EXHIBIT 10.16

EXECUTION COPY

LICENSE AGREEMENT

This LICENSE AGREEMENT (this “Agreement”), dated as of October 25, 2007
(the “Effective Date”), is by and between InfuSystem, Inc., a California
corporation (“InfuSystem”), on the one hand, and I-Flow Corporation, a Delaware
corporation (“I-Flow”), on the other hand. Each of I-Flow and InfuSystem may be
referred to herein individually as a “Party” or collectively as the “Parties.”

RECITALS

WHEREAS, InfuSystem is the owner of certain intellectual property related to the
provision of billing and management services, including intellectual property
jointly developed by I-Flow and InfuSystem;

WHEREAS, I-Flow manufactures, markets, distributes and sells medical equipment
and supplies, including, without limitation, I-Flow’s ON-Q® Pain Management
Systems and acute post-operative pain management, wound site management and
post-operative surgical treatment products and related supplies (hereafter
collectively referred to as the “Products”);

WHEREAS, pursuant to that certain Services Agreement dated April 29, 2002, as
amended, between InfuSystem and I-Flow (the “Existing Agreement”), InfuSystem
has been furnishing I-Flow with the Billing and Collection Services and
Management Services in connection with the Products;

WHEREAS, pursuant to that certain Stock Purchase Agreement, dated as of
September 29, 2006 (the “Stock Purchase Agreement”), by and among I-Flow,
InfuSystem, HAPC, Inc., a Delaware corporation (the “Buyer”) and Iceland
Acquisition Subsidiary, Inc., a Delaware corporation (the “Acquisition Sub”),
the Buyer is purchasing concurrently with the execution and delivery of this
Agreement all of the issued and outstanding capital stock of InfuSystem through
the Acquisition Sub;

WHEREAS, concurrently with the execution and delivery of this Agreement and the
consummation of the transactions contemplated by the Stock Purchase Agreement,
I-Flow and InfuSystem are amending and restating the Existing Agreement (the
“Services Agreement”), pursuant to which InfuSystem will continue to provide
Billing and Collection Services and Management Services to I-Flow and I-Flow
will grant a certain non-exclusive license to InfuSystem, pursuant to
Section 1.B. of the Services Agreement, to enable InfuSystem to provide such
services to I-Flow; and

WHEREAS, in order to facilitate the continued business relationship between
InfuSystem and I-Flow pursuant to the Services Agreement, I-Flow desires to
obtain, and InfuSystem desires to grant, exclusive and non-exclusive licenses to
InfuSystem’s intellectual property related to third-party billing and collection
services and management services for use in the field of acute post-operative
pain management and in other Products fields including, without limitation,
wound site management and post-operative surgical treatments, all subject to the
terms and conditions set forth in this Agreement.

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NOW, THEREFORE, in consideration of the foregoing premises and the promises and
covenants contained in this Agreement, the Services Agreement and the Stock
Purchase Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

AGREEMENT

1. Definitions. The following definitions shall apply to the terms below:

1.1 “Affiliate” shall mean, with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified.

1.2 “Agreement” shall have the meaning set forth in the preamble.

1.3 “Billing and Collection Services” shall have the meaning ascribed thereto in
the Services Agreement.

1.4 “Effective Date” shall have the meaning set forth in the preamble.

1.5 “Exclusively Licensed Intellectual Property” shall have the meaning set
forth in Section 2.1.

1.6 “Field of Use” shall mean the field of acute post-operative pain management
treatments.

1.7 “I-Flow” shall have the meaning set forth in the preamble.

1.8 “InfuSystem” shall have the meaning set forth in the preamble.

1.9 “InfuSystem Intellectual Property” shall mean all Intellectual Property
owned by InfuSystem as of the Effective Date relating to or used in the delivery
or performance of Services.

1.10 “Intellectual Property” shall mean all know-how, trade secrets, and any
other information that is protected by statutory or common law against
unauthorized use.

1.11 “Licensed Intellectual Property” shall have the meaning set forth in
Section 2.2.

1.12 “Litigation” shall have the meaning set forth in Section 3.1.

1.13 “Management Services” shall have the meaning ascribed thereto in the
Services Agreement.

 

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1.14 “Other Fields” shall mean all fields other than the Field of Use,
including, without limitation, the fields of wound site management and
post-operative surgical treatments.

1.15 “Non-Exclusively Licensed Intellectual Property” shall have the meaning set
forth in Section 2.2.

1.16 “Party” shall have the meaning set forth in the preamble.

1.17 “Parties” shall have the meaning set forth in the preamble.

1.18 “Person” shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.

1.19 “Prevailing Party” shall have the meaning set forth in Section 7.4.

1.20 “Services” shall mean Billing and Collection Services and/or Management
Services.

1.21 “Third Party” shall mean any Person other than InfuSystem, I-Flow, or an
Affiliate of either.

2. License Grant and Ownership of Improvements.

2.1 InfuSystem hereby grants to I-Flow an unrestricted, perpetual, irrevocable,
worldwide, assignable, royalty-free and exclusive license to use and/or
sublicense the InfuSystem Intellectual Property, solely in the Field of Use
(the “Exclusively Licensed Intellectual Property”) for the benefit of I-Flow.

2.2 InfuSystem hereby grants to I-Flow an unrestricted, perpetual, irrevocable,
worldwide, assignable, royalty-free and non-exclusive license to use and/or
sublicense the InfuSystem Intellectual Property in the Other Fields
(the “Non-Exclusively Licensed Intellectual Property” and, together with the
Exclusively Licensed Intellectual Property, the “Licensed Intellectual
Property”) for the benefit of I-Flow.

2.3 The license granted under Section 2.1 of this Agreement shall be exclusive
as to all Parties or entities, including InfuSystem. InfuSystem shall have no
right to make, use, sell, offer for sale, and/or import the Exclusively Licensed
Intellectual Property in the Field of Use. Accordingly, InfuSystem agrees and
covenants not to, directly or indirectly, make, use, sell, license offer for
sale, and/or import the Exclusively Licensed Intellectual Property in the Field
of Use for any purpose or by any means without the express prior written consent
of I-Flow, which consent may be withheld in I-Flow’s sole and exclusive
discretion.

2.4 The licenses granted under Sections 2.1 and 2.2 of this Agreement shall not
limit InfuSystem’s ability to use any of the Licensed Intellectual Property in
the Other Fields.

 

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3. Infringement and Enforcement.

3.1 I-Flow may, but has no obligation to, take any and all actions to enforce
the Licensed Intellectual Property (including without limitation instituting
litigation) against any suspected infringement or misappropriation by any Third
Party (“Litigation”). I-Flow shall bear all the expenses and costs with respect
to any such Litigation it elects to undertake and I-Flow shall be entitled to
all damages recovered in such Litigation.

3.2 At I-Flow’s request, InfuSystem agrees to reasonably cooperate in any such
Litigation. I-Flow agrees to pay InfuSystem’s reasonable out-of-pocket costs and
expenses in connection with such Litigation. If InfuSystem desires to retain
separate counsel in connection with such Litigation, however, InfuSystem shall
bear its own costs and expenses concerning the Litigation, including, without
limitation, the costs and expenses of such separate counsel. Notwithstanding
InfuSystem’s participation in such Litigation, I-Flow shall retain the full
right to control such Litigation, including, without limitation, any settlement
of such Litigation. I-Flow shall have the right to settle any Litigation on such
terms and conditions reasonably acceptable to InfuSystem.

3.3 NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY, UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER (A) FOR ANY PUNITIVE,
EXEMPLARY OR OTHER SPECIAL DAMAGES ARISING UNDER OR RELATING TO THIS AGREEMENT
OR THE SUBJECT MATTER HEREOF, AND/OR (B) FOR ANY INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION LOSS OF USE, INCOME, PROFITS
OR ANTICIPATED PROFITS, BUSINESS OR BUSINESS OPPORTUNITY, SAVINGS, DATA, OR
BUSINESS REPUTATION), ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED IN CONTRACT, BREACH
OF WARRANTY, TORT, NEGLIGENCE OR ANY OTHER THEORY, AND REGARDLESS OF WHETHER
SUCH PARTY HAS BEEN ADVISED OF, KNEW OF, OR SHOULD HAVE KNOWN OF THE POSSIBILITY
OF SUCH DAMAGES.

4. Representations and Warranties.

4.1 InfuSystem hereby represents and warrants to I-Flow that:

(i) it has all of the requisite power and authority to enter into this Agreement
and to perform its obligations hereunder and that this Agreement has been duly
and validly authorized, executed and delivered by InfuSystem;

(ii) this Agreement constitutes the legal, valid and binding obligation of
InfuSystem, enforceable against InfuSystem in accordance with its terms;

(iii) it is the owner of the Licensed Intellectual Property and the Licensed
Intellectual Property does not infringe or misappropriate the intellectual
property of any Third Party; and

 

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(iv) it has the entire right to enter this Agreement and grant the licenses
contemplated hereby.

4.2 I-Flow hereby represents and warrants to InfuSystem that:

(i) it has all of the requisite power and authority to enter into this Agreement
and that this Agreement has been duly and validly authorized, executed and
delivered by I-Flow; and

(ii) this Agreement constitutes the legal, valid and binding obligation of
I-Flow, enforceable against I-Flow in accordance with its terms.

5. Term and Termination.

5.1 The term of this Agreement shall commence on the Effective Date and shall
continue in perpetuity, unless terminated by I-Flow by written notice to
InfuSystem, provided that upon the later of (i) the third (3rd) anniversary of
the Effective Date or (ii) termination of the Services Agreement for any reason,
without any action by any of the parties hereto, the exclusive license granted
by InfuSystem to I-Flow pursuant to Section 2.1 of this Agreement shall
automatically be deemed amended to become a non-exclusive license and no longer
an exclusive license, and Section 2.3 shall cease to have any force or effect.
Except as provided in the immediately preceding sentence and as otherwise
mutually agreed by the parties, all terms and conditions of this Agreement,
including, without limitation, those pertaining to the licenses themselves,
shall remain in full force and effect during the term of this Agreement.

5.2 This Agreement may not be terminated by InfuSystem.

6. Notices.

Any notice required or permitted to be given to a Party pursuant to this
Agreement shall be deemed to have been given only if such notice is reduced to
writing and (i) delivered personally, (ii) sent by reputable overnight courier
service for next business day delivery to the address given below, or (iii) sent
by facsimile machine (with proof of transmission capability) to the fax number
set forth below, with a hard copy to be sent by first class mail to the address
given below:

 

If to InfuSystem:    If to I-Flow:   

InfuSystem, Inc.

1551 East Lincoln Ave.

Madison Heights, MI 48071

Attention: President

  

I-Flow Corporation

20202 Windrow Drive

Lake Forest, CA 92630

Attention: President

  

or to such other address or facsimile number as either Party shall have
specified by notice in writing to the other Party.

 

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If delivered personally or by facsimile during normal business hours on a
business day, a notice shall be deemed delivered when actually received at the
address specified above. In any other case, notice shall be deemed delivered on
the next business day following the date on which it was sent.

7. Miscellaneous.

7.1 Confidentiality. The parties recognize that in connection with the
performance of this Agreement, the parties may furnish and disclose to each
other confidential and proprietary information including, without limitation,
information relating to the parties’ respective organization, personnel,
business activities, policies, finances, costs, marketing plans, projected
revenues, technology, rights, obligations, liabilities, strategies and customer
lists (collectively, “Confidential Information”). Each party, to the extent it
comes into possession of Confidential Information of the other party, agrees
that, except as expressly contemplated by this Agreement, it shall not directly
or indirectly use such Confidential Information for its own benefit or in
connection with its business relationships with patients/customers/clients of
the owner of the Confidential Information, and shall take all reasonable care to
ensure that such Confidential Information shall not be disclosed to any third
party, including imposing reasonable confidentiality requirements with respect
to such Confidential Information on its employees, agents, counsel, accountants
and other representatives, except insofar as: (i) disclosure may be specifically
authorized in writing from time to time by the owner of the Confidential
Information; (ii) such Confidential Information is required to be disclosed in
connection with performance of this Agreement, or pursuant to any right or
license granted by the owner of the Confidential Information; (iii) the
recipient of the Confidential Information can demonstrate, by independent
documentation, that such Confidential Information was previously made public by
the Confidential Information’s owner; (iv) the recipient of the Confidential
Information can demonstrate, by independent documentation, that such
Confidential Information was in the public domain, prior to its disclosure
hereunder and otherwise than as a consequence of a breach of its obligations
hereunder; (v) the recipient of the Confidential Information can demonstrate, by
independent documentation, that such Confidential Information was known by the
recipient prior to its disclosure hereunder or was independently developed by
the recipient without the aid or use of any information disclosed hereunder; or
(vi) such disclosure is required under compulsion of law, including subpoena,
civil investigative demand, oral questions or interrogatories, or other
compulsory process; provided that, the Confidential Information’s owner shall be
given notice of service of such demand or process and a reasonable opportunity
to defend against such demand or process, and the party against whom such demand
or process is asserted provides all reasonable cooperation in opposing the same
to the fullest extent permitted by law. The obligations of each party under this
Section 7.1 shall survive any termination of this Agreement and expire upon the
fifth (5th) anniversary of the effective date of such termination. Each of the
parties, for itself and its successors and assigns, acknowledges that any
violation of this Section 7.1 would seriously and irreparably injure the owner
of the Confidential Information. In addition to all other remedies permitted by
law or in equity and without limiting any action at law or in equity to which
such owner may be entitled, the owner of any Confidential Information shall be
entitled to seek injunctive relief, without bond, to enforce the terms and
conditions stated herein.

7.2 Assignability. This Agreement is assignable by I-Flow without restriction.
This Agreement may not be assigned by InfuSystem, except with the written
consent of I-Flow, which

 

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consent may be withheld in I-Flow’s sole and exclusive discretion, or to a
successor to all, or substantially all of InfuSystem’s assets. Any purported
assignment by InfuSystem in violation of the foregoing shall be void.

7.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Michigan, without giving
effect to the choice of law rules thereof.

7.4 Attorneys’ Fees. If any Party to this Agreement shall bring any action,
suit, arbitration, mediation, counterclaim or appeal for any relief against any
other Party, declaratory or otherwise, to enforce the terms hereof or to declare
rights hereunder, the Prevailing Party in such action shall be entitled to
recover as recoverable costs in any such action its actual attorneys’ fees and
costs (including reasonable fees and costs for in-house counsel), all expert
fees and costs, all court and arbitration expenses, and any other costs
reasonably and properly incurred, including any fees and costs incurred in
bringing and prosecuting such action and enforcing any order, judgment, ruling,
or award granted as part of such action. As used in this Section, “Prevailing
Party” shall include, without limitation, a Party which obtains substantially
the relief sought by it.

7.5 Counterparts. This Agreement may be executed in two or more counterparts
(including by means of facsimile), each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

7.6 Severability. Should any part or provision of this Agreement be rendered or
declared invalid by reason of any law or by decree of a court of competent
jurisdiction, the validity of any other term, clause, or provision shall not be
affected provided that such invalid or unenforceable provision is and can be
replaced with an enforceable clause which most closely achieves the result
intended by such invalid clause.

7.7 Headings. The headings used in this Agreement are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.

7.8 Drafting. The Parties agree that this Agreement shall not be construed
against either Party as the drafter.

7.9 Waiver. No waiver or delay by either Party of any breach of the covenants
contained herein to be performed by the other Party shall be construed as a
waiver of any succeeding breach of the same or any other covenants or conditions
hereof.

7.10 Entirety of Agreement. This Agreement supersedes any prior understandings
or agreements, whether written or oral, and any contemporaneous oral agreements,
between the Parties hereto in regard to the subject matter hereof and contains
the entire agreement between the Parties in regard to the subject matter hereof.
This Agreement may not be changed or modified orally, but only by an agreement,
in writing, signed by both parties hereto.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and
delivered by their duly authorized representatives, effective as of the
Effective Date set forth above.

 

I-FLOW CORPORATION By:  

/s/ Donald M. Earhart

Name:   Donald M. Earhart Title:   Chairman, President and Chief Executive
Officer INFUSYSTEM, INC. By:  

/s/ Pat LaVecchia

Name:   Pat LaVecchia Title:   Secretary

Signature Page to Exclusive License Agreement