Exhibit 10.3



 






EXHIBIT 10.3




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 J. DAL PORTO, an
individual (“Dal Porto”), and I-FLOW CORPORATION, a Delaware corporation (“Company”).



Background




     A. The Company and Dal Porto previously entered into that certain Amended & Restated
Employment made and entered into as of June 21, 2001 (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 Dal Porto 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. Section 3(b)(iv) of the Agreement is hereby deleted and replaced in
its entirety with the following:





(iv) Dal Porto’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).



          2. 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 Dal Porto’s
termination of employment earlier than six (6) months following Dal Porto’s termination of
employment, a new Section 17 is added to the Agreement as follows:





17. Compliance with Section 409A. Notwithstanding any provision of this
Agreement to the contrary, if, at the time of Dal Porto’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 Dal
Porto 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 17 shall
only apply to the extent required to avoid Dal Porto’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
Dal Porto 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.



           3. 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 J. DAL PORTO	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Donald M. Earhart
	 	 	 	By:
	 	/s/ James J. Dal Porto	 	 
	 

	 	 

   Donald M. Earhart
	 	 	 	 	 	 

    James J. Dal Porto
	 	 
	 

	 	    President & CEO	 	 	 	 	 	 	 	 






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