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                                                                    Exhibit 10.5

                         LICENSE AND TRANSFER AGREEMENT

                  LICENSE AND TRANSFER AGREEMENT (this "Agreement") dated as of
March 6, 1996 by and between SOLOPAK PHARMACEUTICALS INC., a corporation
organized under the laws of the State of Delaware and having its principal place
of business at 1845 Tonne Road, Elk Grove Village, Illinois 60007 ("SoloPak"),
and I-FLOW CORPORATION, a corporation organized under the laws of the State of
California and having its principal place of business at 2532 White Road,
Irvine, California 92714 ("I-Flow").

                  WHEREAS I-Flow and SoloPak entered into a Distribution
Agreement dated as of November 1994 (the "Original Agreement") providing for the
sale and distribution by SoloPak of the "Side-Kick" pump and "SideKick"
administration sets and related accessories, the "Paragon" pump and "Paragon"
administration sets and related accessories and the "Paragon elite" pump and
"Paragon" administration sets and related accessories; and

                  WHEREAS I-Flow is the sole owner of all rights, title and
interest in and to (i) the "SideKick Infusion System" -- a round, spring-driven
infusion pump with dedicated administration sets and related accessories; (ii)
the "Paragon Infusion System" -- a round, spring-driven infusion pump with
dedicated administration sets and related accessories; and (iii) the "Paragon
elite Infusion System" --a round, spring-driven infusion pump with dedicated
administration sets and related accessories which also includes an electronic
alarm to denote the completion of an infusion; and

                  WHEREAS SoloPak desires to purchase and acquire from I-Flow:

                  A. The exclusive, perpetual, fully-paid and irrevocable right
and license to: (i) manufacture and sell the Products to Customers located in
and for use in the Territory; and (ii) manufacture the SideKick top assembly and
Paragon and Paragon elite cover assembly for incorporation into SideKick and
Paragon Pumps and to purchase from I-Flow Spring Assemblies and System
Components, all as more specifically set forth herein; and

                  B. All of I-Flow's rights, title and interest in and to the
Molds; and

                  WHEREAS the parties wish to confirm their additional
agreements and understandings regarding manufacture, assembly, purchasing and
other commercial transactions relating to the Products; and

                  WHEREAS SoloPak and I-Flow desire to terminate their
respective covenants, agreements, obligations, duties and liabilities under the
Original Agreement, except as otherwise expressly provided in Article 2 of this
Agreement;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto agree to and with each other as follows:
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                                    ARTICLE 1

                                   DEFINITIONS

                  For the purpose of this Agreement, the following words, terms
and phrases where written with an initial capital letter, shall have the meaning
assigned to them in this Article 1 unless the context otherwise requires (the
singular including the plural, and the plural including the singular, as may be
appropriate):

                  1.1 Administration Set Components. "Administration Set
Components" shall mean the Flow Restrictor, round Drug Bag, Filling Valve,
filter, tubing and various components as set forth in Schedule 1.1 hereto.

                  1.2 Affiliate. "Affiliate", as applied to any Person, shall
mean any other Person, or group of Persons acting in concert, directly or
indirectly controlling, in control of, or under common control with, that
Person. For purposes of this definition, "control" (including with correlative
meanings, the terms "controlling," "controlled" and "under common control with")
shall mean with respect to any Person the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities, by contract or
otherwise.

                  1.3 Assembled Administration Sets. "Assembled Administration
Sets" shall mean an assembled or packaged set of two or more Administration Set
Components sold together as a unit specifically for use with any Product.

                  1.4 Closing. "Closing" shall have the meaning given such term
in Section 3.7 hereof.

                  1.5 Closing Date. "Closing Date" shall have the meaning given
such term in Section 3.7 hereof.

                  1.6 Confidential Information. "Confidential Information" shall
mean all information, other than information expressly designated in writing as
non-confidential by the party disclosing the same, which is directly or
indirectly disclosed to any other party hereto, regardless of the form in which
it is disclosed, relating in any way to the disclosing party's markets,
customers, products, patents, formulae, inventions, procedures, methods,
designs, strategies, plans, assets, liabilities, costs, revenues, profits,
organization, employees, agents, distributors or business in general.

                  1.7 Customers. "Customers" shall mean Persons located in the
Territory purchasing Products (for use only in the Territory) for any and all
human health care-related intravenous applications and uses whatsoever (whether
for administering pharmaceutical or nutritional products or otherwise);
provided, however, that "Customers" shall not include persons purchasing
Products for non-human health care uses (such as animal health care or
industrial applications).

                  1.8 Dollars. "Dollars or "$" shall mean lawful currency of the
United States of America.

                  1.9 Drug Bag. "Drug Bag" shall mean the round flexible bag
that is filled with a pharmaceutical or nutritional product and placed in the
Pump bottom.

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                  1.10 Escrow Agreement. "Escrow Agreement" shall have the
meaning given such term in Section 4.3(b) hereof.

                  1.11 Filling Valve. "Filling Valve" shall have the meaning
given such term in Schedule 1.11 hereof.

                  1.12 Flow Restrictor. "Flow Restrictor" shall mean the flow
control orifice used in the Paragon and Paragon elite Infusion Systems and the
calibrated flow control tubing used in the SideKick Infusion System.

                  1.13 FDA. "FDA" shall mean the United States Food and Drug
Administration and any agency or governmental body succeeding to the duties
thereof.

                  1.14 510(k) Clearance. "510(k) Clearance" shall mean the
permission to market pursuant to Section 510(k) of the U.S. Food and Drug Act
for the manufacture and sale of the Products in the United States.

                  1.15 Guaranteed Royalty. "Guaranteed Royalty" shall have the
meaning given such term in Section 3.2(a)(ii) hereof.

                  1.16 I-Flow. "I-Flow" shall have the meaning given such term
in the introduction to this Agreement.

                  1.17 Letter of Credit. "Letter of Credit" shall have the
meaning given such term in Section 3.2(b) hereof.

                  1.18 License. "License" shall have the meaning given such term
in Section 3.1(a) hereof.

                  1.19 Molds. "Molds" shall mean the molds necessary to
manufacture the top and bottom halves, as well as the molds necessary to
complete the assembly of, the SideKick and Paragon Pumps, all as set forth on
Schedule 1.19 hereof.

                  1.20 Net Sales. "Net Sales" shall mean the gross sales
revenues resulting from SoloPak's sales of the Products minus (i) normal returns
and allowances of Products and normal discounts on Products allowed and taken
and (ii) any payments made to a Customer by reason of uninsured manufacturing
defects.

                  1.21 Person. "Person" shall mean any natural person,
corporation, proprietorship, limited partnership, general partnership, joint
stock company, joint venture, association, company, trust company, business
trust or other organization or entity, whether or not a legal entity, or any
governmental agency or subdivision thereof.

                  1.22 Products. "Products" shall mean the SideKick Infusion
System, the Paragon Infusion System, and the Paragon elite Infusion System.

                  1.23 Pump. "Pump" shall mean, with respect to any Product, the
fully-assembled Pump Components, including the Spring Assembly.

                  1.24 Pump Components. "Pump Components" shall mean: (i) the
"top" or upper portion of the pump assembly used for each Product, (ii) the
"bottom" or lower portion of the pump assembly used for each Product, (iii) the
I-Flow proprietary Spring 

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Assembly that is used in each Product, and (iv) miscellaneous components
necessary for assembly. Further definitions as per Schedule 1.24.

                  1.25 Specifications. "Specifications" shall mean those
specifications (including, without limitation, as to quality control) for the
assembly of, the materials used in, and the performance of the Spring Assembly
with the other components used in the SideKick Infusion Systems, the Paragon
Infusion Systems and the Paragon elite Infusion Systems in effect as of the date
hereof as set forth in Schedule 1.25 hereto, as the same may be modified from
time to time by written agreement of SoloPak and I-Flow.

                  1.26 Spring Assembly. "Spring Assembly" shall mean:

                  (i) For the SideKick Infusion Systems, the "Spring Assembly"
shall mean the "pressure plate" assembly. The pressure plate assembly is the
I-Flow proprietary spring, the pressure plate and attaching wires.

                  (ii) For the Paragon and Paragon elite Infusion Systems, the
"Spring Assembly" shall mean the "scissors" assembly. The scissors assembly is
the I-Flow proprietary springs, sliders and links.

                  1.27 System Components. "System Components" shall mean, with
respect to any Product, the Pump, the Administration Set Components and the
accessories.

                  1.28 Technology. "Technology" shall mean any and all designs,
plans, specifications, drawings, patents (including, without limitation, pending
applications for patents), formulae, inventions, procedures, manufacturing
techniques, methods, strategies, software, know-how and intellectual property
rights of whatsoever nature.

                  1.29 Territory. "Territory" shall mean the United States of
America and Puerto Rico.

                  1.30 Trademarks. "Trademarks" shall mean all trademarks or
other property rights, if any, of I-Flow in and to the names "SideKick",
"Paragon" and "Paragon elite" to the extent used in connection with the Products
in the Territory (including any variations thereof and all trademarks or
tradenames, designs, logos or other marks, if any, incorporating all or any
portion of such trademarks, and all registrations or applications, if any, to
register the same in the Territory and all rights, if any, with respect to any
claims of infringement with respect thereto in the Territory), including the
goodwill of the business in the Territory associated therewith.

                  1.31 Transferred Assets. "Transferred Assets" shall have the
meaning given such term in Section 3.1(b) hereof.

                  1.32 U.S. Food and Drug Act. "U.S. Food and Drug Act" shall
mean the United States Federal Food, Drug, and Cosmetics Act, and all
regulations, directives, policy statements and guidelines promulgated thereunder
or issued pursuant thereto, as the same may be amended, modified or replaced
from time to time.

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                                    ARTICLE 2

       REMAINING PRODUCT ORDERS UNDER THE ORIGINAL AGREEMENT; TERMINATION
                           OF THE ORIGINAL AGREEMENT

                  2.1 Satisfaction of Purchase Obligations; Termination of the
Original Agreement. (a) Prior to the date hereof, SoloPak has purchased a
quantity of I-Flow Products and other goods in satisfaction and discharge of all
of the obligations, duties and liabilities of SoloPak to purchase Products under
the Original Agreement or any other agreement, understanding or arrangement with
I-Flow (other than this Agreement). I-Flow acknowledges and agrees that it has
received payment in full for such purchases prior to the date hereof.

                  (b) Products and goods purchased from I-Flow by SoloPak as
provided in Section 2.1(a) above have been purchased on the terms and subject to
the conditions set forth in the following Sections of the Original Agreement:

                  Section 4.01      Prices
                  Section 4.03      Shipment Terms
                  Section 6.01      Warranty Information
                  Section 6.02      Disclaimer of Warranty
                  Section 6.03      Exclusive Remedies
                  Section 6.04      Limitation of Liability
                  Section 6.05      Indemnification of I-Flow
                  Section 6.06      Indemnification of Distributor

References to the Sections of the Original Agreement specified above shall not
be construed to create or preserve any obligations on the part of SoloPak or
I-Flow under the Original Agreement; provided, however that the obligations of
SoloPak and I-Flow under Sections 6.01, 6.02, 6.03, 6.04, 6.05 and 6.06 of the
Original Agreement, to the extent that they relate to Products and goods sold by
I-Flow to SoloPak prior to the date hereof, shall nevertheless survive for one
year.

                  (c) I-Flow hereby agrees that, notwithstanding anything in the
Original Agreement to the contrary, no interest or penalty fee or charge (except
as has been previously made by SoloPak which shall be retained by I-Flow) shall
accrue on or be payable with respect to any amounts required to be paid by
SoloPak to I-Flow under the Original Agreement, regardless of any delay between
the date payment was required to have been made and the date such payment was
actually received by I-Flow.

                  2.2 Termination of the Original Agreement. Except as otherwise
provided in Section 2.1 above, SoloPak and I-Flow acknowledge and agree that (i)
the Original Agreement shall be terminated, discharged and released in all
respects and (ii) neither SoloPak nor I-Flow shall have any continuing liability
or obligation under or in respect of the Original Agreement, and (iii) each
party fully releases the other from any and all claims, liabilities and the like
arising out of, or attributable to, the Original Agreement.

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                                    ARTICLE 3

                           GRANT OF LICENSE AND RIGHT

                  3.1 Grant of License; Transfer of Assets. (a) Subject to the
terms and conditions set forth in this Agreement, I-Flow hereby grants to
SoloPak (effective as of the Closing) the perpetual, fully paid and irrevocable
right and license (hereinafter referred to as the "License") to:

                  (i) exclusively (1) manufacture, assemble, produce, sell and
         distribute to Customers in the Territory, and (2) cause to be
         manufactured, assembled, produced, sold and distributed to Customers in
         the Territory by one or more Affiliates or sublicensees of SoloPak as
         it may from time to time select, the Pump Components excluding,
         however, the manufacture, production, or assembly of the Spring
         Assemblies;

                  (ii) exclusively purchase and acquire Spring Assemblies and
         Administration Set Components from I-Flow or any of I-Flow's Affiliates
         or sublicensees for inclusion in Products and Assembled Administration
         Sets to be assembled, produced, sold and distributed to Customers in
         the Territory;

                  (iii) exclusively assemble and produce Products (or to cause
         one or more Affiliates or sublicensees of SoloPak as it may from time
         to time select to assemble and produce Products) for sale and
         distribution to Customers in the Territory using Spring Assemblies and
         Administration Set Components purchased from I-Flow as provided herein;

                  (iv) exclusively (1) sell and distribute Products to Customers
         in the Territory, (2) promote the sale of Products to Customers in the
         Territory, and (3) cause the Products to be sold, distributed and
         serviced to Customers in the Territory by SoloPak itself and/or one or
         more Affiliates or sublicensees of SoloPak as it may from time to time
         select;

                  (v) modify, improve, enhance, upgrade and redesign the System
         Components (but not the Spring Assemblies or the Filling Valves)
         incorporated in each Product sold to Customers in the Territory, in
         which event the rights and license described in the foregoing clauses
         (i) through (iv) shall be deemed to include such System Components as
         so modified, improved, enhanced, upgraded or redesigned; and

                  (vi) have the exclusive right to use any Trademarks in
         connection with SoloPak's production, distribution and sale of Products
         to Customers in the Territory.

                  (b) Subject to the terms and conditions set forth in this
Agreement, at the Closing Date, I-Flow shall sell, convey, assign, transfer and
deliver to SoloPak, and SoloPak shall purchase, acquire and accept from I-Flow,
all of I-Flow's right, title and interest in and to the Molds (hereinafter
referred to collectively as the "Transferred Assets").

                  (c) Nothing in this Agreement shall be deemed to limit or
restrict SoloPak's right to assemble and produce or arrange to assemble and
produce for sale and 

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distribution to Customers in the Territory all or any portion of the
Administration Set Components other than a Component derived from or
constituting I-Flow's proprietary version of the Filling Valve. In addition,
nothing in this Agreement shall be deemed to require SoloPak to purchase from
I-Flow all or any portion of the Administration Set Components (including
without limitation the Filling Valve).

                  3.2 Consideration. (a) Subject to the terms and conditions set
forth in this Article III, in consideration for the License and the Transferred
Assets,

                  (i) SoloPak shall pay I-Flow $1,300,000 in cash on the Closing
         Date in partial consideration of the License and the Transferred Assets
         as provided in Section 3.1 above;

                  (ii) SoloPak shall pay I-Flow $3,000,000 in cash as a fixed,
         guaranteed royalty (the "Guaranteed Royalty"), payable in installments
         during 1996 as follows: $1,000,000 on June 20, 1996; $1,000,000 on
         September 20, 1996 and $1,000,000 on December 20, 1996; and

                  (iii) SoloPak shall pay I-Flow a royalty equal to two percent
         (2%) of Net Sales of the Products for the 1997 and 1998 calendar years,
         inclusive, which payments shall be made as provided in Section 3.6(a)
         below.

                  No other consideration of any nature whatsoever shall be
required to be paid or delivered to I-Flow in consideration of the License, the
Transferred Assets and the other rights granted to SoloPak hereunder, and the
parties hereby covenant and agree that (except as set forth immediately above in
this Section 3.2(a) (x) the License shall be deemed to be fully paid-up,
perpetual and royalty-free from and after the date hereof and (y) that the sole
right and remedy of I-Flow with respect to the purchase price of the License and
the Transferred Assets from and after the date hereof shall be to receive,
subject to the terms and conditions of this Agreement, the amounts required to
be paid to I-Flow by SoloPak as provided in clauses (i), (ii) and (iii) of this
Section 3.2(a).

                  (b) On the Closing Date SoloPak shall obtain and deliver to
I-Flow an irrevocable standby letter of credit (the "Letter of Credit") from a
bank or other financial institution mutually selected by SoloPak and I-Flow in
an amount, and providing for payments on such dates, as will enable I-Flow to
collect each installment of the Guaranteed Royalty in full no later than five
days after such installment is due if SoloPak shall fail to pay the same as
provided in this Section 3.2. The Letter of Credit shall have such terms and
conditions and shall be in such form as is reasonably acceptable to I-Flow and
its counsel, and all fees and expenses incurred by SoloPak in obtaining and
maintaining such Letter of Credit shall be paid by SoloPak.

                  3.3 Instruments of Assignment and Grant. (a) At the Closing,
I-Flow shall deliver to SoloPak:

                  (i) an acknowledgment and such other endorsements, in form
         reasonably satisfactory to Reboul, MacMurray, Hewitt, Maynard & Kristol
         ("SoloPak's Counsel"), as shall be effective to evidence the License
         granted to SoloPak as provided in Section 3.1(a); and

                  (ii) a bill of sale and such endorsements, assignments and
         other good and sufficient instruments of transfer, conveyance and
         assignment, in form reasonably 

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         satisfactory to SoloPak's counsel, as shall be effective to vest in
         SoloPak good and valid title, free and clear of all liens and
         encumbrances, to the Transferred Assets.

                  (b) I-Flow shall take all commercially reasonable steps to
assist SoloPak in taking actual possession and operating control of the Molds
ninety (90) days after the Closing Date and will also provide reasonable
assistance to SoloPak as to preparation for shipment. I-Flow shall retain
possession and operating control of the Molds (including any and all risk of
loss or damage thereto) until ninety (90) days after the Closing Date, but
I-Flow covenants, represents and warrants that it has not and will not place
orders for Pump Components from February 15, 1996 to the date that is ninety
(90) days after the Closing Date. All costs of disassembly, shipment and
reassembly of the Molds, together with all other costs and expenses relating
thereto, shall be solely borne by SoloPak.

                  3.4 Further Assurances. I-Flow shall from time to time, upon
the written request of SoloPak and without further consideration, execute and
deliver such instruments of assignment, transfer and license in addition to
those delivered pursuant to Section 3.3 and take such other actions as SoloPak
may reasonably request more effectively to evidence the grant of the License and
the sale, conveyance, assignment, transfer and delivery of the Transferred
Assets as provided herein.

                  3.5 Consents. Prior to the Closing, I-Flow shall obtain all
authorizations, consents, waivers and approvals as may be required from any
Person in connection with the grant of the License and the sale, conveyance,
assignment, transfer and delivery of the Transferred Assets as provided herein,
and shall provide SoloPak with copies of all of same on or prior to the Closing.

                  3.6 Certain Payments. (a) Royalties payable to I-Flow pursuant
to Section 3.2(a)(iii) shall be paid within forty-five (45) days after the end
of each calendar quarter with respect to royalty-bearing sales made or occurring
in such quarter. Royalties shall be paid by SoloPak in U.S. Dollars. Each
royalty payment shall be accompanied by a report showing in reasonable detail
the amount of the Net Sales occurring in such quarter and the calculation of the
relevant royalty payment.

                  (b) SoloPak shall keep and maintain, in reasonable detail,
accurate books and records with regard to the Net Sales for calendar years 1997
and 1998 and all royalties payable with respect to sales during such years.
Representatives of I-Flow's public accountants (which shall be one of the "big
six" accounting firms) shall be entitled to review, copy and audit such books
and records (no more often than semi-annually) during normal business hours upon
reasonable notice to SoloPak. The expenses of any such examination shall be paid
by I-Flow, except in the event that such examination discloses an underpayment
in excess of three percent (3%) of the total amount paid to I-Flow for the
examined period (in which case the expenses of such examination shall be paid by
SoloPak).

                  3.7 Closing. The closing (the "Closing") of the transactions
contemplated by this Article 3 shall take place at the offices of Gibson, Dunn &
Crutcher, 4 Park Plaza, Irvine, California, at 7:30 a.m., local time, on March
6, 1996 or at such other place or at such other date and time as the parties may
mutually agree (such date and time of Closing being herein called the "Closing
Date").

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                  3.8 Conditions to Closing. (a) The obligations of SoloPak
under this Agreement are subject, at the option of SoloPak, to the satisfaction
on or prior to the Closing Date of each of the following conditions:

                  (i) The representations and warranties of I-Flow contained in
         Article 5 hereof shall be true and correct in all material respects on
         and as of the Closing Date as though made at and as of that date, and
         I-Flow shall have delivered to SoloPak a certificate to that effect;

                  (ii) The parties to the Escrow Agreement shall have executed
         and delivered such Agreement and the Escrowed Assets shall have been
         deposited with the Escrow Agent;

                  (iii) No legal action or proceeding shall have been instituted
         or threatened seeking to restrain, prohibit, invalidate or otherwise
         affect the consummation of the transactions contemplated hereby; and

                  (iv) I-Flow shall have obtained all authorizations, consents,
         waivers and approvals required in connection with the transfer and
         assignment of those licenses and assets to be assigned to SoloPak
         pursuant to this Agreement.

                  (b) The obligations of I-Flow under this Agreement are
subject, at the option of I-Flow, to the satisfaction on or prior to the Closing
Date of each of the following conditions:

                  (i) The representations and warranties of SoloPak contained in
         Article 5 hereof shall be true and correct in all material respects on
         and as of the Closing Date as though made at and as of that date, and
         SoloPak shall have delivered to I-Flow a certificate to that effect;

                  (ii) The parties to the Escrow Agreement shall have executed
         and delivered such Agreement;

                  (iii) No legal action or proceeding shall have been instituted
         or threatened seeking to restrain, prohibit, invalidate or otherwise
         affect the consummation of the transactions contemplated hereby;

                  (iv) SoloPak shall have obtained all the authorizations,
         consents, waivers and approvals, if any, required in connection with
         the performance of its obligations hereunder; and

                  (v) SoloPak shall have delivered the Letter of Credit to
         I-Flow as provided in Section 3.2(b) above.

                                    ARTICLE 4

                 CERTAIN COVENANTS; PRODUCT COMPONENT PURCHASES;
                             AGREEMENTS NOT TO SELL

                  4.1 Agreement Not to Sell, Etc. Except as provided in this
Agreement, neither I-Flow nor any Affiliate of I-Flow shall manufacture,
produce, sell or distribute for use by Customers in the Territory (or agree to
manufacture, produce, sell or distribute, 

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directly or indirectly, for use by Customers in the Territory) (a) any infusion
pump or device incorporating a circular or substantially circular bag used to
hold a pharmaceutical or nutritional product in a spring-driven pump, (b) any of
the three Products which are the subject of SoloPak's License, or (c) any
Assembled Administration Sets. In addition, I-Flow will not sell complete or
near-complete sets of Administration Set Components if the purchaser of such
Components could readily assemble the same into Products or Assembled
Administration Sets for sale to Customers in the Territory. Further, and in
order to protect the exclusivity of SoloPak's License, I-Flow shall take all
commercially reasonable steps necessary (including, without limitation, the
enforcement of the provisions of its existing and future distribution, sales and
licensing agreements as such provisions relate to the prohibition of sales of
Products and Assembled Administration Sets to Customers in the Territory) to
ensure that Products, Spring Components and Administration Set Components sold
or distributed by it or by any of its Affiliates or sublicensees as permitted by
the second paragraph of this Section 4.1 are not resold or redistributed to
Customers in the Territory in violation of SoloPak's License.

I-Flow acknowledges and agrees that the foregoing provisions of this Section 4.1
are reasonable and properly required for the protection of the rights and
licenses being sold to SoloPak hereunder. Nothing herein shall be construed or
be deemed in any manner to restrict or limit I-Flow's continuing right and
ability to manufacture, produce, sell and/or distribute Products outside the
Territory or --whether directly or indirectly and whether within or outside the
Territory (as long as such Products are not to be resold, redistributed or
otherwise made available to Customers in the Territory) for human health
care-related intravenous applications -- (a) Products for non-human applications
(such as animal health care or industrial applications), or (b) infusion pumps
or devices that incorporate a non-circular bag even if such infusion pumps or
devices may be used in the same manner and for the same purposes as one or more
of the Products. Additionally, it shall not be deemed a breach of this Section
4.1 if a third party acquires I-Flow or any Affiliate thereof and, at the time
of and following such acquisition, such third party manufactures, produces,
sells or distributes to Customers in the Territory (or has agreements with
others to do the same) an existing line of commercial products (including future
models and products) that are infusion pumps or devices incorporating a circular
or substantially circular or roundish bag.

                  4.2 Certain Remedies. I-Flow agrees and acknowledges that the
rights and obligations set forth in the first paragraph of Section 4.1 above are
of a unique and special nature and that SoloPak is, therefore, without an
adequate legal remedy in the event of any violation of the covenants set forth
in said Section 4.1 by I-Flow or any of its Affiliates or sublicensees. I-Flow
therefore agrees that the covenants made by it pursuant to said Section 4.1
shall be specifically enforceable in equity in addition to all other rights and
remedies, at law or in equity, that may be available to SoloPak.

                  4.3 No Transfer of Technology for Spring Assemblies or Filling
Valves; Escrow. (a) SoloPak acknowledges and agrees that I-Flow is not
transferring or licensing and shall not be deemed in any manner to have
transferred or licensed any portion or part of I-Flow's rights, title or
interest in and to the Technology relating to the Spring Assemblies, the Flow
Restrictors, or the Filling Valves, and that the only right granted hereunder to
SoloPak with respect to the Spring Assemblies, the Flow Restrictors and the
Filling Valves is the right to purchase such Spring Assemblies, Flow Restrictors
and Filling Valves, as finished assemblies, from I-Flow for inclusion in
Products to be assembled, produced, sold and distributed by SoloPak to Customers
in the Territory.

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<PAGE>   11
                  (b) Notwithstanding Section 4.3(a) hereof, in order to induce
SoloPak to enter into this Agreement and to purchase the License and the
Transferred Assets as provided herein, I-Flow hereby agrees to enter into an
Escrow Agreement (the "Escrow Agreement") in the form of Exhibit A hereto
providing for the deposit into escrow of all engineering drawings, standard
manufacturing practices and related Technology owned by I-Flow relating to the
Spring Assemblies and Flow Restrictors (collectively, the "Escrowed Assets"),
which Escrowed Assets shall be held by Data Securities International, Inc., as
Escrow Agent, and made available to SoloPak in accordance with the terms and
subject to the conditions of the Escrow Agreement.

                  4.4 Agreement Not to Sell; Certain Remedies. (a) SoloPak shall
ensure that neither SoloPak nor any Affiliate or sublicensee of SoloPak shall:

                  (i) sell or distribute (or agree to sell or distribute,
         directly or indirectly) any proprietary System Components to Persons
         other than Customers located in and for use in the Territory;

                  (ii) sell, distribute or promote for sale (or agree to sell,
         distribute or promote for sale, directly or indirectly) any Products
         (or substantial copies thereof) to Persons other than Customers located
         in and for use in the Territory;

                  (iii) reverse engineer or produce, or cause to be reverse
         engineered or produced, any Spring Assemblies or Filling Valves; or

                  (iv) fail to supply I-Flow with Pump Components in a timely
         fashion as per the provisions of Section 4.5 hereof and subject to the
         supply terms described therein.

                  (b) SoloPak agrees and acknowledges that the rights and
obligations set forth in Section 4.4(a) above are of a unique and special nature
and that I-Flow is, therefore, without an adequate legal remedy in the event of
any violation of the covenants set forth in said Section 4.4(a) by SoloPak with
respect to itself or any of its Affiliates or sublicensees. Accordingly, SoloPak
expressly acknowledges that injunctive relief, without bond, would be fully
appropriate in the event of any breach by SoloPak of its obligations under said
Section 4.4(a). SoloPak therefore agrees that the covenants made by it pursuant
to said Section 4.4(a) shall be specifically enforceable in equity (including,
for example, in the event of a breach of (iv) above, providing I-Flow with
operating control of the Molds or requiring SoloPak to produce and deliver Pump
Components) in addition to all other rights and remedies, at law or in equity,
that may be available to I-Flow (including without limitation damages for lost
profits and the like).

                  4.5 Supply of Pump Components to I-Flow. (a) SoloPak hereby
agrees to fill, in a timely manner, orders by I-Flow to supply Pump Components
to I-Flow for sale to Persons outside of the Territory and to Persons in the
Territory as provided in the second paragraph of Section 4.1 at prices
(excluding shipping, handling, insurance, packaging and other incidental
charges, which shall be paid by I-Flow) equal to the sum of (i) SoloPak's Cost
(as hereinafter defined) thereof (as the same may increase or decrease from time
to time), plus (ii) ten percent (10%) of such Cost, and on such other reasonable
and customary terms (including lead times for manufacturing, projections,
purchase orders, shipping terms and force majeure) and subject to such standard
terms and conditions as SoloPak and I-Flow may mutually agree upon from time to
time. The foregoing shall not 

                                       11
<PAGE>   12
apply to orders placed by I-Flow prior to February 15, 1996 which shall be
filled, at I-Flow's cost, while the Molds are under I-Flow's operating control.

                  (b) For the purposes of this Agreement, SoloPak's "Cost" shall
mean, with respect to any Pump Component, SoloPak's fully burdened standard cost
(i.e., the costs of materials, labor, reasonable manufacturing overhead, and
other direct manufacturing costs), it being understood and agreed by SoloPak and
I-Flow that the Cost of Pump Components manufactured by SoloPak are, as of the
date hereof, estimated to be as specified in Schedule 4.5(b) hereto. SoloPak and
I-Flow agree that the methodology of allocating costs reflected in the Cost
specified for the Pump Components identified in Schedule 4.5(b) may not be
changed or modified by either party hereto without the prior written consent of
the other.

                  (c) Nothing in this Agreement shall be deemed to impose any
obligation on I-Flow to purchase any minimum quantity of Pump Components from
SoloPak.

                  4.6 Supply of Spring Assemblies and Administration Set
Components to SoloPak.

                  (a) I-Flow hereby agrees to fill, in a timely manner, orders
by SoloPak to supply Spring Assemblies and Administration Set Components only
for use with the Products to SoloPak and its designees for sale to Customers in
the Territory at prices (excluding shipping, handling, insurance, packaging and
other incidental charges, which shall be paid by SoloPak), equal to the sum of
(i) I-Flow's Cost (as hereinafter defined) thereof (as the same may increase or
decrease from time to time), plus (ii) ten percent (10%) of such Cost, and on
such other reasonable and customary terms (including lead times for
manufacturing, projections, purchase orders, shipping terms and force majeure)
and subject to such conditions as govern I-Flow's purchases from SoloPak under
Section 4.5(a) and Article VII hereof.

                  (b) For purposes of this Agreement, I-Flow's "Cost" shall
mean, with respect to any Spring Assembly or Administration Set Component,
I-Flow's fully burdened standard cost (i.e., the costs of materials, labor,
reasonable manufacturing overhead, and other direct manufacturing costs), it
being understood and agreed by SoloPak and I-Flow that the Cost of Spring
Assemblies and Administration Set Components manufactured by I-Flow are, as of
the date hereof, estimated to be as specified in Schedule 4.6(b) hereto. SoloPak
and I-Flow agree that the methodology of allocating costs reflected in the Cost
specified for the Spring Assemblies and Administration Set Components identified
in Schedule 4.6(b) may not be changed or modified by either party hereto without
the prior written consent of the other.

                  (c) SoloPak hereby agrees that, as long as I-Flow is not in
material default of its obligations under this Section 4.6, neither SoloPak nor
any of its Affiliates, designees, distributors, subcontractors or sublicensees
will purchase any Spring Assemblies for inclusion in the Products from any
Person other than I-Flow.

                  (d) Nothing in this Agreement shall be deemed to impose any
obligation on SoloPak to purchase any minimum quantity of Spring Assemblies or
any minimum quantity of any Administration Set Components from I-Flow.

                  4.7 I-Flow Right of First Refusal. Commencing the Closing Date
hereof and ending on the second anniversary of the Closing Date, I-Flow shall
have the 

                                       12
<PAGE>   13
continuing right of first refusal to supply SoloPak and its Affiliates with
services and assistance in assembling completed Products (the "Services"). Prior
to SoloPak's and/or its Affiliates' acceptance of any third party bid or
proposal to manufacture and/or assemble all or any portion of the Products,
SoloPak shall first cause a true and accurate copy of such bid or proposal to be
submitted to I-Flow. In the event that, within fifteen (15) days of I-Flow's
receipt of the third party bid or proposal, I-Flow notifies SoloPak that it will
better (by any amount) the pricing set forth in such third party bid or proposal
and meet the other terms and conditions of such bid or proposal, SoloPak shall
ensure that I-Flow is selected as the provider of the relevant services. After
I-Flow has made a proposal which betters the price of the third party proposal
submitted, no additional third party bids or proposals will be allowed. The term
of each bid shall be for a minimum of one year. Under no circumstances shall
SoloPak and/or any of its Affiliates enter into an agreement relating to the
Services, or agree to a modification of an existing agreement relating to the
Services, with another third party which has not been submitted first to I-Flow
to enable exercise of the foregoing right of first refusal.

                                    ARTICLE 5

                CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS

                  5.1 By I-Flow. In order to induce SoloPak to enter into this
Agreement, I-Flow represents and warrants to and agrees with SoloPak as follows:

                  (a) Organization. I-Flow is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite corporate power and authority to own and operate its
properties and assets and to carry on the business presently conducted by it and
contemplated by this Agreement.

                  (b) Authority, Binding Effect. (i) I-Flow has all requisite
corporate power and authority to execute, deliver and perform this Agreement and
the Escrow Agreement; this Agreement and the Escrow Agreement have been duly
executed and delivered by I-Flow and the execution, delivery and performance of
this Agreement and the Escrow Agreement by I-Flow have been duly authorized by
all necessary corporate action on the part of I-Flow. This Agreement and the
Escrow Agreement are valid and binding obligations of I-Flow, enforceable
against it in accordance with their respective terms.

                  (ii) The execution, delivery and performance of this Agreement
and the Escrow Agreement by I-Flow will not in a material respect violate any
provision of law, the Articles of Incorporation or By-laws of I-Flow or any
judgment, award or decree or any indenture, agreement or other instrument to
which I-Flow is a party, or by which it or its properties or assets are bound or
affected, or conflict with, result in a breach of or constitute (with due notice
and/or lapse of time) an "event of default", as defined in, or a material
default under, any such indenture, agreement or other instrument or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the Transferred Assets or License rights granted to
SoloPak herein.

                  (c) No Required Consents. No approval, authorization, consent
or order or action of or filing with any Person is required for the execution,
delivery and performance by I-Flow of this Agreement or the Escrow Agreement, or
the consummation of any of the transactions contemplated hereby or thereby.

                                       13
<PAGE>   14
                  (d) Good Title. I-Flow has (and, until their sale to SoloPak
as hereinabove provided, will have), with respect to the Transferred Assets,
good and valid title, and the Transferred Assets are, and upon delivery to
SoloPak will be, free and clear of any and all liens, claims, options, charges,
security interests, encumbrances and rights and interests whatsoever of third
parties.

                  (e) No Infringement. None of the Transferred Assets, Spring
Assemblies, Filling Valves or related Technology involves any technology, trade
secrets, methods, processes or software or utilizes any information or
documentation proprietary to any third party. No officer or employee of I-Flow
has employed for or on behalf of I-Flow any trade secrets or any information or
documentation proprietary to any former employer and neither I-Flow nor any
Affiliate of I-Flow has violated any confidential relationship which such Person
may have had with any third party, in each case in connection with the
Transferred Assets, Spring Assemblies, Filling Valves or related Technology.

                  (f) No Litigation. There are no actions, proceedings or
investigations pending, or (to the best knowledge and belief of I-Flow)
threatened against or affecting, or any claims asserted against, I-Flow or any
of its Affiliates with respect to the Products, Transferred Assets, Spring
Assemblies, Filling Valves or related Technology, and I-Flow does not know of
any basis for any such action, proceeding, investigation or claim.

                  (g) Certain Trademark Representations, Warranties and
Agreements. To the best knowledge of I-Flow, no third party has adopted, uses or
has registered any trademark, service mark, trade name, trading style or
corporate name that infringes any of the Trademarks; provided, however, that
I-Flow itself makes no other representation or warranty as to the existence,
nature or level of rights or protection it has with respect to the Trademarks.

                  (h) Certain Patent Rights. Certain of the Technology used in
the Spring Assemblies, Drug Bags and Flow Restrictors may be patentable and is
subject to pending applications for patents in the United States as specified in
Schedule 5.1(h) hereto (collectively, the "Patent Applications"). I-Flow owns
all rights, title and interest in and to the Patent Applications and letters
patent that may be issued in respect thereof (collectively, the "Patents"), free
and clear of any and all liens, claims, charges, security interests or other
encumbrances of whatever kind or nature (other than as provided in this
Agreement). The Patent Applications do not infringe on the rights of any person
or entity and, to the best knowledge of I-Flow, no claim has been asserted by
any person or entity with respect to the use of the Patent Applications or
challenging or questioning the validity or effectiveness thereof.

                  (i) Future Infringement. I-Flow shall notify SoloPak as soon
as practicable upon becoming aware of the use of any product or device by a
third party that would infringe any Patent. In the event of any infringement of
any Patent by any third parties known or brought to the attention of I-Flow,
I-Flow shall consult with SoloPak regarding protective action to be taken and,
if reasonably deemed appropriate by SoloPak, shall promptly demand in writing
that the third party committing such infringement or engaging in such conduct
cease and desist forthwith from committing such infringement or engaging in such
conduct. In the event that within fifteen (15) days after such written demand,
good faith negotiations between I-Flow and said person or entity have not
commenced regarding the cessation of such infringement or other conduct, or in
the event that such negotiations cease to be carried on in good faith, at
SoloPak's expense I-Flow 

                                       14
<PAGE>   15
shall either (i) bring and diligently and vigorously maintain appropriate legal
proceedings to stop, and to seek such other appropriate relief with respect to,
such infringement and other conduct until a decision is obtained from which no
review can be taken or until otherwise resolved in a manner reasonably
satisfactory to SoloPak, or (ii) assign the infringement claim to SoloPak which
may then prosecute such claim at SoloPak's own expense.

                  (j) Intellectual Property Indemnification. I-Flow shall
indemnify, defend and hold harmless SoloPak and all of its stockholders,
directors, officers, employees and other agents and representatives from and
against all demands, claims, action or causes of action, assessments, losses,
damages, liabilities, costs and expenses (including, without limitation,
interest, penalties, fines and reasonable attorneys' fees and expenses) asserted
against, resulting to, or imposed upon or incurred by any of them by reason of
or resulting from any infringement or violation, or alleged infringement or
violation, of any patent or other proprietary right of any person or entity by
reason of the sale of any Products or otherwise in connection with any Patent;
provided, however, that the foregoing shall not apply with respect to
infringements or violations caused or allegedly caused by SoloPak or its
Affiliates, sublicensees, subcontractors or distributors.

                  5.2 By SoloPak. In order to induce I-Flow to enter into this
Agreement, SoloPak represents and warrants to and agrees with I-Flow as follows:

                  (a) Organization. SoloPak is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and operate its
properties and assets and to carry on the business presently conducted by it and
contemplated by this Agreement.

                  (b) Authority, Binding Effect. (i) SoloPak has all requisite
corporate power and authority to execute, deliver and perform this Agreement and
the Escrow Agreement; this Agreement and the Escrow Agreement have been duly
executed and delivered by SoloPak and the execution, delivery and performance of
this Agreement and the Escrow Agreement by SoloPak have been duly authorized by
all necessary corporate action on the part of SoloPak. This Agreement and the
Escrow Agreement are valid and binding obligations of SoloPak, enforceable
against it in accordance with their respective terms.

                  (ii) The execution, delivery and performance of this Agreement
and the Escrow Agreement by SoloPak will not in a material respect violate any
provision of law, the Certificate of Incorporation or By-laws of SoloPak or any
judgment, award or decree or any indenture, agreement or other instrument to
which SoloPak is a party, or by which it or its properties or assets are bound
or affected, or conflict with, result in a breach of or constitute (with due
notice and/or lapse of time) an "event of default", as defined in, or a material
default under, any such indenture, agreement or other instrument or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the Transferred Assets or License rights granted herein
other than as provided in the documents governing the secured loans made to
SoloPak by LaSalle National Bank and Line Capital and their respective
Affiliates, as the same may be amended, modified, extended or replaced from time
to time.

                  (c) No Required Consents. No approval, authorization, consent
or order or action of or filing with any Person is required for the execution,
delivery and 

                                       15
<PAGE>   16
performance by SoloPak of this Agreement or the Escrow Agreement, or the
consummation of any of the transactions contemplated hereby or thereby.

                  (d) Intellectual Property Indemnification. SoloPak shall
indemnify, defend and hold harmless I-Flow and all of its stockholders,
directors, officers, employees and other agents and representatives from and
against all demands, claims, action or causes of action, assessments, losses,
damages, liabilities, costs and expenses (including, without limitation,
interest, penalties, fines and reasonable attorneys' fees and expenses) asserted
against, resulting to, or imposed upon or incurred by any of them by reason of
or resulting from any infringement or violation, or alleged infringement or
violation, of any patent or other proprietary right of any person or entity by
reason of the sale of any Products or otherwise in connection with any Patent;
provided, however, that the foregoing shall not apply with respect to
infringements or violations caused or allegedly caused by I-Flow or its
Affiliates, sublicensees, subcontractors or distributors.

                  (e) Molds. SoloPak shall ensure that the Molds are at all
times solely owned by SoloPak, free and clear of any and all liens, claims,
charges and encumbrances except as otherwise disclosed in Section 5.2(b)(ii).

                                    ARTICLE 6

                           SURVIVAL OF REPRESENTATIONS

                  6.1 Survival. The representations and warranties made by
I-Flow and SoloPak in or pursuant to this Agreement shall survive the expiration
or termination of this Agreement and the Closing if the same occurs as
contemplated hereby.

                                    ARTICLE 7

                   WARRANTIES, DISCLAIMERS, LIMITED LIABILITY
                              AND INDEMNIFICATIONS

                  7.1 Warranty Information. (a) I-Flow warrants to SoloPak that,
upon shipment, the Spring Assemblies and Administration Set Components supplied
pursuant to Section 4.6 hereof, and any Products supplied pursuant to Section
4.7 hereof (collectively, the "Goods From I-Flow") (i) shall be free and clear
of all liens, claims and encumbrances of any nature whatsoever, (ii) shall be
free from defects in material and workmanship under normal and proper use in
accordance with any applicable instructions and directions from I-Flow, (iii)
shall be properly labeled, and (iv) shall comply in all material respects with
the Specifications. I-Flow further warrants that the Goods From I-Flow will be
safe and efficacious for use when such use is in compliance with the directions
supplied by I-Flow. SoloPak may reject and refuse to accept any shipment of
Goods From I-Flow which are found to be defective or damaged; provided, however,
that any such rejection and refusal must be made within thirty (30) days of
SoloPak's receipt. Goods From I-Flow shall be deemed damaged either: (i) if
their function is impaired, (ii) for finished Administration Sets if their
sterility is compromised, (iii) if they are mislabeled, or (iv) if their
cosmetic appearance is altered to the extent that the labeling is materially
unreadable or to the extent that the Goods From I-Flow would appear to be in
less than good quality condition.

                                       16
<PAGE>   17
                  (b) SoloPak warrants to I-Flow that, upon shipment, the Pump
Components supplied pursuant to Section 4.5 hereof (collectively, the "Goods
From SoloPak") (i) shall be free and clear of all liens, claims and encumbrances
of any nature whatsoever, (ii) shall be free from defects in material and
workmanship under normal and proper use in accordance with any applicable
instructions and directions from SoloPak, (iii) shall be properly labeled, and
(iv) shall comply in all material respects with the specifications for such Pump
Components as they exist as of the date hereof or as may be modified per Section
9.2 hereof. I-Flow may reject and refuse to accept any shipment of Goods From
SoloPak found to be defective or damaged, provided, however, that any such
rejection and refusal must be made within thirty (30) days of I-Flow's receipt.
Goods From SoloPak shall be deemed damaged either (i) if their function is
impaired, (ii) if they are mislabeled, or (iii) if their cosmetic appearance is
altered to the extent that the labeling is materially unreadable or to the
extent that the Goods From SoloPak would appear to be in less than good quality
condition.

                  (c) Each Party hereto warrants and guarantees that its
obligations hereunder shall be performed in full compliance with all applicable
federal, state and local laws and regulations, including Good Manufacturing
Practices prevailing in the industry, and applicable Federal Food, Drug and
Cosmetic Act guidelines and regulations.

                  (d) Notwithstanding anything to the contrary herein, I-Flow
will not be responsible for the warranty of any Product manufactured or
assembled by SoloPak, SoloPak's designated supplier or any other party other
than I-Flow.

                  (e) The Goods From I-Flow and the Goods From SoloPak are
hereinafter collectively referred to as the "Goods."

                  7.2 Disclaimer of Warranties. THE EXPRESS WARRANTIES DESCRIBED
IN SECTIONS 5.1, 5.2 AND 7.1 CONSTITUTE THE ONLY WARRANTIES WITH RESPECT TO THE
GOODS AND THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, BY OPERATION OF LAW
OR OTHERWISE, FOR ANY GOODS OR PRODUCTS FURNISHED HEREUNDER. I-FLOW AND SOLOPAK
MAKE NO OTHER REPRESENTATION OR WARRANTY OF ANY OTHER KIND WITH RESPECT TO THE
GOODS OR THE PRODUCTS, AND I-FLOW AND SOLOPAK EXPRESSLY DISCLAIM ALL OTHER
WARRANTIES WHETHER EXPRESS OR IMPLIED (EITHER IN FACT OR BY OPERATION OF LAW),
WITH RESPECT TO THE GOODS AND THE PRODUCTS, WHETHER AS TO MERCHANTABILITY,
FITNESS FOR PARTICULAR PURPOSE OR ANY OTHER MATTER. Any other representations or
warranties made by any person with respect to the Goods or Products, including
employees or representatives of I-Flow or SoloPak, which are inconsistent
herewith shall be disregarded by the other party and shall not be binding upon
either party. If any model or sample was shown to either party, such model or
sample was used merely to illustrate the general type and quality of the Goods
and Products and not to represent that the Goods and Products would necessarily
conform to the model or sample.

                  7.3 Remedies. Except as otherwise provided in Sections 7.5,
7.6 and 7.7, each party's sole obligation under the warranties described in
Section 7.1 shall be to repair or replace, at the sole option of the party
providing the Goods, the defective or nonconforming Goods in a timely and prompt
manner.

                                       17
<PAGE>   18
                  7.4 Limitation of Liability. EXCEPT AS OTHERWISE PROVIDED IN
THIS AGREEMENT, IN NO EVENT SHALL I-FLOW, SOLOPAK OR THEIR RESPECTIVE
SUBSIDIARIES OR AFFILIATES BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OR LOSS OF USE, REVENUE, OR PROFITS IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY BREACH HEREOF, ANY FAILURE OR DEFICIENCY OF
THE GOODS OR PRODUCTS, OR EITHER PARTY'S OR ANY THIRD PARTY'S USE OF ANY GOODS
OR PRODUCTS OR SERVICES PROVIDED UNDER THIS AGREEMENT. EACH PARTY'S SOLE REMEDY
FOR THE OTHER PARTY'S LIABILITY OF ANY KIND, INCLUDING NEGLIGENCE, WITH RESPECT
TO ANY ITEM FURNISHED UNDER THIS AGREEMENT SHALL BE LIMITED TO THE REMEDIES
PROVIDED IN SECTIONS 5.1(j), 5.2(d), 7.3, 7.5, 7.6 AND 7.7 OF THIS AGREEMENT.
THE LIMITATIONS CONTAINED IN THIS SECTION SHALL APPLY EVEN IF ANY LIMITED REMEDY
FAILS IN ITS ESSENTIAL PURPOSE.

                  7.5 Indemnification of I-Flow. SoloPak agrees to defend,
indemnify and hold harmless I-Flow and its Affiliates, subsidiaries,
stockholders, directors, officers, employees and other agents and
representatives from all losses, damages, judgments, fines, sums, costs,
expenses and reasonable attorneys' fees which any of them may incur or be
obligated to pay arising out of or as a result of any and all claims, demands,
causes of action or judgments of every nature whatsoever arising out of
SoloPak's direct or indirect sale or distribution of the Products, any default
by SoloPak under this Agreement (including without limitation any inaccuracy or
breach of any representation, warranty or covenant contained herein), SoloPak's
failure to comply with the instructions, training and warnings communicated to
SoloPak by I-Flow regarding the Products, any violation of law, error, omission,
or neglect on SoloPak's part, or on the part of any employee, Affiliate,
sublicensee, subcontractor or agent of SoloPak, and any injury, damage or loss
to any purchasers of the Products caused by or resulting from the design,
manufacture or use of the Products; provided, however, that the immediately
foregoing indemnity shall not cover any injury, damage or loss caused in
principal part by any actions or omissions of I-Flow or its Affiliates,
sublicensees, subcontractors or agents.

                  7.6 Indemnification of SoloPak. I-Flow agrees to defend,
indemnify and hold harmless SoloPak and its subsidiaries, stockholders,
directors, officers, employees and other agents and representatives from all
losses, damages, judgments, fines, sums, costs, expenses and reasonable
attorneys' fees which any of them may incur or be obligated to pay arising out
of or as a result of any and all claims, demands, causes of action or judgments
of every nature whatsoever arising out of I-Flow's direct or indirect sale or
distribution of the Products, any default by I-Flow under this Agreement
(including without limitation any inaccuracy or breach of any representation,
warranty or covenant contained herein), I-Flow's failure to comply with the
instructions, training and warnings communicated to I-Flow by SoloPak regarding
the Products, any violation of law, error, omission, or neglect on I-Flow's
part, or on the part of any employee, Affiliate, sublicensee, subcontractor or
agent of I-Flow, and any injury, damage or loss to any purchasers of the
Products caused by or resulting from the design, manufacture or use of the
Products; provided, however, that the immediately foregoing indemnity shall not
cover any injury, damage or loss caused in principal part by any actions or
omissions of SoloPak or its Affiliates, sublicensees, subcontractors or agents.

                  7.7 Insurance. Each party shall at all times maintain product
liability insurance under such policies of insurance, against such risks
(including, without limitation and in all events, personal injury, injury to
property and death) and with such insurance 

                                       18
<PAGE>   19
companies as are at all times in accordance with prevailing, normal and
customary industry practices and in an amount per occurrence not less than
mutually agreed upon by the parties hereto. Each party's policies shall name the
other party and its Affiliates, subsidiaries, stockholders, directors, officers,
employees and other agents and representatives as insureds and loss payees, as
their interests may appear. Each party shall provide a certificate of insurance
to the other party certifying the existence of such insurance in accordance with
the terms hereof.

                  7.8 Survival of Indemnification. Notwithstanding anything to
the contrary herein, the indemnification obligations set forth in Sections 7.5
and 7.6 above shall survive any termination of this Agreement indefinitely, and
the insurance obligations set forth in Section 7.7 shall survive any termination
of this Agreement for a period of one (1) year following such termination.

                                    ARTICLE 8

                                 CONFIDENTIALITY

                  8.1 No Disclosure. Neither I-Flow nor SoloPak shall directly
or indirectly disclose to third parties or use or employ except as permitted by
this Agreement, whether prior to the termination of this Agreement or
thereafter, any Confidential Information of the other party. The respective
Confidential Information of each party hereto is, and will remain, the exclusive
property of such party and will be held in trust by the other party for the
exclusive benefit of such party.

                  8.2 Exceptions. Confidential Information shall not be subject
to Section 8.1 hereof in the following circumstances:

                           (i) if it is lawfully obtained by the receiving party
         from a third party that is not under any obligation of confidentiality,
         direct or indirect;

                           (ii) if it is or becomes known or available to the
         public without any act or failure to act by the receiving party in
         breach hereof;

                           (iii) if it is developed by the receiving party
         independently of any disclosures made by the disclosing party of such
         Confidential Information; or

                           (iv) if it is required to be disclosed by order of a
         court of competent jurisdiction, administrative agency or governmental
         body, or by law, rule or regulation provided that prior to such
         disclosure the non-disclosing party is given reasonable advance notice
         of such order and opportunity to object to such disclosure and provided
         further that the party required to make disclosure as contemplated by
         this clause (iv) uses its best efforts to protect the confidentiality
         of such disclosed Confidential Information to the maximum extent
         permitted by law.

                                    ARTICLE 9

           IMPROVEMENTS; COOPERATION WITH RESPECT TO 510(k) CLEARANCE

                  9.1 SoloPak Ownership of Certain Improvements. (a) Any and all
information, inventions, innovations, improvements, modifications, designs,
discoveries, techniques and the like (collectively, "Improvements") in any way
relating to any of the 

                                       19
<PAGE>   20
System Components invented, created, discovered or developed by SoloPak or any
of its Affiliates, subcontractors or sublicensees shall be and become, and for
all purposes be deemed to be and to have become, without the payment by SoloPak
or any of its Affiliates to I-Flow or any of its Affiliates of any additional
consideration for any such invention, creation, discovery or development and
without the necessity of SoloPak's or any of its Affiliates' taking any further
action, the sole and exclusive property of SoloPak or its Affiliate, as the case
may be, and I-Flow and its Affiliate, as the case may be, shall promptly
deliver, at SoloPak's request, any instrument necessary or appropriate in the
reasonable judgment of SoloPak and its counsel to vest completely such property
rights in SoloPak or its Affiliate, as the case may be.

                  (b) Subject to Section 9.1(a) above, SoloPak agrees to
describe to I-Flow any Improvements in any way relating to the System Components
invented, created, discovered or developed by SoloPak or any of its Affiliates,
subcontractors or sublicensees as described above. I-Flow agrees to review any
such Improvements in good faith and, if one or more of such Improvements would
be appropriate for the Products and would (in the reasonable judgment and
discretion of I-Flow) justify the expense and effort of modifying such System
Components, then I-Flow shall implement such Improvements for such System
Components sold to SoloPak hereunder.

                  9.2 Impact on Pump Components Supply. In the event of
Improvements to the Pump Components, I-Flow in the reasonable exercise of its
discretion shall be free to accept or reject incorporation of each Improvement
to the Pump Components supplied to I-Flow pursuant to Section 4.5 hereof. To
enable I-Flow to exercise its discretion appropriately and in good faith,
SoloPak shall provide all available information to I-Flow as to the impact of
each such Improvement's proposed incorporation on the Cost of the Pump
Components. In any such event, SoloPak shall ensure that the Molds are not
altered or modified without the prior written consent of I-Flow.

                  9.3 Cooperation on New 510(k) Clearance for SoloPak. (a)
SoloPak shall prepare and submit to the FDA notices under Section 510(k) of the
U.S. Food and Drug Act with respect to manufacture, distribution and sales of
the Products in the Territory. The costs of preparing and submitting such
notices under Section 510(k) shall be borne by SoloPak. I-Flow covenants and
agrees to provide SoloPak with all assistance reasonably required by SoloPak in
connection with the preparation, completion and filing of the materials,
documents, instruments and certifications necessary or desirable with respect to
such Section 510(k) notices, including, without limitation, access to complete
records and files of I-Flow relating to the 510(k) Clearance and access to, and
assistance from, appropriate personnel of I-Flow and I-Flow's agents and
representatives. SoloPak shall reimburse I-Flow for any and all out-of-pocket
costs and expenses incurred by I-Flow in this regard together with payment for
the time spent by I-Flow personnel based on the cost to I-Flow with respect to
the employment of such personnel.

                  (b) All right, title and interest in and to any 510(k)
clearances obtained by SoloPak as described in Section 9.3(a) above shall be the
exclusive property of SoloPak and shall be registered in the name of SoloPak or
one or more of its Affiliates as it may designate.

                                       20
<PAGE>   21
                                   ARTICLE 10

                                  MISCELLANEOUS

                  10.1 Relationship. This Agreement does not make either party
the employee, agent, partner, co-venturer, dealer, franchisee, joint venturer or
legal representative of the other party for any purpose whatsoever. In
fulfilling its obligations pursuant to this Agreement, each party shall be
acting as an independent contractor.

                  10.2 Assignment. (a) The rights and obligations of I-Flow
under this Agreement shall not be assignable without the prior written consent
of SoloPak or its successors and assigns. A successor in interest by merger, by
operation of law, assignment, purchase or otherwise of the stock or all or
substantially all of the assets or business of I-Flow shall be bound by the
terms and conditions of this Agreement as in effect at the time of such merger,
assignment, purchase or other transaction.

                  (b) SoloPak shall be entitled to transfer and assign any or
all of its rights and obligations hereunder, without the consent of I-Flow, to:

                           (i) any Person (other than in the manner provided in
         clause (ii) below), as long as I-Flow's rights to the payments and
         indemnifications to be made and provided to it hereunder are not
         diminished, limited or otherwise adversely affected thereby (it being
         understood and agreed that such condition that I-Flow's rights to the
         payments and indemnifications to be made and provided hereunder not be
         diminished, limited or otherwise adversely affected may be satisfied,
         at the option of SoloPak, by SoloPak's agreement to remain liable for
         the payment and indemnification of such amounts under this Agreement);
         or

                           (ii) a successor in interest by merger, by operation
         of law, assignment, purchase or otherwise of the stock or all or
         substantially all of the assets or business of SoloPak as long as such
         successor in interest shall confirm in writing to I-Flow that such
         successor in interest is bound by the terms and conditions of this
         Agreement as then in effect.

Any prohibited assignment shall be null and void.

                  10.3 Notices. Notices permitted or required to be given
hereunder shall be deemed sufficient if given by hand delivery, facsimile
transmission, pre-paid overnight courier, registered or certified air mail
(postage prepaid, return receipt requested), addressed to the attention of, in
the case of I-Flow: President, at the address of I-Flow first above written; and
in the case of SoloPak: Vice President of Finance and Administration, at the
address of SoloPak first above written. Notices so given shall be effective upon
(a) in the case of hand delivery, receipt by the party to which notice is given,
(b) in the case of overnight courier, on the day following the date such notice
was given to such courier for delivery, (c) in the case of registered or
certified mail, on the seventh (7th) day following the date such notice was
posted and (d) in the case of facsimile transmission, on the date such notice
was transmitted by facsimile.

                  10.4 ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING ALL ANNEXES,
EXHIBITS AND SCHEDULES ATTACHED HERETO AND WHICH ARE HEREBY INCORPORATED AS AN
INTEGRAL PART OF THIS AGREEMENT, CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES

                                       21
<PAGE>   22
WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND SUPERSEDES ALL PREVIOUS
AGREEMENTS BETWEEN I-FLOW AND SOLOPAK AS WELL AS ALL PROPOSALS, ORAL OR WRITTEN,
AND ALL NEGOTIATIONS, CONVERSATIONS OR DISCUSSIONS HERETOFORE HAD BETWEEN THE
PARTIES RELATED TO THIS AGREEMENT. NO PARTY HAS RELIED ON ANY PROMISE, STATEMENT
OR REPRESENTATION NOT SET FORTH HEREIN IN ENTERING INTO THIS AGREEMENT.

                  10.5 No Third-Party Beneficiaries. Except as contemplated by
the indemnification provisions hereof, the parties hereto are the only
beneficiaries of this Agreement, and neither party hereto intends to confer any
benefit on any other person or entity by entering into this Agreement.

                  10.6 Amendment. This Agreement shall not be deemed or
construed to be modified, amended, rescinded or canceled, in whole or in part,
except by written amendment signed by the parties hereto.

                  10.7 Publicity. This Agreement is confidential and neither
party shall issue press releases or engage in other types of publicity of any
nature dealing with the commercial and legal details of this Agreement without
the other party's prior written approval, which approval shall not be
unreasonably withheld or delayed. However, approval of such disclosure shall be
deemed to be given to the extent such disclosure is required to comply with
governmental rules, regulations or other governmental requirements. In such
event, the publishing party shall furnish a copy of such disclosure to the other
party.

                  10.8 Severability. In the event that any of the terms of this
Agreement are in conflict with any rule of law or statutory provision or are
otherwise unenforceable under the laws or regulations of any government or
subdivision thereof, such terms shall be deemed stricken from this Agreement,
but such invalidity or unenforceability shall not invalidate any of the other
terms of this Agreement and this Agreement shall continue in force, unless the
invalidity or unenforceability of any such provisions hereof does substantial
violence to, or where the invalid or unenforceable provisions comprise an
integral part of, or are otherwise inseparable from, the remainder of this
Agreement.

                  10.9 Counterparts. This Agreement may be executed in two or
more counterparts, and each such counterpart shall be deemed an original hereof.

                  10.10 Remedies Cumulative. Except as otherwise expressly
provided herein, no failure by any party to take any action or assert any right
hereunder shall be deemed to be a waiver of such right in the event of the
continuation or repetition of the circumstances giving rise to such right.

                  10.11 Headings. Article and section headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose or be given any substantive effect.

                  10.12 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. ANY LEGAL
ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF, OR RELATING TO, THIS 

                                       22
<PAGE>   23
AGREEMENT, OR FOR THE BREACH OR ALLEGED BREACH THEREOF, SHALL BE BROUGHT ONLY IN
THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN ORANGE COUNTY OR THE UNITED
STATES DISTRICT COURT LOCATED THEREIN. THE PARTIES HEREBY CONSENT TO THE
JURISDICTION AND PROPER VENUE OF SUCH COURTS.

                  10.13 No Waiver. No waiver of any term or condition of this
Agreement will be valid or binding on either party unless the same will have
been mutually assented to in writing by both parties. The failure of either
party to enforce at any time any of the provisions of the Agreement, or the
failure to require at any time performance by the other party of any of the
provisions of this Agreement, will in no way be construed to be a present or
future waiver of such provisions, nor in any way affect the validity of either
party to enforce each and every such provision thereafter.

                  10.14 Construction. The language in all parts of this
Agreement shall in all cases be construed simply, according to its fair meaning,
and shall not be construed strictly for or against either of the parties hereto.

                  10.15 Attorneys' Fees. Should any party institute any action
or proceeding to enforce this Agreement or any provision hereof, or for damages
by reason of any alleged breach of this Agreement or of any provision hereof, or
for a declaration of rights hereunder, the prevailing party in any such action
or proceeding shall be entitled to receive from the other party all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
in connection with such action or proceeding.

                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.

                                       SOLOPAK PHARMACEUTICALS INC.


                                       BY:    /s/LARRY W. ZONNER
                                              ----------------------------------
                                              LARRY W. ZONNER

                                       TITLE: VICE PRESIDENT - FINANCE AND
                                              ADMINISTRATION


                                       I-FLOW CORPORATION


                                       BY:    /s/DONALD M. EARHART
                                              ----------------------------------
                                              DONALD M. EARHART

                                       TITLE: CHAIRMAN, PRESIDENT & CEO

                                       23
<PAGE>   24
                               SCHEDULES OMITTED