NONCOMPETITION AGREEMENT

EXHIBIT 10.1

NONCOMPETITION AGREEMENT

     THIS NONCOMPETITION AGREEMENT, dated as of February 15, 2008 (this “ Agreement ”), is by and among I-Flow Corporation, a Delaware corporation (the “ Parent ”), AcryMed Incorporated, an Oregon corporation and wholly owned subsidiary of the Parent (the “ Company ”), and Bruce L. Gibbins, a natural person (“ Stockholder ”).

RECITALS

     WHEREAS, the Parent, the Company and Stockholder are parties to an Agreement and Plan of Merger dated as of February 2, 2008 (the “ Merger Agreement ”); and

     WHEREAS, in accordance with the Merger Agreement and as a material part of the consideration to be given by Stockholder in connection with the Merger, Stockholder is entering into this Agreement with the Parent and the Company wherein Stockholder agrees not to compete with the Parent or the Company as described herein.

     NOW, THEREFORE, in consideration of the recitals set forth above and the covenants, representations and warranties contained in this Agreement, and for good and valuable consideration, the receipt and adequacy of which are acknowledged by the parties, the parties agree as follows.

AGREEMENT

     1.  DEFINITIONS.

     Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. For the purposes of this Agreement, the following terms shall have the meanings ascribed to them below:

          (a) “ Business ” shall mean the business or pursuit of developing, licensing, manufacturing or distribution of technologies or products in the Company’s current fields of technology development or exploitation except for the benefit of the Parent, the Company and their respective affiliates, successors and assigns.

          (b) “ Covenant Term ” shall mean a period beginning on the Closing Date (as defined in the Merger Agreement) and ending four (4) years thereafter.

          (c) “ Control ” shall mean ownership of 5% or more of the equity securities of any corporation, partnership or joint venture, or such other instances when control in fact exists.

          (d) “ Covenant Territory ” shall mean the entire world due to the global nature of the Business.

     2.  CONSIDERATION. In consideration of compliance with the covenants set forth herein, the Parent shall, at the Closing, deposit the sum of One Million Dollars ($1,000,000) in an interest-bearing escrow account. Provided Stockholder complies with the covenants set forth in this Agreement, and subject to Section 7.3(d) of the Merger

Agreement, Stockholder shall be entitled to receive from the escrow account, the following amounts on the designated dates: (i) Five Hundred Thousand Dollars ($500,000) plus all interest then accrued in the escrow account (less any loss with respect thereto and the Stockholder’s portion of the escrow agent’s fees) on the second anniversary of the Closing Date, (ii) Two Hundred Fifty Thousand Dollars ($250,000) plus all interest then accrued in the escrow account (less any loss with respect thereto and the Stockholder’s portion of the escrow agent’s fees) on the third anniversary of the Closing Date and (iii) the entire balance then remaining in the escrow account (less any loss with respect thereto and the Stockholder’s portion of the escrow agent’s fees) ( i.e. , Two Hundred Fifty Thousand Dollars ($250,000) plus all interest then accrued in the escrow account (less any loss with respect thereto and the Stockholder’s portion of the escrow agent’s fees) ) on the fourth anniversary of the Closing Date. Disbursements from the escrow account shall be made pursuant to the Escrow Agreement of even date herewith entered into among the Parent, Stockholder and Citibank, N.A., as escrow agent, substantially in the form attached hereto as Exhibit A (and including revisions thereto requested by the escrow agent and agreed to by the Stockholder and the Parent).

     3.  NONCOMPETITION.

          (a) Stockholder shall not, at any time during the Covenant Term, directly or indirectly, invest in (other than as a passive investor holding less than five percent (5%) of the outstanding voting or nonvoting securities of a publicly traded entity), engage in or be associated with, as an employee, consultant, agent, director, stockholder, partner, financial backer or otherwise, the ownership or operation of any enterprise operating or proposing to operate in the Business (excluding any ownership interest Stockholder has or may have in the Parent).

          (b) Stockholder shall not, at any time during the Covenant Term, directly or indirectly, nor will any person, corporation, firm, partnership or other entity over which Stockholder exercises Control (whether as an officer, director, individual proprietor, control stockholder, consultant, partner or otherwise), (i) solicit, recruit or hire away from employment by the Parent or the Company, any person who is employed on the date hereof or during the Covenant Term by any of them, or (ii) solicit any person or entity to terminate or modify such person’s contractual and/or business relationship with the Parent or the Company.

          (c) Stockholder shall not, at any time during the Covenant Term, directly or indirectly, nor will any person, corporation, firm, partnership or other entity over which Stockholder exercises Control (whether as an officer, director, individual proprietor, control stockholder, consultant, partner or otherwise), solicit, recruit or encourage any current or future customer (including any distributor, sales agent or sales representative) or licensee of the Parent or the Company to cease doing business in whole or in part with the Parent or the Company with respect to the Business, or to reduce, modify, divert or otherwise interfere with or impair the business relating to the Business between such customer or licensee and the Parent or the Company.

     4.  REASONABLENESS OF COVENANTS. Stockholder acknowledges that the Parent and the Company are involved in the Business in the Covenant Territory. Stockholder further recognizes and acknowledges that these covenants not to compete are necessary in order to protect and maintain the proprietary interests and other legitimate business interests of the

Parent and the Company in the Business acquired under the Merger Agreement and are reasonable in all respects. The noncompetition obligations set forth herein constitute a covenant not to compete under the internal laws of the State of California.

     5.  SEPARATE COVENANTS. This Agreement shall be deemed to consist of a series of separate covenants, one for each line of business activity included within the Business as it may be conducted by the Parent or the Company on or after the date hereof, and each city, county, state, country, market area, business area or other region included within the Covenant Territory, for each year. The parties expressly agree that the character, duration and geographical scope of this Agreement are reasonable in light of the circumstances as they exist on the date upon which this Agreement has been executed.

     6.  PARTIAL INVALIDITY. It is the intention of the parties hereto that the covenants contained herein shall be fully enforceable as set forth herein. If, in any judicial proceeding, a court or other tribunal of competent jurisdiction shall refuse to enforce or declare void or invalid any of the provisions or covenants, or any part thereof, of this Agreement, as applied to any party or to any circumstances, such invalid or unenforceable provision or covenant shall in no way affect any other provision or covenant of this Agreement, the application of such provision or covenant in other circumstances, or the validity or enforceability of this Agreement. If any provision or covenant, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby or for any other reason, the parties agree that the court making such determination shall have the power and is hereby asked to reduce the duration and/or area of such provision, and/or to delete specific words or phrases in order to render this Agreement and its scope valid and enforceable to the fullest extent permitted by law.

     7.  EQUITABLE RELIEF. The parties hereto agree that Stockholder’s obligations contained in this Agreement are of a unique character which gives them a special value and that damages in an action at law for Stockholder’s breach of these obligations may not reasonably or adequately compensate the Parent or the Company. The Parent or the Company shall be entitled to injunctive and other equitable relief, without bond, to prevent a breach of said obligations, in addition to any other remedies such parties may have.

     8.  ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations between or among the parties with respect to the subject matter of this Agreement.

     9.  MODIFICATIONS AND AMENDMENTS. This Agreement may not be modified, changed or supplemented, nor may any obligations hereunder be waived, except by written instrument signed by all of the parties hereto.

     10.  GOVERNING LAW. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of California.

     11. SUBMISSION TO JURISDICTION. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement shall be brought

and determined in any state or federal court in San Francisco, California, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts with regard to any such action or proceeding arising out of or relating to this Agreement. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in San Francisco, California, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in San Francisco, California. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the courts in San Francisco, California as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

     12.  WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

     13.  TITLES AND HEADINGS. Titles and headings of sections of this Agreement are for convenience of reference only and shall not affect the construction of any provision of this Agreement.

     14.  SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, inure to the benefit of, and may be enforced by, each of the parties to this Agreement and its successors and assigns. Notwithstanding the foregoing, Stockholder may not assign his obligations under this Agreement, except that in the event of the Stockholder’s death, this Agreement shall be assignable to his estate or other successor, and the payments provided for in Section 2 shall still be made to such estate or other successor, as applicable.

     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 actual attorneys’ fees, incurred by the prevailing party in connection with such action or proceeding.

     16.  COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be an original but all of which shall constitute one and the same instrument.

[ Signature Page Follows .]

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

Signature Page to
Gibbins Noncompetition Agreement

EXHIBIT A

NONCOMPETITION
ESCROW AGREEMENT

ESCROW AGREEMENT

     THIS ESCROW AGREEMENT, dated as of ___, 2008 (this “ Agreement ”), is among I-Flow Corporation, a Delaware corporation (the “ Acquiror ”), ______, an individual (the “ Stockholder ”), and [______], a [______] (the “ Escrow Agent ”).

RECITALS

     A. The Acquiror and the Stockholder are, among others, parties to an Agreement and Plan of Merger dated as of February 2, 2008 (the “ Merger Agreement ”).

     B. In connection with the Merger Agreement, the Acquiror, AcryMed Incorporated, a wholly owned subsidiary of the Acquiror, and the Stockholder have entered into that certain Noncompetition Agreement dated as of [___], 2008 (the “ Noncompetition Agreement ”).

     C. Pursuant to the Noncompetition Agreement and in consideration of compliance with the covenants set forth therein, the Acquiror has agreed to pay into the escrow created hereby the sum of One Million Dollars ($1,000,000) (the “ Escrow Amount ”), to be disbursed as provided in this Agreement. Capitalized terms used herein but not otherwise defined have the meanings ascribed to such terms in the Noncompetition Agreement.

     D. The Acquiror and the Stockholder desire the Escrow Agent to act as escrow agent with respect to the Escrow Fund and income earned thereon as provided herein, and the Escrow Agent has agreed so to act.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

     1.  Appointment . The Escrow Agent is hereby appointed as escrow agent to hold and distribute the Escrow Fund in accordance with the terms hereof, and the Escrow Agent