Document:

exv10w81

Exhibit 10.81

SELECT MEDICAL HOLDINGS CORPORATION

LONG-TERM CASH INCENTIVE PLAN

(As Amended — September 2005)

     1. Purpose. The purpose of the Select Medical Holdings Corporation Long-Term Cash
Incentive Plan is to:

     (a) attract and retain key employees of the Company and its Subsidiaries;

     (b) motivate participating key employees, by means of appropriate cash incentives, to
achieve long-range goals;

     (c) provide incentive compensation opportunities which are competitive with those of
other major corporations in the Company’s peer group; and

     (d) further align the interests of participating key employees with those of the
Company’s stockholders through cash compensation alternatives based on the future value of
the Company’s stock;

and thereby promote the long-term financial interest of the Company and its Subsidiaries, including
the growth in value of the Company’s equity and enhancement of long-term stockholder return.

     2. Plan Benefits.

     (a) If the Cumulative Value of a Strip of Company Securities, valued at the earlier to
occur of a Qualified IPO or Change of Control, exceeds the greater of (i) the IRR Hurdle or
(ii) the Price Hurdle, each Participant shall be entitled to receive a cash payment equal to
the Final Bonus Payment in respect of each of his then vested Units.

     (b) Upon a Preferred Stock Liquidity Event, each Participant shall be entitled to
receive without duplication a cash payment equal to the Preferred Stock Liquidity Payment in
respect of each of his then vested Units.

     (c) Except as the Committee otherwise provides in a Participant’s Unit Award Agreement,

     (i) a Participant will forfeit all of his Units for no consideration upon the
termination of the Participant’s employment with the Company or its Subsidiaries
other than due to the Participant’s death or Disability, and

     (ii) upon the termination of the Participant’s employment due to the
Participant’s death or Disability: (1) the Participant (or his estate, in the case
of death) shall remain entitled to the benefits of this Plan in respect of 50% his
Units and (2) all remaining Units, if any, shall be forfeited.

 

 

     3. Effective Date; Term; Tax Matters.

     (a) The Plan has been unanimously approved by a majority of the stockholders of the
Company and shall be effective as of the Effective Time.

     (b) If any amount payable to a Participant under the Plan would be subject to any
income or penalty tax prior to such Participant’s receipt of the Final Bonus Payment or
Preferred Stock Special Dividend Payment, as the case may be, by reason of the application
of Section 409A of the Code or regulations promulgated thereunder, the Company shall take
such reasonable steps as the Company may determine to be necessary or desirable, with the
consent of the affected Participant, to ensure that such amounts are not subject to such
income or penalty tax; provided, that the Company shall not be required to take any action
pursuant to this Section 3(b) if the Company determines that such action would
adversely effect the Company.

     4. Administration. The Plan shall be administered by the Committee. If for any
reason there is no Committee, the duties of the Committee shall be performed by the Board. Subject
to the provisions of the Plan, the Committee shall have authority, in its sole discretion, to
select Participants to receive awards of Units, to determine the time or times of receipt and to
determine the number of Units covered by the awards. The Committee is authorized to interpret the
Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine
the terms and provisions of any agreements made pursuant to the Plan, to modify such agreements,
and to make all other determinations that may be necessary or advisable for the administration of
the Plan. Decisions of the Committee (including decisions regarding the interpretation and
application of the Plan) shall be binding on the Company and on all Participants and other
interested parties. The Committee shall hold its meetings at such times and places as it deems
advisable. A majority of the Committee shall constitute a quorum for a meeting. All determinations
of the Committee shall be made by a majority of its members attending the meeting. Furthermore,
any decision or determination reduced to writing and signed by all of the members of the Committee
shall be as effective as if it had been made by a majority vote at a meeting properly called and
held.

     5. Participation.

     (a) Subject to the terms and conditions of the Plan, the Committee shall from time to
time determine and designate, in its sole discretion, the employees of the Company or its
Subsidiaries who will participate in the Plan. The number of Units awarded as of the
effective date of the Plan is set forth on Schedule I hereto. Schedule I may be
amended from time to time by the Committee to reflect new grants by the Committee,
forfeitures, cancellation, and any other changes that effect the number of Units then
outstanding. In the discretion of the Committee, a Participant may be awarded Units, and
more than one award of Units may be granted to a Participant. Except as otherwise agreed to
by the Company and the Participant, any award under the Plan shall not affect any previous
award to the Participant under the Plan or any other plan maintained by the Company or its
Subsidiaries.

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     (b) Notwithstanding the provisions set forth in Section 5(a) above, if within
the 30-day period prior to the consummation of a Qualified IPO or Change of Control, any of
the Units remain unawarded or any of the Units are held in treasury for re-granting pursuant
to Section 6 below, then Rocco A. Ortenzio and Robert A. Ortenzio, so long as they
are employed by the Company, may award such ungranted Units to employees of the Company
other than themselves; it being undertsood that if only one of Rocco A. Ortenzio or Robert
A. Ortenzio continues to be employed by the Company then such award may be made individually
by the continuing employee.

     6. Units. Subject to the provisions of Section 16, the number of Units
available under the Plan for awards shall not exceed 100,000. If any award under the Plan or any
portion of an award shall terminate or be forfeited or cancelled, such Units shall be deemed
outstanding and held in treasury by the Company and again be available for future awards, if any,
under the Plan, subject to the foregoing limit.

     7. Withholding of Taxes. All awards and payments under the Plan are subject to
withholding of all applicable taxes. The Company shall have the right to deduct from all amounts
paid in cash under the Plan any taxes required by law to be withheld with respect to such cash
payments as determined by the Committee in its sole discretion.

     8. Transferability. Except to the extent provided in a Participant’s Unit Award
Agreement, units awarded under the Plan are not transferable, except as designated by the
Participant by last will and testament or by the laws of descent and distribution.

     9. Employee Status. The Plan does not constitute a contract of employment or for
services, and selection as a Participant will not give any employee the right to be retained in the
employ of the Company or any Subsidiary.

     10. Agreement With Company. At the time of any awards under the Plan, the Committee
will require a Participant to enter into an agreement with the Company in a form specified by the
Committee, agreeing to the terms and conditions of the Plan and to such additional terms and
conditions, not inconsistent with the Plan, as the Committee may, in its sole discretion,
prescribe. In the event of any inconsistency or conflict between the terms of the Plan and the
agreement, the terms of the Plan shall govern, unless a Participant’s Unit Award Agreement provides
otherwise in which case the Unit Award Agreement shall govern. For the avoidance of doubt, it is
understood that such agreement between the Participant and the Company shall be subordinate and
subject to the terms of the covenants contained in the indentures, credit agreements or other
instruments relating to the indebtedness of the Company and Select Medical Corporation in effect on
February 24, 2005, as the same may be amended.

     11. No Funds Established. It is not intended that awards under the Plan be set aside
in a trust which would qualify as an employee’s trust within the meaning of Sections 401 or 402 of
the Code, or in any other type of trust, fund, or separate account. The rights of any Participant
and any person claiming under such Participant shall not rise above or exceed those of an unsecured
creditor of the Company.

     12. Assignment. Except as contemplated by Section 8, no right or benefit
under the

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Plan shall be subject to alienation, sale, assignment, pledge, encumbrance, or charge, and any
attempt to alienate, sell, assign, pledge, encumber, or charge the same shall be void. No right or
benefit hereunder shall in any manner be liable for or subject to any debts, contracts,
liabilities, or torts of the person entitled to such benefits.

     13. Gender, Tense and Headings. Whenever the context requires such, words of the
masculine gender used herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Headings as used herein are inserted solely for convenience and
reference and constitute no part of the construction of the Plan.

     14. Tax Consequences. Neither the Company nor the Committee makes any commitment or
guarantee that any federal, state or local tax treatment will apply or be available to any person
participating or eligible to participate hereunder.

     15. Severability. In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully severable, but shall not
affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the
illegal, invalid, or unenforceable provision had never been included herein.

     16. Amendment and Termination of Plan. The Board may at any time and in any way
amend, suspend or terminate the Plan. Notwithstanding the foregoing, no amendment, suspension or
termination of the Plan shall alter adversely or impair any Units previously awarded under the Plan
without the consent of the holder thereof.

     17. Definitions. The following definitions are applicable to the Plan.

     (a) “Accreted Value” has the meaning provided for such term in the Company’s
Amended and Restated Certificate of Incorporation.

     (b) “Applicable Percentage” means the quotient expressed as a percentage of (x)
the amount of Accreted Value paid at a Preferred Stock Liquidation Event plus the amount of
Accreted Value, if any, paid at all prior Preferred Stock Liquidity Events, divided by (y)
the Accreted Value at the time of determination plus the amount of Accreted Value paid at
all prior Liquidity Events.

     (c) “Board” means the Board of Directors of the Company.

     (d) “Change of Control” has the meaning provided for such term in the Company’s
Amended and Restated Certificate of Incorporation.

     (e) “Code” means the Internal Revenue Code of 1986, as amended.

     (f) “Committee” means the compensation committee of the Board (or, if there is
no such committee, the Board committee performing equivalent functions). The Board shall
have the power to fill vacancies on the Committee arising by resignation, death, removal or
otherwise.

     (g) “Common Stock” means the Company’s Common Stock, par value $0.001

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per share.

     (h) “Company” means Select Medical Holdings Corporation, a Delaware
corporation.

     (i) “Cumulative Value” means the value of a Strip of Company Securities upon
and after giving effect to a Qualified IPO or a Change of Control. For purposes of
determining Cumulative Value, (x) the value of a share of Common Stock will be determined by
reference to the price at which a share of Common Stock is sold to the public in the
Qualified IPO or valued in the Change of Control transaction, as applicable, (y) the value
of a share of Preferred Stock shall be the Accreted Value thereof plus the sum of all
amounts previously declared and paid in respect of such share as Special Dividends, and (z)
the issuance of shares of Common Stock in respect of the Conversion Constant (as defined in
the Company’s Amended and Restated Certificate of Incorporation) upon a Qualified IPO or
Change of Control shall be included for purposes of determining the Cumulative Value but
shall not be included for purposes of calculating the Preferred Stock Liquidity Payment. It
is understood that the calculation of Cumulative Value shall be adjusted as appropriate for
stock splits, combinations and other reclassifications

     (j) “Disability” shall mean the inability of a Participant to engage in
substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than one hundred eighty (180) days. The
Committee shall determine in its reasonable discretion whether a Participant has incurred a
Disability for purposes of the Plan.

     (k) “Effective Time” means February 24, 2005.

     (l) “Final Bonus Payment” means, an amount equal to (i) $50,000,000 (ii)
divided by 100,000.

     (m) “IRR Hurdle” means the value required for a Strip of Company Securities to
yield a 25% average annual percentage return, compounded annually from the Effective Time to
the date of a Qualified IPO or Change of Control, as applicable.

     (n) “Participant” means any employee of the Company or a Subsidiary to whom the
Committee awards Units under the Plan.

     (o) “Plan” means this Long-Term Cash Incentive Plan.

     (p) “Preferred Stock” means the Company’s Participating Preferred Stock, par
value $0.001 per share.

     (q) “Preferred Stock Liquidity Event” means any time the Company pays a Special
Dividend in respect of the Preferred Stock or redeems, in whole or in
part, outstanding shares of Preferred Stock. For the avoidance of doubt, the mere conversion of Preferred
Stock to Common Stock at the time of a Qualified IPO without such shares

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being redeemed or sold in the Qualified IPO shall not be a Preferred Stock Liquidity
Event; provided, however, within the first year after a Qualified IPO, the redemption or
sale of any outstanding Preferred Stock shall constitute a Preferred Stock Liquidity Event.

     (r) “Preferred Stock Liquidity Payment” means an amount equal to (i) (x) the
product of the Applicable Percentage times $50,000,000, minus (y) the aggregate Preferred
Stock Liquidity Payments paid on Prior Preferred Stock Liquidity Events, divided by (ii)
100,000.

     (s) “Price Hurdle” means $67.25, which is two times the initial value of a
Strip of Company Securities.

     (t) “Qualified IPO” has the meaning provided for such term in the Company’s
Amended and Restated Certificate of Incorporation.

     (u) “Select Medical” means Select Medical Corporation, a Delaware corporation.

     (v) “Special Dividend” has the meaning provided for such term in the Company’s
Amended and Restated Certificate of Incorporation.

     (w) “Strip of Company Securities” means a unit consisting of (i) 1 share of
Preferred Stock and (ii) 6.75 shares of Common Stock, which had an initial value of $33.625
as of the Effective Time.

     (x) “Subsidiary” means, during any period, any corporation or other entity of
which 50% or more of the total combined voting power of all classes of stock (or other
equity interests in the case of an entity other than a corporation) entitled to vote is
owned, directly or indirectly, by the Company.

     (y) “Unit” means a unit of participation in the Plan.

     (z) “Unit Award Agreement” means an award agreement evidencing the grant of
Units to a Participant.

6Exhibit 10.2 

SETTLEMENT AGREEMENT

          This
Settlement Agreement (the “Agreement”) is effective as of the __ day of May
2008 (the “Effective Date”) by and between VNUS Medical Technologies, Inc., a
Delaware corporation having a place of business at 5799 Fontanoso Way, San
Jose, California 95138 (“VNUS”), and AngioDynamics, Inc., a Delaware
corporation having a place of business at 603 Queensbury Avenue, Queensbury,
New York 12804 (“AngioDynamics”) and Vascular Solutions, Inc., a Minnesota
corporation having a place of business at 6464 Sycamore Court, Minneapolis,
Minnesota 55369 (“VSI”) (collectively “the Parties”).

RECITALS

          WHEREAS, on
or about October 12, 2005, VNUS filed a First Amended Complaint against Diomed
Holdings, Inc., Diomed, Inc. (collectively “Diomed”), AngioDynamics, and VSI in
the United States District Court for the Northern District of California, Civil
Action No. C05-02972-MMC, (the “Civil Action”) alleging that each of Diomed,
AngioDynamics and VSI has infringed U.S. Patent Nos. 6,258,084, 6,638,273,
6,752,803, and 6,769,433 (the “Patents-in-Suit”);

          WHEREAS,
Diomed, AngioDynamics and VSI have denied the allegations in the First Amended
Complaint and have asserted and attempted to assert by way of affirmative
defenses and counterclaims that the Patents-in-Suit are not infringed, are invalid and are
unenforceable;

          WHEREAS, on
or about March 14, 2008, Diomed filed Voluntary Petitions under Chapter 11 of
the United States Bankruptcy Code, which resulted in a stay of the Civil Action
as to Diomed pursuant to Section 362(a) of the Bankruptcy Code, 11 U.S.C. §
362(a).

          WHEREAS,
through the execution of this Agreement, VNUS and AngioDynamics and VSI desire
to resolve all claims and counterclaims, potential claims and counterclaims,
and contemplated claims and counterclaims as to the Patents-in-Suit, including
but not limited to all claims raised or asserted in the Civil Action.

** The
appearance of a double asterisk denotes confidential information that has been
omitted from the exhibit and filed separately, accompanied by a confidential
treatment request, with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934.

1

          NOW,
THEREFORE, in
consideration of the promises made hereunder and for other good and valuable
consideration, and intending to be legally bound, the Parties agree as follows:

DEFINITIONS

          1.
“Affiliates” shall mean any corporation, firm, partnership or
other entity, which directly or indirectly owns, is owned by or is under common
ownership with a Party to this Agreement to the extent of at least fifty-one
percent (51 %) of the equity having the power to vote on or direct the affairs
of the entity, and any person, firm, partnership, corporation or other entity
actually controlled by, controlling or under common control with a Party to
this Agreement.

          2. “Covered
Products” shall mean the following products that are usable to perform ELA:

          **

The foregoing
products shall be deemed Covered Products if they are usable to perform ELA,
regardless of whether Licensees provide product labeling, instructions,
training, or marketing activities related to performance of ELA. Covered
Products shall not include:

          **

A current list
of each Licensee’s Covered Products that are currently marketed in the
Territory or FDA cleared for marketing in the Territory are identified in
Exhibit A hereto.

          3. “ELA”
and “Field” shall both mean endovenous thermal ablation based on laser and/or
light delivered to a vein or into a vein lumen. The term ablation shall
include: therapy, vein diameter reduction, vein occlusion, vein damage, vein
destruction, and venous reflux treatment. The Field does not include (i)
multiple use endovenous products other than laser consoles or other laser or
light sources; (ii) endovenous thermal ablation based on delivery to a vein or
into a vein lumen energy other than laser and/or light energy, such as RF,
electrical current, microwave, circulating hot fluid, and ultrasound; (iii) **;
(iv) methods of restoring vein valve competence or limited, controlled vein
shrinkage to restore normal venous function; and (v) **. Notwithstanding the
foregoing, the exclusion of ** from the Field shall not be read to prevent either
Licensee from marketing its current Covered Products listed in Exhibit A and
any 

2

future Covered
Product that incorporates only insubstantial changes in design and function and
does not facilitate ** more so than any current Covered Product.

          4.
“Licensee” or “Licensees” shall mean individually or collectively AngioDynamics
and VSI and their respective Affiliates.

          5.
“Licensed Patents” shall mean the following U.S. patents and
pending application: 

	
 

	
 

	
 

	
 

	
6,769,433

	
6,638,273

	
6,398,780

	
6,613,045

	
 

	
 

	
 

	
 

	
6,752,803

	
6,179,832

	
6,969,388

	
09/825,741

	
 

	
 

	
 

	
 

	
6,258,084

	
6,237,606

	
6,152,899

	
 

and any
continuations, continuations-in-part, divisionals, reissues or reexaminations
(in each case either direct or indirect through one or more intervening patents
or applications) of any of the patents or patent application listed above.
“Licensed Patents” shall also include any continuations, continuations-in-part,
divisionals, reissues or reexaminations for which all of the following apply:
(a) issue after the Effective Date of this Agreement, (b) applicable to the
Field, and (c) claim priority (either directly or indirectly) to any member of
either patent family descended from U.S. Patent No. 6,200,312 or 6,036,687,
whether or not such family member is among the patents and application listed
above. VNUS represents and warrants that the Licensed Patents include all
issued patents that are owned or licensed by VNUS with a right to sublicense
that are applicable to the Field. VNUS further represents and warrants that the
Licensed Patents include all pending patent applications for which all of the
following apply: (a) owned or licensed by VNUS with a right to sublicense, (b)
filed or claim priority to an application filed before June 11, 2003, and (c)
applicable to the Field.

          6. “Other
VNUS Patents” shall mean any VNUS patents that issue after the Effective Date without a priority claim to any of
the Licensed Patents
and that are applicable to the Field. VNUS further represents and warrants that
the Other VNUS Patents include all pending patent applications for which all of
the following apply: (a) owned or licensed by VNUS 

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with a right
to sublicense, (b) do not have a priority claim to any Licensed Patent, and (c)
applicable to the Field.

          7. “Single-Use”
shall mean use in one patient and during a single day.

          8. The
“Territory” shall mean the United States of America and all territories and
possessions thereof.

          9. “Third
Party” or Third Parties” mean any person(s) or entit(ies) other than VNUS,
AngioDynamics and VSI, and their respective Affiliates.

License Grant

          10. VNUS
hereby grants to each Licensee a non-exclusive and non-sublicensable license
under the Licensed Patents (but not the Other VNUS Patents) to make, have made,
use, sell, and offer for sale Covered Products in the Field throughout the
Territory.

          11. VNUS
hereby grants to each Licensee a non-exclusive and non-sublicensable license in
the Field throughout the Territory under the Other VNUS Patents to make, have
made, use, sell, and offer for sale only its current Covered Products
identified on Exhibit A and any future Covered Product in the Field that
incorporates only insubstantial changes in design and function in comparison to
a current Covered Product. For purposes of this Agreement, a future Covered
Product incorporates only insubstantial changes in design and function where
the changes made do not materially alter the product’s mechanism of action.
Nothing in this Section shall limit the license granted in Section 10 of this
Agreement.

          12. The
licenses granted in Sections 10 and 11 are not transferable by a Licensee
except to a successor-in-interest as provided in Section 58 of this Agreement.

Royalty Rate

          13. Each
Licensee shall pay to VNUS a royalty for each Covered Product that is sold or
shipped directly or indirectly to a clinical user or clinical facility in the
Territory as follows: 

          **

4

          14.
Notwithstanding the foregoing, neither Licensee shall be required to pay any
royalty on: (a) any demonstration laser/light source maintained within the
possession of its respective sales employees (limit one per employee at any
time); (b) any Covered Product or any laser/light source provided or shipped to
honor warranty obligations; (c) any Covered Product or any laser/light source
used on a temporary basis as a warranty or service repair loaner; or (d) on
returned Covered Products where credits are issued.

          15. Each
Licensee shall pay to VNUS within thirty (30) days of the end of each fiscal
quarter of the respective Licensee the royalties owed for the respective
quarter.

          16. Each
Licensee shall report to VNUS within fifteen (15) calendar days of the end of
each fiscal quarter of Licensor monthly reports of: a) the unaudited total
numbers of each Covered Product shipped in the Territory, and b) the unaudited
amount of royalties incurred during the respective quarter. 

          17. There
shall be no obligation to pay royalties on any Covered Products sold or shipped
after the Term. The above royalty rates shall remain constant throughout the
Term. VNUS shall not seek royalties under this Agreement from either Licensee
for Covered Products sold or shipped outside of the Territory and not re-sold
or re-shipped by or on behalf of the respective Licensee within the Territory.

Upfront Payment

          18. Each
Licensee shall pay to VNUS within three (3) business days of execution of this
Agreement an upfront payment equal to the total royalty owed on Covered
Products that were sold or shipped directly or indirectly to clinical users or
clinical facilities in the Territory through to the end of the Licensee’s most recent fiscal quarter. 

Audit Rights

          19. Licensees shall maintain, and cause to be
maintained, all business records necessary to verify the royalties under
Section 15 above. Such records shall be maintained for a period of three (3)
years after each royalty payment is made.

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          20. VNUS
shall have the right to conduct one pre-scheduled royalty-related audit per
fiscal year of each Licensee during reasonable commercial hours by an
independent third party auditor selected by VNUS and acceptable by the
respective Licensee, such acceptance not to be unreasonably withheld,
conditioned or delayed. If such an audit produces a material (> 2%)
discrepancy, VNUS may have the third party auditor re-audit the respective
Licensee upon demand and with prior notice up to twice more during the
respective fiscal year.

          21. In
the event that the auditor determines that additional royalties are due and the
discrepancy is greater than 2% of the total royalties due for the audited
royalty period, then the Licensee shall pay for the expense of the audit. In
the event the auditor determines that royalties were overpaid, VNUS shall
refund the overpayment to the Licensee.

          22. VNUS
will only receive the results of any such audit but not the underlying
information, will retain the results in confidence, and all units information
and audit information received by VNUS shall be disclosed solely to VNUS’s
Chief Executive Officer and Chief Financial Officer, who shall use the
information solely for financial auditing purposes or for remedying any failure
to pay royalties due and shall not disclose it to any other person within VNUS.

Future Covered Products

          23. With
respect to the issue of whether the Licensees have a license under Section 11
to the Other VNUS Patents for any future Covered Product, the Parties agree to
negotiate in good faith concerning whether the future Covered Product
incorporates only insubstantial changes in design and function in comparison to
a current Covered Product. If the Parties cannot amicably resolve any
disagreement, the dispute will be submitted to binding arbitration as set forth
below. In all cases the Parties agree that any future Covered Product which
incorporates only insubstantial changes in design and function in comparison to
a current Covered Product remains subject to the exclusions from the Field set
forth in Section 3.

          24.
In order to avoid potential future disputes, Licensees agree that Licensee’s
future products within the Field shall be considered Covered Products (but
subject to the restrictions on 

6

license to the
Other VNUS Patents as set forth in Section 11). Existing limitations to the
Field and exclusions to Covered Products shall apply to future Covered
Products.

Releases and Covenants Not to Sue or
Challenge the Enforceability of the Licensed Patents

          25. VNUS,
for itself and its directors, officers, employees, agents, successors, assigns,
and representatives agrees to release, acquit, and forever discharge, and
hereby does release, acquit, and forever discharge, and covenants not to sue
AngioDynamics and VSI and their respective directors, officers, employees,
agents, successors, assigns, and representatives, from or on any of the
following claims or causes of action that existed prior to or as of the
Effective Date of this Agreement:

	
 

	
 

	
 

	
 

	
(a)

	
Any claims asserted in the Civil Action.

	
 

	
 

	
 

	
 

	
(b)

	
Any claims based on or relating to past infringement of any of the
 Licensed Patents.

	
 

	
 

	
 

	
 

	
(c)

	
Any claims of past patent infringement relating to any ELA products
 or products accused of infringement in the Civil Action.

	
 

	
 

	
 

	
 

	
(d)

	
Any
 patent-related claims or causes of action that VNUS may have against
 AngioDynamics or VSI, including but not limited to any claim for past
 infringement of any patents, or claims for costs, damages for past
 infringement, or attorney’s fees.

          26. Each
Licensee, for itself and its directors, officers, employees, agents,
successors, assigns, and representatives agrees to release,
acquit, and forever discharge, and hereby does release, acquit, and forever
discharge, and covenants not to sue VNUS and its respective directors,
officers, employees, agents, successors, assigns, and representatives, from or
on any of the following claims or causes of action that existed prior to or as
of the Effective Date of this Agreement:

	
 

	
 

	
 

	
 

	
(a)

	
Any claims
 asserted in the Civil Action.

7

	
 

	
 

	
 

	
 

	
(b)

	
Any claims
 based on or relating to the enforceability or validity of the Licensed
 Patents.

	
 

	
 

	
 

	
 

	
(c)

	
Any claims
 of patent infringement relating to any products currently sold by VNUS as of
 the date of this Agreement.

	
 

	
 

	
 

	
 

	
(d)

	
Any
 patent-related claims or causes of action that each Licensee may have against
 VNUS, including but not limited to any claim for past infringement of any
 patents, or claims for costs, damages for past infringement, or attorney’s
 fees.

          27. Each
Licensee agrees that U.S. Patents Nos. 6,769,433; 6,752,803; and
6,258,084 are valid, enforceable and indirectly infringed by Licensees in
connection with the accused products in the Civil Action.

          28. Licensees
agree not to initiate, support, engage in, participate in or assist any attempt
to invalidate, render unenforceable or narrow any claims of any of the Licensed
Patents.

          29.
Although the release set forth in this Agreement is not a general release, if the
release is determined by an arbitrator or court of competent jurisdiction to be
a general release, the Parties expressly waive the rule set forth in Section
1542 of the California Civil Code (“Section 1542”), which provides as follows:
“A general release does not extend to claims which the creditor does not know
or suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.” The
Parties further waive any right or benefit to which they may be entitled under
the provisions of any statutes in any other jurisdictions or common law
principle that are identical or similar to the provisions of Section 1542. 

Term/Termination

          30. The
Term of this Agreement shall be until the earlier of (i) September 11, 2017, or
(ii) a final non-appealable decision of invalidity or unenforceability of all
unexpired claims asserted in the Civil Action, and of all applicable claims of
all continuations, continuations-in-part, divisionals, reissues or
reexaminations of U.S. Patents Nos. 6,769,433, 6,752,803 and 6,258,084.

8

          31. VNUS
and Licensees agree that each Licensee’s obligation to pay royalties under this
Agreement shall terminate if either of the following circumstances occur: A)
All applicable claims of the Licensed Patents are invalidated, or their scope
is substantially narrowed, by a final non-appealable decision in reissue or
reexamination proceedings, such that no claim of any Licensed Patent covers ELA
as then currently practiced, and the claims of the Other VNUS Patents also do
not cover ELA as then currently practiced; or B) All applicable claims of the
Licensed Patents are invalidated, or their scope is substantially narrowed, by
a final non-appealable decision in litigation, such that no claim of any
Licensed Patent covers ELA as then currently practiced, and the claims of the
Other VNUS Patents also do not cover ELA as then currently practiced. 

          32. If
at any time during the term either Licensee believes that it is selling an
ELA-related product usable in a method that is not covered by a Licensed Patent
or Other VNUS Patent, it may notify VNUS, and if VNUS disagrees it shall submit
the matter to arbitration as set forth below.

          33.
If any Party fails to perform any material covenant of this Agreement and if
such default is not corrected, or if such default is not correctable, and
commercially reasonable steps to prevent such default from recurring are not
taken, within thirty (30) days, after receiving written notice from the other
Party with respect to such default, such other Party shall have the right to
terminate this Agreement with respect only to such defaulting Party by giving
written notice to the Party in default provided the notice of termination is
given within six (6) months of the non-defaulting party becoming aware of the
default and prior to correction of the default. Examples of default or breach
of the Agreement by a Licensee shall be:

	
 

	
 

	
 

	
          i.
 Failure to pay the amount of royalty due under this Agreement within the time
 so specified or failure to pay any additional royalties found to be owing as
 the result of an audit conducted by a third party auditor pursuant to this
 Agreement; or

	
 

	
 

	
          ii.
 Public disparagement of the validity or enforceability of the Licensed
 Patents including, but not limited to, any action or proceeding to challenge
 the validity or enforceability of the Licensed Patents.

9

In addition,
VNUS may immediately terminate this Agreement at its discretion with respect to
a Licensee if such Licensee:

	
 

	
 

	
 

	
 

	
a.

	
Fails to pay
 to VNUS a minimum quarterly royalty ** in two consecutive fiscal quarters of
 Licensee;

	
 

	
 

	
 

	
 

	
b.

	
Markets
 products in the U.S. that are covered by the Licensed Patents but outside of
 the Field, such as multi-use fibers or RF vein ablation catheters; or

	
 

	
 

	
 

	
 

	
c.

	
Becomes
 insolvent or files for bankruptcy protection (in which case, all rights
 automatically revert to VNUS without a tie to the respective Licensee’s
 encumbered assets).

If a Party disputes a claim of default or breach, it may initiate
Dispute Resolution under this Agreement, and until a final, non-appealable
decision of the Dispute Resolution Panel, this Agreement shall remain in
effect.

Confidentiality

          34. Each
of the Parties acknowledges and agrees that the financial terms of this
Agreement constitute confidential information of the other Party. Each of the Parties agrees for itself, its
employees, agents and representatives, to take all reasonable steps necessary
to preserve and protect the confidentiality of the financial terms of this
Agreement, and not to disclose any such information to any Third Parties
without the prior written consent of the other Parties, except to the extent
required by law or otherwise to comply with applicable securities or regulatory
rules or filing standards. Notwithstanding the foregoing, each Party
may disclose the financial terms of this Agreement under a similar obligation
of confidentiality to individual Third Parties as may be reasonably required in
connection with the conduct of its business affairs, such as when negotiating a
license with a non-Party as set forth in Section 39. Notwithstanding the foregoing, each Party may disclose the
financial terms of this Agreement to a government agency, if disclosure is
mandated by a government requirement.

          35. Notwithstanding
the foregoing, a Party may disclose any information otherwise protected from
the disclosure in the preceding Section 34 if such information is the subject
of a subpoena or demand for production of documents in connection with any
suit, arbitration proceeding, administrative procedure or before any
governmental agency, provided that in such 

10

event, the
Party proposing to make such disclosure shall notify the other Party prior to
such disclosure and shall take such actions as are reasonably requested and
otherwise cooperate with the other Party in its attempts to protect the
confidentiality of the information, such as by requesting confidential
treatment or seeking a protective order from a court of competent jurisdiction.

          36. The
Parties shall within four (4) business days of the Effective Date
mutually agree on the statements to be made concerning this Agreement in any
press release.

          37. The
Parties acknowledge that this Agreement may constitute a material definitive
agreement required to be filed as a Current Report on Form 8-K pursuant to the
Securities Exchange Act of 1934. The
Parties agree they will mutually work together to submit a request for
confidential treatment of such filing so that the appropriate confidential
information is uniformly redacted.

Dismissal

          38. Within
five (5) business days of the Parties having executed this Agreement and the
transfer of funds described in Section 18, the Parties shall jointly move to
enter a dismissal with prejudice by filing a Joint Motion for Dismissal. The Parties agree to each bear their own
costs, including attorneys’ fees, incurred in connection with the Civil Action
and in fulfilling these responsibilities under this Agreement.

**

          39. **

          40. **

          41.
VNUS shall have the right of first enforcement against all non-Party suppliers
of ELA-related products in the United States where such non-Party supplier(s)
infringe both a Licensed Patent and a patent owned by a Licensee. When either Licensee becomes aware of an
ELA-related product or method of use that it believes infringes both a Licensed
Patent or an Other VNUS Patent and a patent owned by the Licensee, the Licensee
shall notify VNUS in writing and VNUS shall have not more than 120 days to
exercise its first right to commence a 

11

lawsuit
against the infringer. Either Licensee
may commence suit against the infringer after the earlier of expiration of the
120 day period of the preceding sentence or the filing of suit by VNUS against
the infringer. However, if either
Licensee believes it commercially necessary to pursue a provisional remedy,
such Licensee may file a complaint and application for a temporary restraining
order or preliminary injunction without first waiting for VNUS to exercise its
first right to commence a lawsuit.
Except for matters released under Sections 25 and 26 above, nothing in
this Agreement shall prevent either Licensee from enforcing any of its patents
that are infringed by an ELA-related product that does not infringe any of the
Licensed Patents or the Other VNUS Patents.

          42. In
the event a Licensee’s Covered Products or Methods of Use become subject to
patent litigation from a party other than VNUS, it is the sole responsibility
of the Licensee to conduct its defense.

**

          43. **

          44. **

          45. **

Representations,
Warranties and Indemnification

          46. Each
Party warrants that it has the unencumbered legal authority to
enter into and execute this Agreement, and that the execution and performance
of this Agreement has been authorized by all necessary and appropriate
corporate action. VNUS, AngioDynamics
and VSI and the undersigned individuals signing on behalf of the Parties hereby
further represent and warrant, as of the date hereof, that they have all
requisite power and authority to enter into this Agreement and perform all of
their respective obligations hereunder, and that no claim as to which a release is granted hereunder has been assigned to
any third party.

          47. Licensees
represent that they will not publicly disparage the validity or enforceability
of the Licensed Patents through acts including, but not limited to,
participating in 

12

or assisting
any action or proceeding to challenge the validity or enforceability of the
Licensed Patents.

          48. **

          49. VNUS
is not providing any warranty with respect to the Licensed Patents to the
Licensees other than to its knowledge the Licensed Patents are valid and
enforceable.

          50. If
AngioDynamics purchases any assets of a Diomed entity, VNUS represents that it
will not assert any claim against AngioDynamics for damages arising out of or
related to any infringing activities of Diomed occurring prior to such
purchase, and that all Diomed ELA-related products marketed before the date of
the purchase and listed in Appendix A shall be included within the license
going forward subject to royalty payment and the other terms of this
Agreement. Nothing herein shall prevent
VNUS from asserting any claims against the Diomed estate through the bankruptcy
proceeding.

          51. In
the event that AngioDynamics purchases any Diomed assets, it agrees that a
license under U.S. Patent Nos. 6,769,433; 6,752,803; and 6,258,084 is necessary
to avoid infringement in connection with the continued marketing of such Diomed
products in the United States. 

          52. Subject
to the provisions of Section 50 regarding Diomed entities, should either
Licensee after the Effective Date of this Agreement become the owner of, owned
by or under common ownership with a new Affiliate, the licenses granted in
Sections 10 and 11 shall not apply to any infringing activity by such new
Affiliate prior to the Licensee’s becoming owner of, owned by or under common
ownership with the new Affiliate, and nothing in this Agreement shall apply to
such new Affiliate for the period prior to the date on which a Licensee becomes
an owner of, owned by or under common control.
VNUS retains the full right to pursue damages, royalties or other
remedies for all such prior infringing activity via litigation in state or
federal courts, or otherwise. 

          53. VNUS
shall not assert that any Licensed Patents that are pending or issued as of the
Effective Date are directly or indirectly infringed by **. If in the future VNUS obtains an issued
Licensed Patent that it believes is directly or indirectly infringed by a
Licensee’s **, 

13

VNUS shall
submit the matter to arbitration as set forth below, and the Licensee shall be
entitled to assert all available defenses and counterclaims against the
respective Licensed Patent, including non-infringement, invalidity and
unenforceability, and/or may seek reexamination of such Licensed Patent.

          54. Each
Licensee shall indemnify, defend, and hold harmless VNUS against any claims or
actions arising from Covered Products shipped or sold by such Licensee.

Resolution of Disputes

          55. All
disputes between or among the Parties relating to the interpretation or
application of this Agreement shall be settled by means of alternative dispute
resolution as provided in this Section.
The Parties agree that any such dispute shall be decided by a JAMS
arbitrator who is a retired Judge of the United States Court of Appeals for the
Federal Circuit or a United States District Court, and the arbitrator shall be
chosen by mutual agreement of the Parties.
If the Parties cannot agree on the choice of an arbitrator, the Parties
shall ask JAMS to select one for the Parties.
The arbitrator shall determine the nature and form of the arbitration
proceeding, as well as the discovery rules applicable to the proceeding. However, unless the parties mutually agree
in writing or the JAMS arbitrator rules for good cause, in no event shall
discovery exceed the following:

          i)
Written Discovery. Each party
shall be entitled to serve 25 document requests, 10 single question
interrogatories, and 10 single question requests for admissions. Answers and documents, if requested, shall
be produced within thirty (30) days after service of the requests.

          ii)
Oral Depositions. Each party to
the dispute shall be limited to two seven-hour depositions of the other party,
and to two seven hour depositions of non-Parties who are not expert witnesses.

          iii)
Experts. Each party shall be
limited to two expert(s), who shall render a written report within ninety days
after the initiation of the dispute resolution proceeding. There shall be no rebuttal reports;
rebuttals may be raised in briefing to the Arbitrator. Each party to the dispute may take one seven
hour deposition of each Expert proffered by the other party to the dispute.

14

          iv)
Discovery Disputes. The
Arbitrator shall have the sole and binding authority to render decisions
concerning the propriety of all discovery requests, the sufficiency of all
discovery responses, and to otherwise resolve all discovery disputes.

          v)
Time for Discovery. All
discovery shall be completed within 180 days after the initiation of the
dispute by the Arbitrator. The time
periods for discovery may be extended by the Arbitrator for good cause.

Notice

          56. Any
consent or notice required or permitted to be given or made by any Party under
this Agreement shall be made in writing and sent to the other Parties by
commercial carrier for delivery within two business days, to the following
addresses of the Parties, or to such other address as the addressee may have
last furnished in writing, and shall be effective upon receipt by the
addressee.

	
 

	
 

	
 

	
 

	
If to VNUS:

	
If to
 AngioDynamics:

	
 

	
VNUS Medical
 Technologies, Inc.

	
AngioDynamics,
 Inc.

	
 

	
5799 Fontanoso
 Way

	
603
 Queensbury Ave

	
 

	
San Jose,
 CA 95138

	
Queensbury,
 NY 12804

	
 

	
Attn: General Counsel, CEO

	
Attn:
 General Counsel, CEO

	
 

	
 

	
 

	
 

	
If to VSI:

	
 

	
 

	
Vascular
 Solutions, Inc.

	
 

	
 

	
6464
 Sycamore Court

	
 

	
 

	
Minneapolis,
 MN 55369

	
 

	
 

	
Attn:
 General Counsel, CEO

	
 

Miscellaneous

          57. The
terms of this Agreement shall be binding upon the Parties hereto, and is
intended to bind to the fullest extent possible, each of their respective
officers, directors, employees, shareholders, affiliated companies, successors,
assigns and any entity or individual which or who may acquire all or
substantially all of the assets or business of VNUS, AngioDynamics or VSI. 

          58.
No Party may assign or otherwise transfer its rights hereunder without the
written consent of the other Parties; provided,
however, that either VNUS on the
one hand, or 

15

AngioDynamics
or VSI on the other hand, may freely assign its rights and obligations under
this Agreement to any successor or assignee of all or substantially all of its
business and business assets. Any
assignment or transfer in violation of this Section shall be deemed null and
void.

          59. The
failure of any Party to exercise any rights under this Agreement shall not be
deemed to constitute a waiver of any such rights.

          60. It
is understood and agreed that the Parties hereto are independent contractors,
and no agency relationship, partnership, joint venture or other similar
relationship is created between or among any of the Parties to this Agreement.

          61. This
Agreement shall be governed by and construed in accordance with the internal
substantive laws of the State of Delaware without regard to its conflicts of
laws provisions. 

          62. Licensee
shall mark the IFUs, packaging, and promotional materials (e.g. FDA labeling)
of all Covered Products shipped in the Territory with the numbers of U.S.
Patents Nos. 6,769,433; 6,752,803 and 6,258,084, as well as additional
applicable Licensed Patents as reasonably directed by VNUS. Notwithstanding the foregoing, Licensees
shall be allowed to exhaust current supplies of such materials.

          63. This
Agreement and its attachments constitute the entire agreement between the
Parties regarding the subject matter hereof, and supersedes any and all prior agreements,
arrangements, or understandings between the Parties regarding the subject
matter hereof. No oral understandings,
statements, promises or inducements contrary to, or in addition to, this
Agreement exist. 

          64. This
Agreement may not be altered or amended except by a subsequent writing or
writings signed by all Parties.

          65. This
Agreement may be executed in any number of identical counterparts by one or
more Parties. All such counterparts,
when so executed, shall be deemed to constitute one final agreement as if one
document had been signed by all Parties to this Agreement. Each such counterpart, upon execution and
delivery of all counterparts, shall be deemed to be a complete 

16

original of
this Agreement. A telecopy or facsimile
transmission of a signed counterpart of this Agreement shall be sufficient to
bind the Party or Parties whose signature(s) appears thereon.

          66. Each
Party to this Agreement hereby agrees to execute and deliver such additional
and further consideration, instruments, documents and assurances as may be
reasonably necessary to carry out or fully effectuate the intent, purposes, and
provisions hereof.

          IN
WITNESS WHEREOF, the Parties have executed this Settlement Agreement by their
duly authorized representatives as of the Effective Date.

	
 

	
 

	
 

	
VNUS Medical Technologies, Inc.

	
 

	
AngioDynamics, Inc.

	
 

	
 

	
 

	
 

	
 

	
By: 

	
 

	
 

	
By: 

	
 

	
 

	

	
 

	
 

	

	
 

	
Its:

	
 

	
 

	
Its:

	
 

	
 

	

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Date:

	
 

	
 

	
Date:

	
 

	
 

	

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Vascular Solutions, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Its:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Date:

	
 

	
 

	
 

	
 

	
 

	

17

EXHIBIT A

          The
following are the Covered Products of each Licensee that are currently marketed
in the Territory, or FDA cleared for marketing in the Territory, and are
licensed under the Licensed Patents and the Other VNUS Patents:

          AngioDynamics: 

          **

          VSI:

          **

18

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