Exhibit 10.4



 






EXHIBIT 10.4




AMENDMENT #1

TO

EMPLOYMENT AGREEMENT




     THIS AMENDMENT #1 TO EMPLOYMENT AGREEMENT (this “Amendment”) is made and entered into as of
the 23rd day of February, 2006 (the “Effective Date”) by and between JAMES R. TALEVICH, an individual
(“Employee”), and I-FLOW CORPORATION, a Delaware corporation (“Company”).



Background




     A. The Company and Employee previously entered into that certain Employment Agreement made and
entered into as of June 21, 2000 (the “Agreement”). Capitalized terms in this Amendment and not
otherwise defined herein shall have the meanings given them in the Agreement.



     B. The Company and Employee wish to amend and modify certain provisions in the Agreement as
provided herein and effective as of the Effective Date hereof, while leaving unchanged all other
provisions of the Agreement.



Agreement




          1. Severance Pay. The first sentence of Section 3(b) of the Agreement is hereby
deleted and is replaced in its entirety with the following:




The Employee shall be entitled to a severance package consisting of (i) a one time
payment equal to six months of his base salary at the time of termination (ii)
immediate and automatic vesting of all outstanding stock options, restricted stock
or other equity-based awards, with the exercise period (to the extent relevant)
being no less than one year from the date of termination (but in no event later than
the last day prior to the day that any extension would cause such options or rights
to become subject to Section 409A of the Code).



          2. Change in Control. Section 4(b) of the Agreement is hereby deleted and is replaced
in its entirety with the following:





In the event of a Change in Control, all of Employee’s unvested and outstanding
stock options, restricted stock or other equity-based awards shall immediately and
automatically become fully vested and (to the extent relevant) exercisable. Any
stock options and stock appreciation rights shall remain exercisable for their
remaining terms (but in no event later than the last day prior to the day that any
extension would cause such options or rights to become subject to Section 409A of the
Code).



          3. Section 409A Compliance. In recognition that Section 409A of the Code may
prohibit the payment of certain payments or benefits under the Agreement in connection with




 









 







Employee’s termination of employment earlier than six (6) months following Employee’s termination
of employment, a new Section 8 is added to the Agreement as follows:





8. 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, he 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 constitute deferred compensation subject
to Section 409A, no such payment or benefit will be provided under this Agreement
until the earliest of (A) the date which is six (6) months after his “separation
from service” for any reason, other than death or “disability” (as such terms are
used in Section 409A(a)(2) of the Code), (B) the date of his death or “disability”
(as such term is used in Section 409A(a)(2)(C) of the Code) or (C) the effective
date of a “change in the ownership or effective control” of the Company (as such
term is used in Section 409A(a)(2)(A)(v) of the Code). The provisions of this
Section 8 shall only apply to the extent required to avoid Employee’s incurrence of
any penalty tax or interest under Section 409A of the Code or any regulations or
Treasury guidance promulgated thereunder. 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 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 this Agreement, 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 as of the Effective
Date.



	 	 	 	 	 	 	 	 	 	 	 
	I-FLOW CORPORATION	 	 	 	JAMES R. TALEVICH	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Donald M. Earhart
	 	 	 	By:
	 	/s/ James R. Talevich	 	 
	 

	 	 

   Donald M. Earhart
	 	 	 	 	 	 

   James R. Talevich
	 	 
	 

	 	   President & CEO	 	 	 	 	 	 	 	 






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