is made and entered into as of
the 21st day of February, 2008 (the “Effective Date”) by and between XXXXXX X. XXXXXXX, an
individual (“Employee”) and I-FLOW CORPORATION, a Delaware corporation (the “Company”).
Background
A. The Company and Employee previously entered into that certain Employment Agreement dated as
of May 16, 1990, as subsequently amended by an Amendment #1 dated as of June 21, 2001 and an
Amendment #2 dated as of February 23, 2006 (collectively, the “Agreement”).
B. The Internal Revenue Service issued final regulations interpreting the rules and standards
under Section 409A of the Internal Revenue Code on April 10, 2007 (the “Final 409A Regulations”).
C. To comply with the Final 409A Regulations, the Company and Employee wish to amend and
modify certain provisions of the Agreement as provided herein, effective as of the Effective Date,
while leaving unchanged all other provisions of the Agreement.
Agreement
In consideration of the foregoing, and for other good and valuable consideration the receipt
of which is hereby acknowledged, Employee and the Company hereby agree as follows:
1. Termination Without Cause. The first paragraph of Section 2.5(b) and Section
2.5(b)(i) and Section 2.5(b)(ii) of the Agreement are hereby amended and restated as follows:
(b) Termination Without Cause. In the event Employee’s employment as
provided herein is terminated by the Company without cause, or in the event Employee
resigns his employment because his job location is transferred (without his prior,
voluntary consent) to a site more than thirty (30) miles away from his current place
of employment, after having given the Company at least 30 days prior written notice
of his intent to resign and a reasonable opportunity to cure during such 30-day
notice period, the Company shall be obligated to pay (in lump sum immediately upon
termination of employment) and provide and Employee shall be entitled to receive, as
severance, the following payments and benefits:
(i) A cash payment equal to three (3) times the sum of (A) Employee’s annual
salary rate in effect at the time of termination, plus (B) the average
annual bonus earned by Employee in the previous three full fiscal years;
(ii) Any bonus, or relevant pro rata portion thereof, earned by Employee for
the fiscal year in which the termination occurs, together with any and all
deferred and unpaid bonus amounts earned by Employee prior to the Effective
Date of Amendment #1 to this Agreement which were subject to the deferred
payment provisions of (old) Sections 2.2(b) and 2.2(c) of this Agreement;
2. Disability. Section 2.5(c) of the Agreement is hereby amended and restated as
follows:
(c) Disability. In the event that Employee becomes permanently disabled,
i.e., suffers a physical or mental disability or incapacity continuing for a period
of six consecutive months, which prevents him from substantially discharging his
duties and responsibilities as set forth herein, the Company will secure disability
coverage which will pay to Employee amounts equal to at least 60% of his total
compensation then currently in effect (as computed in accordance with Section 2.1
hereof), with such amount payable in equal installments in accordance with the
Company’s standard payroll practices, but no less than monthly, until Employee
achieves the age of 65, or until such time as Employee shall have recovered from
such disability and is able to secure full time employment, whichever first occurs.
In the absence of such coverage, such disability shall be deemed a termination
without cause with the meaning of Section 2.5(b) hereof, and shall entitle Employee
to the payment specified therein. During any such period of disability, options
granted hereunder shall not lapse by virtue of such disability.
3. Section 409A Compliance. Section 6.12 of the Agreement is hereby amended and
restated as follows:
6.12 Compliance with Section 409A. Notwithstanding any provision of this
Agreement to the contrary, if, at the time of Employee’s termination of employment
with the Company, Employee is a “specified employee” as defined in Section 409A of
the Code, and one or more of the payments or benefits received or to be received by
Employee pursuant to this Agreement would become subject to the additional tax under
Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under
Section 409A of the Code (“Section 409A Taxes”) if provided at the time otherwise
required under this Agreement, no such payment or benefit will be provided under
this Agreement until the earliest of (a) the date which is six (6) months after
Employee’s “separation from service” or (b) the date of Employee’s death, or such
shorter period that, as determined by the Company, is sufficient to avoid the
imposition of Section 409A Taxes. The provisions of this Section
6.12 shall only apply to the minimum extent required to avoid Employee’s incurrence
of any Section 409A Taxes. In addition, if any provision of this Agreement would
cause Employee to incur any penalty tax or interest under Section 409A of the Code
or any regulations or Treasury guidance promulgated thereunder, the Company may
reform such provision to
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maintain to the maximum extent practicable the original intent of the applicable provision without violating the provisions of Section 409A
of the Code.
4. No Other Changes. Except as otherwise set forth in herein, all terms and
provisions of the Agreement remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have entered into this Amendment #3 as of the Effective
Date.
| I-FLOW CORPORATION | XXXXXX X. XXXXXXX | |||||||||
By:
|
/s/ Xxxxx X. Dal Porto | By: | /s/ Xxxxxx X. Xxxxxxx | |||||||
| Xxxxx X. Dal Porto | Xxxxxx X. Xxxxxxx | |||||||||
| Executive Vice President and | ||||||||||
| Chief Operating Officer | ||||||||||
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