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Exhibit 10.1

Execution Form

SETTLEMENT AGREEMENT
 
This SETTLEMENT AGREEMENT ("the Agreement"), is entered into as of the 23rd day
of July, 2010 ("Effective Date"), by and between Hysitron Incorporated
("Hysitron"), a Minnesota corporation having its principal place of business at
10025 Valley View Road, Minneapolis, Minnesota 55344, and MTS Systems
Corporation ("MTS"), a Minnesota corporation having its principal place of
business at 14000 Technology Drive, Eden Prairie, Minnesota 55344 (collectively,
"the Parties").
 
WHEREAS, Hysitron owns U.S. Patent No. 5,553,486 ("the '486 patent") and U.S.
Patent No. 6,026,677 ("the '677 patent");
 
WHEREAS, Hysitron owns the trademark "HYSITRON," Federal Registration No.
3,644,289;
 
WHEREAS, on March 14, 2007, Hysitron filed a lawsuit, currently pending before
the U.S. District Court for the District of Minnesota as Hysitron Incorporated
v. MTS Systems Corporation, Case No. 0:07-cv-01533-ADM-AJB ("the Action"),
against MTS, and MTS asserted counterclaims against Hysitron in the Action; and
 
WHEREAS, the Parties now wish to resolve all disputes and claims currently
between them and to avoid further litigation;
 
NOW, THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
 
1.             Compensation:  MTS shall pay Hysitron a lump sum of  Seven
Million Five Hundred Thousand Dollars ($7,500,000)  ("Compensation Amount")
within fourteen (14) days of the Effective Date to resolve all disputes and
claims between them and to reimburse Hysitron for attorneys fees, litigation
costs and other expenses.
 
2.             Release by Hysitron:  Hysitron, for itself and its successors and
assigns, hereby releases, acquits, and forever discharges MTS, its directors,
officers, members, managers, representatives, employees, agents, shareholders,
dealers, distributors, and customers, and its successors and assigns from any
and all claims, counterclaims, compulsory counterclaims, causes of action,
demands, damages, costs, attorneys' fees, and other expenses of any kind arising
out of or relating to the '486 patent, the '677 patent, or the "HYSITRON"
trademark that were brought or could have been brought in the Action prior to
the Effective Date.
 
3.             Release by MTS:  MTS, for itself and its successors and assigns,
hereby releases, acquits, and forever discharges Hysitron, its directors,
officers, members, managers, representatives, employees, agents, shareholders,
dealers, distributors, and customers, and its successors and assigns from any
and all claims, counterclaims, compulsory counterclaims, causes of action,
demands, damages, costs, attorneys' fees, and other expenses of any kind arising
out of or relating to the '486 patent, the '677 patent, or the "HYSITRON"
trademark that were brought or could have been brought in the Action prior to
the Effective Date.
 
4.             Covenant Not to Challenge the '486 Patent and the '677 Patent:
 
a.           Covenant Not to Challenge Validity, Enforceability, and
Patentability:  MTS acknowledges the validity, enforceability, and patentability
of the '486 patent and the '677 patent.  MTS, for itself and its successors and
assigns, hereby forever covenants not to challenge the validity, enforceability,
and patentability of the '486 patent and the '677 patent, not to assist any
third party in challenging the validity, enforceability, and patentability of
the '486 patent and the '677 patent, and not to cause a third party to challenge
the validity, enforceability, and patentability of the '486 patent and the '677
patent.
 
b.           Covenant Not to Challenge Ownership:  MTS acknowledges that
Hysitron is the sole and complete owner of the '486 patent and the '677
patent.  MTS, for itself and its successors and assigns, hereby forever
covenants not to challenge Hysitron's ownership of the '486 patent and the '677
patent, not to assist any third party in challenging Hysitron's ownership of the
'486 patent and the '677 patent, and not to cause any third party to challenge
Hysitron's ownership of the '486 patent and the '677 patent.
 
5.             Covenant Not to Challenge the "HYSITRON" trademark:
 
a.           Covenant Not to Challenge Validity and Enforceability:  MTS
acknowledges the validity and enforceability of the "HYSITRON" trademark.  MTS,
for itself and its successors and assigns, hereby forever covenants not to
challenge the validity and enforceability of the "HYSITRON" trademark, not to
assist any third party in challenging the validity and enforceability of the
"HYSITRON" trademark, and not to cause any third party to challenge the validity
and enforceability of the "HYSITRON" trademark.

 
 

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b.           Covenant Not to Challenge Ownership:  MTS acknowledges that
Hysitron is the sole and complete owner of the "HYSITRON" trademark.  MTS, for
itself and its successors and assigns, hereby forever covenants not to challenge
Hysitron's ownership of the "HYSITRON" trademark, not to assist any third party
in challenging Hysitron's ownership of the "HYSITRON" trademark, and not to
cause any third party to challenge Hysitron's ownership of the "HYSITRON"
trademark.
 
6.             Covenant Not to Infringe by MTS:
 
a.           Covenant Not to Infringe the '486 Patent and the '677 Patent:  MTS,
for itself and its successors and assigns, hereby forever covenants not to
infringe the '486 patent and the '677 patent, not to assist any third party in
infringing the '486 patent and the '677 patent, and not to cause any third party
to infringe the '486 patent and the '677 patent.
 
b.           Covenant Not to Infringe the "HYSITRON" Trademark:  MTS, for itself
and its successors and assigns, hereby forever covenants not to infringe the
"HYSITRON" trademark, not to assist any third party in infringing the "HYSITRON"
trademark, and not to cause any third party to infringe the "HYSITRON"
trademark.
 
7.             Covenant Not to Use the "HYSITRON" trademark:  MTS, for itself
and its successors and assigns, hereby forever covenants not to use, mention, or
otherwise include the "HYSITRON" trademark in any advertisements, in print, on
the internet, or otherwise, in any metadata associated with any website under
its control, or on any list of search terms, paid or otherwise, associated with
any website under its control.
 
8.             Dismissal of Suit:  Within 7 days of Hysitron receiving payment
pursuant to paragraph 1, the Parties shall execute and file a joint stipulation
for dismissal with prejudice in the form of Exhibit A hereto with the U.S.
District Court for the District of Minnesota, and agree to take such other steps
as are necessary to ensure the prompt dismissal with prejudice of all claims and
counterclaims of the Action, with each Party to bear its own attorneys' fees,
costs, and other expenses.
 
9.             Confidentiality:
 
a.           Confidentiality:  Each Party shall be permitted to disclose the
contents of this Agreement and the Agreement itself.  MTS will be permitted to
disclose this Settlement Agreement to the SEC as required by SEC rules and
regulations and any MTS press release will be consistent with the SEC filing(s)
and the terms of this Agreement.  Any information contained in the MTS SEC
filing(s) or the press release of either Party shall not include confidential
information of either Hysitron or MTS.
 
b.           No Representations Inconsistent with this Agreement:  Neither Party
shall make any representation, orally, in writing, or otherwise, to any third
party that is inconsistent with the terms and provisions of this Agreement.
 
10.           Enforcement of Agreement:
 
a.           Governing Law:  This Agreement shall be construed and enforced
under and in accordance with the laws of the United States and the State of
Minnesota.
 
b.           Remedies:  If either Party materially breaches this Agreement, the
aggrieved Party may seek money damages, injunctive relief, equitable relief, and
the reasonable attorneys' fees incurred in enforcing the Agreement.
 
11.           Representations and Warranties:
 
a.           Warranty of Authority:  Each Party warrants and represents that its
has the authority to enter into this Agreement and that it is legally permitted
to undertake the obligations imposed by this Agreement.
 
b.           Consents:  Each Party warrants and represents that, to the extent
any third party consents are required for the performance of any obligation
under this Agreement, it has obtained or shall obtain such consents
 
12.           Miscellaneous Provisions:
 
a.           Amendment:  This Agreement may be changed, modified, or amended
only by an instrument in writing duly executed by both Parties.
 
b.           Entire Agreement:  This Agreement constitutes the full and complete
agreement between the Parties with respect to the subject matter hereof and
supersedes any and all prior understandings, whether written or oral.  Neither
Party entered into this Agreement in reliance on any representation made by the
other Party, whether written or oral, not expressly provided herein.
 
c.           No Agency:  Nothing in this Agreement shall be construed to create
any relationship between the Parties other than as expressly set forth
herein.  The Parties shall not have any express or implied right or authority to
assume or create any obligations on behalf of or in the name of the other Party
or to bind the other Party with regard to any other contract, agreement, or
undertaking with a third party.

 
 

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d.           No Waiver:  The failure of either Party to insist upon strict
performance of any obligation under this Agreement of the other Party,
irrespective of the length of time for which such failure continues, shall not
be a waiver of its rights to demand strict compliance in the future.  No consent
or waiver, express or implied, by either Party to or of any breach or default in
the performance of any obligation hereunder by the other Party shall constitute
a consent or waiver to or of any other breach or default in the performance of
the same or any other obligation hereunder.
 
e.           Joint Drafting:  Counsel for both Parties participated in the
negotiation and drafting of this Agreement.  The terms and provisions of this
Agreement must not be construed either for or against either Party based solely
on the authorship of any particular term or provision.
 
f.           Counterparts:  This Agreement may be executed by facsimile
signature and in any number of counterparts, each of which shall be deemed an
original and all of which will constitute one and the same instrument.
 
g.           No Duress:  The Parties are entering into this Agreement in good
faith and after careful contemplation of the terms and provisions, with the
advice of counsel.  Neither Party is entering into this Agreement because of
duress, whether financial or otherwise, nor has any such duress been
identified.  Neither Party has any intention of later attempting to contest this
Agreement on the basis of any duress.
 
h.           Severability:  If any provision of this Agreement is found or held
to be invalid or unenforceable, the meaning of said provision will be construed,
to the extent feasible, so as to render the provision valid and enforceable, and
if no feasible interpretation shall save such provision, it will be severed from
the remainder of the Agreement, as appropriate.  The remainder of this Agreement
shall remain in full force and effect unless the severed provision is essential
and material to the rights or benefits received by either Party.
 
i.           Headings:  The headings used in this Agreement are for convenience
only and shall not be used to interpret this Agreement.
 
j.           Successors:  This agreement shall be binding upon and inure to the
benefit of each Party, and their respective heirs, successors, assigns, and
legal representatives.
 
k.           Notices:  All notices required or that may be given pursuant to
this Agreement shall be in writing and shall be sufficient in all respects if
(1) delivered by hand or (2) sent by overnight courier as follows:
 
If to Hysitron:
 
Michael Okerlund
General Counsel
Hysitron Incorporated
10025 Valley View Road
Minneapolis, Minnesota 55344

If to MTS:
 
Sue Knight
Chief Financial Officer
MTS Systems Corporation
14000 Technology Drive
Eden Prairie, Minnesota 55344

 
l.           Non-Admission of Liability:  By entering into this Agreement, MTS
does not admit any liability to Hysitron, and Hysitron acknowledges that MTS has
not admitted any liability or wrongdoing.

 
 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers.
 

 
Hysitron Incorporated
               
Date: July 23, 2010
By:
/s/  THOMAS WYROBEK
           
Name:
Thomas Wyrobek
           
Title:
President and CEO
                   
MTS Systems Corporation
                 
Date: July 23, 2010
By:
/s/ SUE KNIGHT
           
Name:
Sue Knight
           
Title:
Chief Financial Officer
 

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