Document:

exv10w41

 

EXHIBIT 10.41

AGREEMENT

This is a complete and final Agreement between DAVID DEVONSHIRE (for yourself,
your spouse and anyone acting for you) (“you”), and Motorola, Inc. (for itself,
its subsidiaries and affiliates and anyone acting for it) (“Motorola”) that
resolves all matters between you and Motorola. This Agreement has been
individually negotiated and has not been reached as part of a group incentive or
other separation program. In consideration for the payments and benefits
provided under this Agreement, you and Motorola agree to the following terms of
your separation from Motorola:

     1. SEPARATION. All your duties and responsibilities as an
employee, officer and/or director of Motorola and its subsidiaries and
affiliates shall end effective August 31, 2007 (the “Transition Date”). Your
employment by Motorola shall continue through December 31, 2007 (“Separation
Date”). At Motorola’s request, you shall execute any and all documents
reasonably necessary to confirm the cessation of your service as a director
and/or officer of Motorola and its subsidiaries and/or affiliates.

     2. TRANSITION ALLOWANCE AND SEPARATION ALLOWANCE. Motorola will
pay you at your regular base salary rate at regular payroll intervals, less
applicable state and federal payroll deductions, between your Transition Date
and Separation Date. The total gross amount of these payments is Two Hundred
Ten Thousand Six Hundred Sixteen Dollars and Forty-Four Cents ($210,616.44)
(“Transition Allowance”). Motorola also will pay you a lump sum in the amount
of Two Hundred Twenty-Five Thousand Dollars and No Cents ($225,000.00) within
thirty (30) days after you have signed, returned and not revoked this Agreement
and a lump sum Separation Allowance in the amount of One Million Eight Thousand
One Hundred Thirty-Three Dollars and Fifty-Six Cents ($1,008,133.56), less
applicable state and federal payroll tax deductions, within thirty (30) days
after you have signed, returned and not revoked a supplemental release attached
as Attachment A. Signature of Attachment A is a condition to your receiving the
Separation Allowance and other consideration under this Agreement. The
Transition and Separation Allowances, and the additional lump sum, include and
exceed any paid time off, bonuses (other than an 8/12 pro rata 2007 MIP bonus,
for which you will be eligible per the terms of the MIP Plan if other elected
officers receive a 2007 MIP bonus and a 32/36 pro rata 2005-2007 LRIP bonus for
which you will be eligible per the terms of the 2005 LRIP Plan if other elected
officers receive a 2005-2007 LRIP bonus), or any other amounts that are unpaid
as of your Separation Date. You will only be paid the amounts specifically
identified in this Agreement and will not receive any additional payments from
Motorola.

     3. HEIRS/BENEFICIARIES. In the event of your death after the
effective date of this Agreement, your surviving spouse (or heirs if you are
then unmarried) shall be paid any unpaid salary, lump sum payment and any unpaid
Transition and Separation Allowances described in this Agreement. Payments or
benefits, if any, following your death under any of the Motorola benefit or
compensation plans shall be according to the terms of those plans and any
elections and/or beneficiary designations previously made by you thereunder.

     4. BENEFIT AND COMPENSATION PLANS.

(a) The effect of your separation and this Agreement upon your participation
in, or coverage under, any of Motorola’s benefit or compensation plans,
including but not limited to the Motorola Elected Officers Supplementary
Retirement Plan, the Motorola Elected Officers Life Insurance Plan, the Motorola
Long Range Incentive Plan for any given performance cycle, the Motorola
Incentive Plan, the Motorola Management Deferred Compensation Plan, the Motorola
Financial Planning Program, the Motorola Omnibus Incentive Plan of 2006, any
other applicable stock option plan and any restricted stock, stock unit or SAR
agreements shall be governed by the terms of those plans and agreements.
Motorola is making no guarantee, warranty or representation in this Agreement
regarding any position that may be taken by any administrator or plan regarding
the effect of this Agreement upon your rights, benefits or coverage under those
plans. Pursuant to the Motorola Management Deferred Compensation Plan, your
deferred compensation elections, and applicable law, your deferred compensation
payments will commence in April, 2008.

(b) You shall receive coverage under the Motorola Post-Employment Health
Benefits Plan, at your own expense, pursuant to Sections 2.82(iii) and 3.5(ii) thereof.

 

 

     5. TRANSFER OF EQUIPMENT. Effective on or within fourteen days
after your Transition Date, Motorola will transfer to you ownership of your
cellular phone. On that date you will assume responsibility for all insurance,
maintenance, service and other fees related to this item, and Motorola will
have no responsibility for it thereafter. The parties agree that any fair market
value of such item will be calculated as of the Transition Date and that you are
responsible for the payment of income tax due as a result of this transfer.

     6. NO DISPARAGEMENT. You agree that you will not, directly or
indirectly, individually or in concert with others, engage in any conduct or
make any statement calculated or likely to have the effect of undermining,
disparaging or otherwise reflecting poorly upon Motorola or its good will,
products or business opportunities, or in any manner detrimental to Motorola,
though you may give truthful and nonmalicious testimony if properly subpoenaed
to testify under oath. Motorola agrees that neither Ed Zander, Tom Meredith,
nor Ruth Fattori will, acting officially on Motorola’s behalf, directly or
indirectly, individually or in concert with others, engage in any conduct or
make any statement calculated or likely to have the effect of undermining,
disparaging or otherwise reflecting poorly upon you, or in any manner
detrimental to you, though each may give truthful and nonmalicious testimony if
properly subpoenaed to testify under oath.

     7. COOPERATION/INDEMNIFICATION. From your Transition Date, and
for as long thereafter as shall be reasonably necessary, you agree to cooperate
fully with Motorola in any investigation, negotiation, litigation or other
action arising out of transactions in which you were involved or of which you
had knowledge during your employment by Motorola. If you incur any business
expenses in the course of performing your obligations under this paragraph, you
will be reimbursed for the full amount of all reasonable expenses upon your
submission of adequate receipts confirming that such expenses actually were
incurred. Motorola will indemnify you for judgments, fines, penalties,
settlement amounts and expenses (including reasonable attorneys fees and
expenses) reasonably incurred in defending any actual or threatened action,
lawsuit, investigation or other similar proceeding arising out of your
employment with Motorola, provided that if the matter is a civil action, you
acted in good faith and in a manner you reasonably believed to be in, or not
opposed to, the best interests of Motorola and if the matter is a criminal
action, you had no reasonable cause to believe your conduct was unlawful (in
each case as determined under Delaware General Corporation Law).

     8. RESTRICTIVE COVENANTS. You acknowledge that you have entered
into certain Stock Option Agreements and/or Stock Option Consideration
Agreements and/or Restricted Stock Agreements and/or Restricted Stock Units
Agreements with Motorola, as well as various other agreements for the protection
of Motorola’s confidential proprietary information, and agree that such
agreements, including but not limited to the non-disclosure, non-competition and
non-solicitation provisions therein, continue in full force and effect according
to their terms.

     9. CONFIDENTIALITY OF AGREEMENT. You agree to keep the existence
and terms of this Agreement confidential, except to the extent required by law
to disclose this information, or except as needed to be disclosed to your
spouse, legal counsel, financial advisors, outplacement firm, creditors, or
anyone preparing your tax returns.

     10. RETURN OF MOTOROLA PROPERTY. You further agree to return to
Motorola by your Transition Date all Motorola property and confidential and/or
proprietary information including the originals and all copies and excerpts of
documents, drawings, reports, specifications, samples and the like that were/are
in your possession at all Motorola and non-Motorola locations, including but not
limited to information stored electronically on computer hard drives or disks.

     11. NEW EMPLOYMENT. You agree that you will immediately inform
Motorola of (i) the identity of any new employment, start-up business or
self-employment in which you have engaged or will engage between the Transition
Date and December 31, 2009 (the “Notice Period”), (ii) your title in any such
engagement, and (iii) your duties and responsibilities. You hereby authorize
Motorola to provide a copy of this Agreement, excluding the economic terms, to
any new employer or other entity or business by which you are engaged during the
Notice Period. You further agree that during the Notice Period, you will
provide such information to Motorola as it may from time to time reasonably
request in order to determine your compliance with this Agreement.

 

 

     12. BREACH OF AGREEMENT.

(a) You acknowledge that Motorola’s agreement to make the payments set forth in
Paragraph 2 above is conditioned upon your faithful performance of your
obligations pursuant to Paragraphs 7, 8, 10 and 11 of this Agreement, and you
agree to repay to Motorola all sums received from Motorola under Paragraph 2,
less One Thousand Dollars ($1,000.00), if you breach any of your obligations
under Paragraphs 7, 8, 10 or 11 of this Agreement or the agreements referenced
in Paragraph 8. You further agree that in addition to any other remedies
available in law and/or equity, all of your vested and unvested stock options
will terminate and no longer be exercisable, and for all stock options exercised
within two years prior to your Separation Date or anytime after your Separation Date, you will immediately pay to Motorola
the difference between the exercise price on the date of grant as reflected in
the Award Document and the market price on the date of exercise (the “spread”)
for each affected stock option grant. The above remedies are in addition to and
cumulative with any other rights and remedies Motorola may have pursuant to this
Agreement and/or in law and/or equity, including the recovery of liquidated
damages. In any dispute regarding this Agreement, each party will pay its own
fees and costs.

(b) You acknowledge that the harm caused to Motorola by the breach or
anticipated breach of Paragraph 7, 8, 10 or 11 of this Agreement will be
irreparable and you agree Motorola may obtain injunctive relief against you in
addition to and cumulative with any other legal or equitable rights and remedies
Motorola may have pursuant to this Agreement or law, including the recovery of
liquidated damages. You agree that any interim or final equitable relief
entered by a court of competent jurisdiction, as specified in paragraph 15
below, will, at the request of Motorola, be entered on consent and enforced by
any such court having jurisdiction over you. This relief would occur without
prejudice to any rights either party may have to appeal from the proceedings
that resulted in any grant of such relief.

(c) This Agreement (which includes the agreements referenced in Paragraph 8) is
your entire agreement with Motorola regarding the subject matter. No waiver of
any breach of any provision of this Agreement by Motorola shall be construed to
be a waiver of any succeeding breach or as a modification of such provision.
The provisions of this Agreement shall be severable and in the event that any
provision of this Agreement shall be found by any court as specified in
paragraph 15 below to be unenforceable, in whole or in part, the remainder of
this Agreement as well as the provisions of your prior agreements, if any,
regarding the same subject matter as that which was found unenforceable herein
shall nevertheless be enforceable and binding on the parties. You also agree
that the court may modify any invalid, overbroad or unenforceable term of this
Agreement so that such term, as modified, is valid and enforceable under
applicable law. Further, you affirmatively state that you have not, will not
and cannot rely on any representations not expressly made herein.

     13. NON-ADMISSION/GENERAL RELEASE. You and Motorola agree that,
in exchange for the payments and other terms described above, Motorola is not
admitting to any wrongdoing or unlawful action in its dealing with you and you
fully and completely release Motorola and hold it harmless from any and all
legal claims of any type to date arising out of your employment or the
separation of your employment from Motorola or any notice regarding your
separation, whether known or unknown, presently asserted or otherwise. This
includes, but is not limited to, breach of any implied or express employment
contracts or covenants; entitlement to any pay or benefits, including insurance
and any claims under the Elected Officers Supplementary Retirement Plan or any
other retirement plan; claims for wrongful termination, public policy
violations, defamation, emotional distress or other common law matters; or
claims of discrimination based on race, sex, age (Age Discrimination in
Employment Act), religion, national origin, disability, veteran’s status,
sexual preference, marital status or retaliation; or claims under the Family and
Medical Leave Act. If you are employed in Pennsylvania, however, you are not
waiving any claims under the Family and Medical Leave Act. IF YOU ARE EMPLOYED
IN CALIFORNIA, YOU EXPRESSLY WAIVE THE PROTECTION OF SECTION 1542 OF THE CIVIL
CODE OF THE STATE OF CALIFORNIA, WHICH STATES THAT: “A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR
HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER
MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” You
understand that by signing this General Release you are not releasing any claims
or rights that cannot be waived by law, including the right to file an
administrative charge of discrimination.

 

 

     14. CONDITIONS OF AGREEMENT. You agree that you are signing this
Agreement knowingly and voluntarily, that you have not been coerced or
threatened into signing this Agreement and that you have not been promised
anything else in exchange for signing this Agreement. You agree that if any
part of this Agreement is found to be illegal or invalid, the rest of the
Agreement will still be enforceable. You further agree that you have had
sufficient time (at least twenty-one (21) days) to consider this Agreement and
you were advised to consult with an attorney, if desired, before signing below.
You understand and agree that any change, whether material or otherwise, to the
initial terms of this Agreement shall not restart the running of this twenty-one
(21) day period. This Agreement will not become effective or enforceable until
seven days after you sign it, during which time you can revoke it if you wish,
by delivering a signed revocation letter within the seven-day period to Jill A.
Goldy, Corporate Vice President, Law — Labor and Employment, Motorola, Inc.,
1303 East Algonquin Rd., Schaumburg, Illinois 60196. Any alterations to this
Agreement must be in writing, signed by both parties.

     15. GOVERNING LAW/VENUE. You and Motorola agree that this
Agreement is governed by the laws of Illinois, without giving effect to
principles of Conflicts of Laws, and any legal action related to this Agreement
shall be brought only in a federal or state court located in Illinois, USA. You
accept the jurisdiction of these courts and consent to service of process from
said courts solely for legal actions related to this Agreement.

	 	 	 	 	 	 	 	 
	 
	 	 	 	 
	DAVID DEVONSHIRE

	 	 	MOTOROLA, INC.
	 
	 	 	 	 	 	 
	 
	 	 	 	 
	/s/ David Devonshire

	 	 	By:
	/s/ Ruth A. Fattori
	 

	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 
	Date:

	 	September 18, 2007
	 	 	Date:
	September 18, 2007
	 	 	 

	 	 	 	 

 

 

ATTACHMENT A

In consideration for the promises made by Motorola in the Agreement to which
this is Attachment A, you fully and completely release Motorola and hold it
harmless from any and all legal claims of any type to date arising out of your
employment or the separation of your employment from Motorola, whether known or
unknown, presently asserted or otherwise. This includes, but is not limited to,
breach of any implied or express employment contracts or covenants; entitlement
to any pay or benefits, including insurance and any claims under the Elected
Officers Supplementary Retirement Plan or any other retirement plan; claims for
wrongful termination, public policy violations, defamation, emotional distress
or other common law matters; or claims of discrimination based on race, sex, age
(Age Discrimination in Employment Act), religion, national origin, disability,
veteran’s status, sexual preference, marital status or retaliation; or claims
under the Family and Medical Leave Act. IF YOU ARE EMPLOYED IN CALIFORNIA, YOU
EXPRESSLY WAIVE THE PROTECTION OF SECTION 1542 OF THE CIVIL CODE OF THE STATE OF
CALIFORNIA, WHICH STATES THAT: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” You understand by signing this
General Release you are not releasing any claims or rights that cannot be waived
by law, including the right to file an administrative charge of discrimination.
You further agree that you have had sufficient time (at least twenty-one (21)
days) to consider the attached Agreement and you were advised to consult with an
attorney, if desired, before signing below. This Attachment A will not become
effective or enforceable until seven days after you sign it, during which time
you can revoke it if you wish, by delivering a signed revocation letter within
the seven-day period to Jill A. Goldy, Corporate Vice President, Law — Labor
and Employment, Motorola, Inc., 1303 East Algonquin Rd., Schaumburg, Illinois
60196.

	 	 	 	 
	Agreed to and accepted by:
	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	DAVID DEVONSHIRE
	 	 
	 
	 	 	 	 
	Date:
	 	 
	 

	 	 
	(to be signed after December 31, 2007 and before January 31, 2008Exhibit 10.1

 

EXHIBIT 10.1

AMENDMENT NO. 4

TO

STOCK PURCHASE AGREEMENT

     THIS AMENDMENT NO. 4, dated as of September 18, 2007 (this “Amendment”) to the Stock
Purchase Agreement dated as of September 29, 2006, as previously amended by an Amendment No. 1
dated as of April 30, 2007, an Amendment No. 2 dated as of June 29, 2007 and an Amendment No. 3
dated as of July 31, 2007 (collectively, the
“Agreement”) by and among I-Flow Corporation, a Delaware corporation (the “Seller”), InfuSystem, Inc., a
California corporation (the “Company”), HAPC, Inc., a Delaware corporation (the
“Buyer”), and Iceland Acquisition Subsidiary, Inc., a Delaware corporation (the
“Acquisition Sub”), is entered into with reference to the following:

     WHEREAS, in accordance with Section 11.2 of the Agreement, the parties hereto deem it
appropriate and advisable to amend the Agreement as described below; and

     WHEREAS, capitalized terms used but not defined herein shall have the respective meanings
assigned to them in Agreement.

     NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

     1. Amendment of Definition. Section 1.1 of the Agreement is hereby amended such that
the definition of “Maximum Amount” contained therein shall be amended and restated as follows:

          “Maximum Amount” means Thirty-Five Million Dollars (US $35,000,000.00).

     2. Amendment of Purchase Price. Section 2.1 of the Agreement is hereby amended and
restated as follows:

     Section 2.1 Purchase and Sale of the Shares.

     Upon the terms and subject to the conditions of this Agreement, at the Closing, the
Seller shall sell, assign, transfer, convey and deliver the Shares to the Acquisition Sub
and the Acquisition Sub shall purchase the Shares from the Seller, free and clear of any
Encumbrances, for an aggregate purchase price of One Hundred Million Dollars (US
$100,000,000.00) (as such may be adjusted pursuant to the terms hereof, the “Purchase
Price”), which amount shall be paid by the Buyer or the Acquisition Sub to the Seller in
cash or a combination of (i) a duly completed and executed promissory note payable to the
Seller, dated as of the Closing Date, in a principal amount requested by the Buyer, not to
exceed the amount of the Term Loan (as defined in the Term Sheet) pursuant to the Term
Sheet, and in a form to be agreed among the Seller and the Buyer (the “Promissory
Note”) and (ii) the Cash Purchase Price in cash. In addition, the Seller shall be
entitled to the contingent payment right of up to Twelve Million Dollars ($12,000,000) as
set forth in Section 2.6.

1

 

     3. Amendment of Allocation of Purchase Price. Schedule 8.3 (Allocation of Purchase
Price) to the Agreement is hereby amended and restated as follows:

SCHEDULE 8.3

Allocation of Purchase Price

	 	 	 	 	 
	Cash
	 	$	521,000	 
	Accounts receivable
	 	 	12,134,000                    	(1)
	Inventories
	 	 	214,000	 
	Prepaid expenses and other current assets
	 	 	101,000	 
	Property, net
	 	 	11,687,000	 
	Goodwill
	 	 	77,164,000                    	(2)
	 
	 	 	 
	Total Purchase Price
	 	$	101,821,000                  	(3)
	 
	 	 	 
	 
	 	 	 	 
	Cash Purchase Price
	 	 	100,000,000	 
	Liabilities Assumed: (4)
	 	 	 	 
	Accounts payable
	 	 	906,000	 
	Accrued payroll and related expenses
	 	 	874,000	 
	State income taxes payable
	 	 	31,000	 
	Other current liabilities
	 	 	10,000	 
	 
	 	 	 
	Total Purchase Price
	 	$	101,821,000	 
	 
	 	 	 

 

			
	(1)	 	net receivables of $10,390,000 plus bad debt reserve of $1,744,000
	 
	(2)	 	This amount shall be increased dollar for dollar to reflect the Earn-Out Amount, if any,
and the Buyer and the Seller shall cooperate to file a fully executed supplemental IRS Form
8883 to reflect such increase.
	 
	(3)	 	allocated assets excludes deferred tax asset — current of $710,000
	 
	(4)	 	liabilities assumed excludes deferred tax liability and accrued use tax liability

     The above figures shall be adjusted to reflect the actual amounts as of the Closing Date, and to take into account any
Purchase Price adjustments.

     4. Amendment of Exhibit C (the Term Sheet). The sections of Exhibit C (the Term
Sheet) labeled “Promissory Note” and “Use of Proceeds” are hereby amended and restated as follows:

	 	Promissory Note:	 	The senior secured term loan (the “Term Loan”) shall be in an
amount equal to the sum of (A) $15,000,000.00 and (B) the
dollar amount (which amount may be zero) actually returned to
shareholders of the Parent voting against the Acquisition (as
defined below) and requesting a return of their investment in

2

 

	 	 	 	accordance with the terms of such investment; provided,
however, that if the sum of clauses (A) and (B) exceeds
$35,000,000.00 (the “Maximum Amount”), the Term Loan shall be
in an amount equal to the Maximum Amount. The Term Loan shall
be evidenced by a note payable to the Noteholder (the
“Promissory Note”).
	 
	 	Use of Proceeds:	 	On the Closing Date, it is anticipated that the aggregate
proceeds of the Promissory Note shall be used as follows:

	 	Uses:	 	$5,468,000 — deferred underwriting fee, subject to
reduction in the same proportion that (a) the dollar amount
actually returned to shareholders of the Parent voting against
the Acquisition (as defined below) and requesting a return of
their investment in accordance with the terms of such
investment bears to (b) the amount of the Parent’s trust
account.
	 
	 	 	 	$1,000,000 — merger advisory fee.
	 
	 	 	 	$2,000,000 — Closing costs and fees payable to third parties
other than FTN Midwest Securities Corp.
	 
	 	 	 	Balance of proceeds — proposed acquisition of InfuSystem, Inc.
(the “Acquisition”), including fees and expenses payable to
the Seller.

     5. Technical Amendment of Ticking Fee. Section 12.1(a) of the Agreement is hereby
amended and restated as follows to preserve the parties’ original intent:

     (a) Ticking Fee. The Buyer shall pay a fee (the “Ticking Fee”),
accruing from the date of this Agreement, which Ticking Fee shall be due and payable in cash
on the last business day of each month, in an amount equal to the sum of (i) $1,041.67 per
diem for the period from and including the date of this Agreement through and including the
day that is the 90th day following the date of this Agreement, (ii) $1,562.50 per diem for
the period from and including the 91st day following the date of this Agreement through and
including the day that is the 150th day following the date of this Agreement, and (iii)
$2,083.33 per diem thereafter. The Ticking Fee shall cease to accrue and all amounts then
outstanding in respect thereof shall be immediately due and payable upon the earlier to
occur of (A) the Closing Date, (B) the delivery by the Buyer to the Seller of a notice
terminating the Buyer’s right to pay a portion of the Purchase Price by issuing the
Promissory Note on the Closing Date (because alternative financing has been arranged

3

 

which will enable the Buyer to pay the Purchase Price in cash in full at the Closing Date)
or (C) the date that this Agreement is terminated in accordance with the provisions of
Article X.

     6. Technical Amendment of Facility Fee. Section 12.1(c) of the Agreement is hereby
amended and restated as follows to preserve the parties’ original intent:

     (c) Facility Fee. On the Closing Date, if the Buyer executes and delivers the
Promissory Note, the Buyer shall pay a fee (the “Facility Fee”) in an amount equal
to the sum of (i) $1,375,000 plus (ii) 2.50% of the excess of the actual principal amount of
the Promissory Note over $15,000,000.

     7. Addition of Earn-Out Provision. A new Section 2.6 is hereby added to the Agreement
as follows:

     Section 2.6 Earn-Out.

     (a) Preparation of Earn-Out Statement. Within seventy-five (75) calendar days
after the end of the Buyer’s fiscal year ended December 31, 2010 (“FY 2010”), the
Buyer shall prepare or cause to be prepared and delivered to the Seller, at the Buyer’s
expense, a statement (the “Earn-Out Statement”) setting forth the calculation of the
Buyer’s audited consolidated net revenue for FY 2010 (the “2010 Revenue Amount”),
without regard to whether such amounts are classified as continuing or discontinued
operations and further including the revenue of any entities acquired by or merged into the
Buyer and included in the Buyer’s FY 2010 consolidated net revenue in accordance with GAAP.
The Buyer and the Buyer’s accountants shall cooperate with the Seller and the Seller’s
accountants in connection with the preparation of the Earn-Out Statement, and the Buyer
shall provide the Seller and the Seller’s accountants with reasonable access to any of its
books, records, schedules, analyses, working papers and other information relating to the
Buyer for this purpose. The Earn-Out Statement shall be prepared in accordance with GAAP.

     (b) Review of Earn-Out Statement. Upon receipt from the Buyer, the Seller
shall have thirty (30) calendar days to review the Earn-Out Statement (the “Earn-Out
Review Period”). If the Seller disagrees with the Buyer’s computation of the 2010
Revenue Amount, the Seller may, on or prior to the last calendar day of the Review Period,
deliver a notice to the Buyer (the “Earn-Out Notice of Objection”), which sets forth
its objections to the Buyer’s calculation of the 2010 Revenue Amount. Any Earn-Out Notice
of Objection shall specify those items or amounts with which the Seller disagrees, together
with a reasonably detailed written explanation of the reasons for disagreement with each
such item or amount, and, to the extent reasonably practicable, shall set forth the Seller’s
calculation of the 2010 Revenue Amount based on such objections. To the extent not set
forth in the Notice of Objection, the Seller shall be deemed to have agreed with the Buyer’s
calculation of all other items and amounts contained in the Earn-Out Statement.

     (c) Finalization of Earn-Out Statement. Unless the Seller delivers the
Earn-Out Notice of Objection to the Buyer within the Earn-Out Review Period (or if the
Seller provides a written notice to the Buyer that it agrees with the Earn-Out Statement),
the Seller shall be deemed to have accepted the Buyer’s calculation of the 2010 Revenue

4

 

Amount and the Earn-Out Statement shall be final, conclusive and binding. If the Seller
delivers the Earn-Out Notice of Objection to the Buyer within the Earn-Out Review
Period, the Buyer and the Seller shall, during the thirty (30) calendar days following such
delivery or any mutually agreed extension thereof, use their commercially reasonable and
good faith efforts to reach agreement on the disputed items and amounts in order to
determine the 2010 Revenue Amount. If, at the end of such period or any mutually agreed
extension thereof, the Buyer and the Seller are unable to resolve their disagreements, they
shall jointly retain and refer their disagreements for final determination to an independent
accounting firm mutually agreed upon by the Buyer and the Seller (or, if the Buyer and the
Seller cannot agree on such an accounting firm, then each shall select an independent
accounting firm and such accounting firms shall select a third independent accounting firm)
(the accounting firm mutually agreed upon by the Buyer and the Seller or such other
accounting firms being the “Earn-Out Independent Expert”). The Buyer and the Seller
shall instruct the Earn-Out Independent Expert promptly to review this Section 2.6 and to
determine solely with respect to the disputed items and amounts so submitted whether and to
what extent, if any, the 2010 Revenue Amount set forth in the Earn-Out Statement requires
adjustment. The Buyer and the Seller shall make available to the Earn-Out Independent
Expert all relevant books and records and other items reasonably requested by the Earn-Out
Independent Expert for this purpose. The Buyer and the Seller shall request that the
Earn-Out Independent Expert deliver to the Buyer and the Seller, as promptly as practicable
but in no event later than thirty (30) calendar days after its retention, a report that sets
forth its resolution of the disputed items and amounts and its calculation of the 2010
Revenue Amount. The decision of the Earn-Out Independent Expert shall be final, conclusive
and binding on the parties. The costs and expenses of the Earn-Out Independent Expert shall
be borne by the parties in inverse proportion to their success on the disputed matters as
determined by the Earn-Out Independent Expert (by way of example only, if the Buyer’s
calculation of the 2010 Revenue Amount yields an Earn-Out Amount (as defined in Section
2.6(d)) of $3 million, the Seller’s calculation of the 2010 Revenue Amount yields an
Earn-Out Amount of $12 million and the Earn-Out Independent Expert’s calculation of the
Final 2010 Revenue Amount (as defined below) yields an Earn-Out Amount of $9 million, the
Buyer shall bear two-thirds (2/3) of the costs and expenses of the Earn-Out Independent
Expert and the Seller shall bear one-third (1/3) of the costs and expenses of the Earn-Out
Independent Expert). Each of the Buyer and the Seller agrees to promptly execute, if
requested by the Earn-Out Independent Expert, a reasonable engagement letter, including
customary indemnities in favor of the Earn-Out Independent Expert. The 2010 Revenue Amount,
as finally determined pursuant to this Section 2.6, is referred to herein as the “Final
2010 Revenue Amount.”

     (d) Calculation of Earn-Out Amount. As further consideration in respect of the
sale of the Shares by the Seller, the Buyer shall pay the Seller, if earned in accordance
with this Section 2.6, an additional amount (the “Earn-Out Amount”) based on the
Final 2010 Revenue Amount:

          (i) If the Final 2010 Revenue Amount is less than the First Revenue Target (as defined
below), the Earn-Out Amount shall be zero.

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          (ii) If the Final 2010 Revenue Amount is greater than or equal to the First Revenue
Target (as defined below) but less than the Second Revenue Target (as
defined below), the Earn-Out Amount shall be equal to $3 million plus the Incremental
Amount (as defined below).

          (iii) If the Final 2010 Revenue Amount is greater than or equal to the Second Revenue
Target (as defined below), the Earn-Out Amount shall be equal to $12 million.

     For purposes of this Agreement,

          (x) The “First Revenue Target” shall be equal to the Company’s 2007 actual net
revenues (excluding all revenues related to the Seller’s
ON-Q® product line (which includes without limitation ON-Q®, ON-Q PainBuster®, ON-Q
C-bloc® and ON-Q Soaker® Catheters) including without limitation
revenues resulting from the billing of public and private insurance payors, providers and
patients by the Company on behalf of the Seller, as well as any charges to the Seller by the
Company or the Buyer under the Services Agreement or any services agreement existing between
the Company and the Seller prior to the Closing) for the entire calendar year 2007,
multiplied by 2.744 (representing a 40% compound average growth rate);

          (y) The “Second Revenue Target” shall be equal to the Company’s 2007 actual net
revenues (excluding all revenues related to the Seller’s
ON-Q® product line (which includes without limitation ON-Q®, ON-Q PainBuster®, ON-Q
C-bloc® and ON-Q Soaker® Catheters) including without limitation
revenues resulting from the billing of public and private insurance payors, providers and
patients by the Company on behalf of the Seller, as well as any charges to the Seller by the
Company or the Buyer under the Services Agreement or any services agreement existing between
the Company and the Seller prior to the Closing) for the entire calendar year 2007,
multiplied by 3.375 (representing a 50% compound average growth rate); and

          (z) The “Incremental Amount” shall equal $9 million multiplied by the ratio of
(a) the Final 2010 Revenue Amount minus the First Revenue Target, divided by (b) the Second
Revenue Target minus the First Revenue Target.

     (e) Payment of Earn-Out Amount. Within five (5) Business Days after the Final
2010 Revenue Amount has been finally determined pursuant to Section 2.6(c), the Buyer shall
pay to the Seller, as an adjustment to the Purchase Price, an amount of cash equal to the
Earn-Out Amount, if any, by wire transfer of immediately available funds to an account
designated in writing by the Seller at least three (3) Business Days prior to such payment.
If the amount of any payment to be made pursuant to this Section 2.6(e) is for any reason
not made within five (5) Business Days after the Final 2010 Revenue Amount has been finally
determined, such amount shall bear interest from and including the expiration of such
five-Business-Day period to (but excluding) the date of payment at a rate per annum equal to
the higher of (a) the “prime rate,” as published in The Wall Street Journal, Eastern
Edition, in effect from time to time or (b) the rate of any debt then outstanding owed by
the Buyer or the Company to the Seller, or (if less) the maximum rate permitted by
applicable Law. Such interest shall be calculated daily on the basis of a year of three
hundred and sixty five (365) days and the actual number of days elapsed, without
compounding.

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     (f) Assignment of the Buyer’s Obligations. Notwithstanding anything to the
contrary contained in this Agreement (including Section 11.12 regarding assignment of this
Agreement), the Buyer may not assign its obligations under this Section 2.6 in whole or in
part without the prior written consent of the Seller which shall not be unreasonably
withheld, delayed or conditioned (and a Buyer Change of Control (as defined below) shall be
considered such an assignment). In connection with a Buyer Change of Control, the Seller
may require that the successor Person in the Buyer Change of Control unconditionally assume
all obligations of the Buyer under this Section 2.6. Any assignment by the Buyer of its
obligations under this Section 2.6 contrary to the provisions of this Section 2.6(f) shall
cause the maximum Earn-Out Amount of $12,000,000 to immediately become due and payable by
the Buyer to the Seller, which amount shall be paid to the Seller, as an adjustment to the
Purchase Price, with interest as provided below, by wire transfer of immediately available
funds to an account designated in writing by the Seller at least three (3) Business Days
prior to such payment. The amount of any payment to be made pursuant to this Section 2.6(f)
shall bear interest from and including the date of the Buyer Change of Control to (but
excluding) the date of payment at a rate per annum equal to the “prime rate,” as published
in The Wall Street Journal, Eastern Edition, in effect from time to time or (if less) the
maximum rate permitted by applicable Law. Such interest shall be calculated daily on the
basis of a year of three hundred and sixty five (365) days and the actual number of days
elapsed, without compounding. For purposes of this Section 2.6(f), a “Buyer Change of
Control” means a merger, consolidation, reorganization or sale of all or substantially
all of the assets (in a single transaction or through a series of related transactions) of
the Buyer, or a change in ownership of 50% or more of the voting capital stock of the Buyer.

     (g) Ability to Account. Without limiting the provisions of Section 2.6(f), if
the Buyer is at any time acquired by another Person, the Buyer hereby covenants and agrees
to preserve the ability to account for the business of the Buyer and its Subsidiaries as it
existed before the date of such acquisition as if it were segregated to the extent
reasonably necessary to allow the Buyer and the Seller to accurately calculate the 2010
Revenue Amount and in such a manner as to allow the Buyer and the Seller to accurately
calculate the Earn-Out Amount due, if any, under Section 2.6(d).

     (h) Future Operational Control. Nothing in the foregoing shall obligate Buyer,
or any successor, to take any action, or refrain from taking action, to maintain, increase
or otherwise have any effect on net revenues; Seller hereby expressly acknowledging that
subsequent to the Closing date all actions regarding the conduct of the Company’s business
shall be in the sole and absolute discretion of Buyer, or any successor, except as otherwise
expressly provided herein.

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     8. Amendment of Assignment Provision. Section 11.12 of the Agreement is hereby
amended and restated as follows:

     Section 11.12 Assignment; Successors.

     Neither this Agreement nor any of the rights, interests or obligations under this
Agreement may be assigned or delegated, in whole or in part, by operation of law or
otherwise, by any party without the prior written consent of the other parties, and any such
assignment without such prior written consent shall be null and void; provided,
however, that the Buyer or the Acquisition Sub may assign this Agreement to any
Subsidiary of the Buyer without the prior consent of the Seller or the Company (subject to
Section 2.6(f)) and; provided further, that the Seller may assign any of its
rights under this Agreement, including the right to receive the Purchase Price, the Cash
Purchase Price and/or the Promissory Note, to one or more Affiliates of the Seller without
the consent of the Buyer or the Company and; provided still further,
that the Seller may assign its right to receive the Earn-Out Amount to any Person without
the consent of the Buyer or the Company and; provided still further,
that no assignment shall limit the assignor’s obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.

     9. Amendment of Fees and Expenses Provision. Section 11.1 of the Agreement is hereby
amended and restated as follows:

          Section 11.1 Fees and Expenses.

          Except as otherwise provided herein, all fees and expenses incurred in connection with
or related to this Agreement and the Ancillary Agreements and the transactions contemplated
hereby and thereby shall be paid by the party incurring such fees or expenses, whether or
not such transactions are consummated. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by the other. Notwithstanding anything to the
contrary contained in this Agreement, the Buyer shall reimburse to the Seller, at the
earlier of the Closing or October 31, 2007, all out-of-pocket expenses incurred by the
Seller associated with that certain Fourth Amendment to this Agreement dated as of September
18, 2007, including without limitation any fees charged by Banc of America Securities LLC in
connection therewith.

     10. Amendment of Seller Brokers Provision. Section 3.5 of the Agreement is hereby
amended and restated as follows:

          Section 3.5 Brokers.

          Except for Banc of America Securities LLC, the fees of which will be paid by the Seller
(except as provided in Section 11.1), no broker, finder, financial adviser, intermediary or
investment banker is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated hereby based upon arrangements made by or on
behalf of the Seller.

8

 

     11. Amendment of Company Brokers Provision. Section 4.18 of the Agreement is hereby
amended and restated as follows:

          Section 4.18 Brokers.

          Except for Banc of America Securities LLC, the fees of which will be paid by the Seller
(except as provided in Section 11.1), no broker, finder, financial advisor, intermediary or
investment banker is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement based on arrangements made
by or on behalf of the Company.

     12. Amendment of Termination Date. Section 10.1(d) of the Agreement is hereby amended
such that the date “October 1, 2007” contained therein shall be stricken and replaced with the date
“October 22, 2007.”

     13. Location of Closing. Section 2.2 of the Agreement is hereby amended such that the
address of Gibson, Dunn & Crutcher LLP contained therein shall be stricken and replaced with the
following: “3161 Michelson Drive, Irvine, California 92612.”

     14. No Further Amendments. Except as expressly amended pursuant to Sections 1 through
13 hereof, the remaining provisions of the Agreement shall remain in full force and effect in
accordance with their terms, including without limitation the provisions of Section 10.3 relating
to the Buyer Termination Fee.

     15. Counterparts; Facsimile Signatures. This Amendment may be executed in two or more
counterparts, all of which shall be considered one and the same instrument and shall become
effective when one or more counterparts have been signed by each of the parties hereto and
delivered to the other parties hereto. This Amendment may be executed by electronic or facsimile
signature, and an electronic or facsimile signature shall constitute an original for all purposes.

[Signature page follows.]

9

 

     IN WITNESS WHEREOF, the Seller, the Company, the Buyer and the Acquisition Sub have
caused this Amendment to be executed as of the date first written above by their respective
officers thereunto duly authorized.

	 	 	 	 	 
	 	I-FLOW CORPORATION

 	 
	 	By:  	/s/ James J. Dal Porto
 	 
	 	 	Name:  	James J. Dal Porto 	 
	 	 	Title:  	Executive VP & COO 	 
	 
	 	INFUSYSTEM, INC.

 	 
	 	By:  	/s/ James R. Talevich
 	 
	 	 	Name:  	James R. Talevich 	 
	 	 	Title:  	CFO and Secretary 	 
	 
	 	HAPC, INC.

 	 
	 	By:  	/s/ John E. Voris
 	 
	 	 	Name:  	John E. Voris 	 
	 	 	Title:  	CEO 	 
	 
	 	ICELAND ACQUISITION SUBSIDIARY, INC.

 	 
	 	By:  	/s/ John E. Voris
 	 
	 	 	Name:  	John E. Voris 	 
	 	 	Title:  	CEO 	 
	 

Signature Page 

Amendment No. 4 to Stock Purchase Agreement

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